01/03/1999
E-Journal and
E*CARM
Will the electronic bank ever become a virtual one?
By Contributing Editor Pecenik Miran
translation by Michele Clara
Commentary to the site www.netzapping.com
Pecenik
Miran was born in Trieste (Italy), in 1956. From 1978 he worked
in the Banca di Credito di Trieste - Trzaska Kreditna Banka, in
sectors like Edp and organization. Now he is the chief of Information
and Communication Technology (and also Webmaster) in the Nuova
Banca di Credito di Trieste - Nova trzaska kreditna banka.
In the last two years he published many articles about the
Web on italian and canadian newspapers and his work was mentioned
in dozens of articles on financial and Internet magazines, on
television and on an italian national teletext. Overall he increased
the popularity of the bank with over 700 links all around the
world.
He spoke in various meetings, organised by the principal italian
banking corporates, such Abi, Ipacri and Istinform. In 1996 worked
on a questionnaire of the use of Internet in Italy (nowadays the
biggest in Italy, with 1700 answers) and had organised the first
italian elections on the Web. In 1997 he tested the push technology
with a group of 700 people.
The great majority of the Italian banks is striving to establish
the virtual bank. Some of these financial institution are investing
a great deal of their money to do it in the shortest possible time.
Some others bet more heavily on technological alliances. Still other
institutions tend to give more importance to electronic com merce.
Every second article on financial magazines provide in-depth references
to computer technology and supports the idea of a financial world
which is inesorably becoming a high-tech environment. Phone banking
is earning its legitimacy and it will soon become fully integrated
in the next generation of mobile telephones. The first cell phones
with Internet-browsing capability are already available and they
clearly represent a fur ther step in the evolution which had already
resulted in the symbiosis between the day organiser and the mobile
telephone. Talking about screens, as the hype surrounding HDTV and
the 16:9 standard is subsid ing, we are all waiting for the next
technology break which should finally unify Internet, Computers
and Television (will then ICT lose its original meaning?). As for
the argument on whether one should prefer TV on the Internet or
Internet on TV, illustrious commentators have failed in their (ex
post largely negligible) predictions
To cut a long story short, the evolution of technology is running
at a much faster pace than the competence of the average uses. All
this appears worryingly wrong! What a week ago used be at the forefront
of tech nology, in a month's time will be obsolete (and it will
cost you about half of what it does now!). The aver age user fails
to keep up not only with the speed of technological innovation but
also with market forecasts and he or she often fails to understand
what is actually looming behind the latest price cut.
Within such a confused framework, the moment is finally coming for
the Italian banks to use the Net (or better, its architecture) as
a work tool. Among the twenty or so serious initiatives which are
taking place, however, very few are the attempts to enshrine the
concept of the Web within a long-term strategy. For the majority
of the banks, Internet appears to be little more than a "must"
or a fashion that is hard to resist. For the remaining institutes
it is yet another channel to publicise their various means of communication.
To take up the numerous innovative features of the Internet one
needs to nurture the competence of its po tential users and to increase
their number. The managers and the top decision-makers who use the
Net on a daily basis must be able to understand the average user
to turn his or her needs into strategies and ultimately into Web
pages. Above all, what appears to be missing is the competence of
the people who operate in the front desks. Such employees should
be able to link up effortlessly with their Web manager very much
as they commonly do with their switchboard.
There is a lot of talking about the growing range of services offered,
which includes the sale of insurance and leasing policies but also
the management of asset and of other financial instruments. This
discussion raises the question as to whether the Internet is sufficiently
mature to operate within such a context. The providers find it increasingly
hard to find new clients. Wouldn't is be simpler if they outsourced
such a task to a bank (or at least to the suitably trained personnel
which should operate within a bank)? Understandably, such an option
will remain beyond the reach of all those banks which prefer to
outsource the creation and management of their site. Furthermore
there is the issue of domains. No Italian bank has a physical address
such as "XY Bank c/o Mario Rossi ...". Well, nearly half
of them have e-mail addresses which do not contain their name to
the right of the @.
If I want to move an even more direct criticism (and I hope it will
be understood as the suggestion for a step forward), I only need
to continue with the description of the resources that banks provide
on line. Not only it is impossible to find a bank whose site gives
the user (even if not necessarily already a client) all he or she
looks for, but there is a range of services that cannot be found
at all on the site of any on-line bank. As an example I may refer
to the lack of indications on issues such as the "deal of the
month", or mortgage re- payment details, or to the details
on the relevant laws (for example what are a cheque or an IOU from
a le gal point of view?), but also to bank manuals which are often
little more than a patchwork of advertisement brochures, and so
on. Talking about the content of these sites, there appears to be
a widespread lack of imagination. As a matter of fact, however,
the largest national banks appear to have somewhat broadened their
offer, providing access to data which used to be largely confidential
only a couple of years ago.
How does one choose his or her bank? Sometime it is because there
is a branch just near home. Sometime it is because of the suggestion
of a good friend. Sometimes just because it will be easier to get
one's wage credited. In the States, there are Web sites which offer
cross-referenced data on the conditions offered by various banks
which help would-be customers to make up their minds. If one needs
a mortgage (o more sim ply to open a current account) it is extremely
easy for him or her to compare the various bids (often all neatly
lined up on a single Web page) and to take a decision in full autonomy
Since five years ago, the Ital ian law forces all banks to publicise
the terms of their services: this is currently done in all the over
24,000 branches scattered through the country and on two or three
Internet sites. I agree that this kind of informa tion is extremely
vague and often very dry. It would not take however a great deal
of effort and imagination to make it more interesting and relevant
and still to satisfy the law: it would be probably enough to add
to the maximum and minimum rates (which are set by law) also the
ones currently offered by the bank. If such data were freely available,
everyone could make up his or her mind. We could call it multihome-banking
.....
If this is our departure point, it is understandably hard to imagine
an Italian virtual bank. Some time ago, this magazine asked me to
name the bank which could act as a template for such an initiative.
I answered (and would still do the same today) that luckily none
of the foreign banks operating on the Net could play such a role.
In Italy the virtual bank is yet to be invented and it not clear
that the first one to make a move will necessarily eat up the entire
market
From my experience (but also from the numerous mistakes made) I
would define the Italian virtual bank as a balanced mix between
different media (web, phone and TV until they all merge into one)
with a good pres ence in the market (something like one branch every
100,000 inhabitants). In order to implement what has been described,
one would need to confront serious redundancy problems but also
very untractable practical issues. Up to now, banks used to be big
players in the housing market - who will replace them as their "physical"
branches are progressively abandoned? Beside the potential redundancies,
there is also the prob lem of re-training the existing personnel.
If more and more transactions are automised, there won't be any
need for most of the traditional' employees and entirely new tasks
will need to be devised for the remaining ones. To take an historical
example, at the turn of the century one could find in my town what
used to be called "impizaferai-distudaferai" namely people
who crossed the town's roads to light the gas lamps at dusk and
to switch them off at dawn. As electric lamps were introduced all
these workers were laid off and they were left to contemplate in
sadness the rise of a new job, that of electricians. By its very
definition innova tion leads to a loss of job places which is however
invariably compensated (with hefty gains) by the rise of new opportunities.
This will be true also for the banking industry.
Another significant problem concerns the status of the electronic
mail which needs to be upgraded at the same level as that of any
other means of communication used by a bank. Urgency will become
of paramount importance. In the case of delays it won't be possible
to discharge responsibilities to the chronic inefficien cies of
the traditional mail system Independently from its origin, an e-mail
needs to be forwarded rapidly to the addressee and he or she needs
to be able to respond to it effectively.
In order to do all this, one needs time: time to train bank employees,
to update technology (often after all the efforts to upgrade the
applications to accommodate for the Euro and for the Millennium
bug), and to revise all internal regulations. Only if such a transition
will be backed up by a coherent set of instructions by the bank
management and placed within a comprehensive strategy, will it be
likely to succeed. One last point needs to be focused upon. Most
of the businesses which operate through their Internet site tend
to adapt it to the requests and interests of their "new"
clients. On the contrary, the Italian banks seem to be following
a different approach and use the Internet as a "window"
for their traditional clients. That's the reason for all the media
hype concerning home-banking. Evolution, however, does not imply
a shift to the so-called corporate banking (where enterprises can
control their accounts in different banks), but the provi sion of
entirely new services (and that's where the Italian fantasy should
play an important role) which are customised to the interest of
the potential clients. As globalisation mounts up, especially within
the common European market, it will be important to keep in mind
that the opportunity to fish for clients outside the tra ditional
markets also implies that the traditional clients will be increasingly
exposed to the opportunities of fered by what to used foreign' banks.
To sum up, I do not yet envisage a competitive virtual bank to be
established in Italy in the near future. As personal computers are
estimated to be present in less than 13% of the Italian households
and as the total number of Internet users is likely to be lower
than 2.5 million (5% of the entire population) a conclusion is not
hard to find: it is not yet convenient to invest on a virtual bank.
It is but a sad irony that when the num bers will be high enough,
it will probably be too late and someone else will have already
monopolised the entire market.
Miran
PECENIK
Personal
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miran@pecenik.com
http://miran.pecenik.com/
Business
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netzapping@netzapping.com
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Copyright Miran Pecenik, 20-Feb-1998
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