Abstract: I'm willing to bet that most banks get most of their earnings from tittle old Ladies with CDs. It sounds rather crass, but when they die, in the next 10-15 years, all of their money--some $10 trillion dollars--is going to another group of people, most of whom don't like banks. They would rather go to Fidelity, play the market, not having lived through a downturn. One of the challenges as we go forward is how the banking industry is going to transform itself, move from the current group who provides the bulk of our earnings, to a second group who will assume society's wealth, and who does not realty like us. Who likes banks? Those 55 years and older plus those who have lower incomes and less education, according to a 1997 ABA survey--valued customers, but not a group we can solely survive on. Also, as the chart below indicates, customer satisfaction is slipping somewhat for banks. You need to know when you should allocate resources from the group giving you the bulk of your earnings now, to the group that does not like you. EBT will help the Net You will also get a boost from the federal government's change to electronic benefits transfer (EBT) on January 1, 1999. Most states will have an EBT environment by the end of 1998. The people who now get a Social Security check will have to become accustomed to an electronic transaction, and that's in your favor. A lot of the back-office work, you can change through electronic transactions. EBT will provide a large infusion of the infrastructure required for electronic commerce, by increasing the number of point-of-sale terminals. The ABA asked the Federal Reserve and the Treasury to review the regulations surrounding transaction accounts, because the existing regulations are all in the realm of paper-based accounts. We would really like to get rid of the periodic statement under Regulation E because a purely electronic account will not have any outstanding items so you don't realty need a statement. Banks will have to do some new things, though--electronic benefits transactions on automated teller machines, and maybe statements on demand. What can you do today on the Internet? You can do consumer education; you can have interactive advertising; you can distribute forms and applications; you can provide account information. You can do some internal transactions (transferring between a checking and a savings account), some bill payment (for payees like the power and the gas company), and, perhaps, some electronic commerce for the more daring. Electronic commerce, a broader term than electronic banking, better describes what ultimately we might want to do. What customers want today is not necessarily what they are going to want next year. You have to continually reassess. Today's reliability on tomorrow's systems Today, most of you keep your real stuff on a mainframe, a rather secure system. On the Internet, how are you going to let people like me hack around in your computer? …
Publication Year: 1998
Publication Date: 1998-02-01
Language: en
Type: article
Access and Citation
Cited By Count: 3
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