A once-troubled savings and loan in sunny Southern California will make an intermediate stop in snowy Minnesota on its journey to Internet banking.
Fidelity Federal Bank (BPLS), with 37 branches and 650 employees in Los Angeles and Orange County, on Monday opens its first iBank branch in Mall of America. The Bloomington, Minnesota, shopping complex bills itself as the world's largest shopping mall.
A now-profitable financial institution with $4.3 billion in assets, Fidelity Federal is so taken with the Net that it plans to change its corporate name to iBank. Further, it aims to build its entire banking software infrastructure on Internet technologies, everything from branch operations to phone customer service to merchant screen phones in the Minnesota mall.
"We wanted to make sure that the infrastructure provided a consistent message no matter what device the customers use, whether they stop by a physical location, go to an ATM, get on the Internet, or use a screen phone," Richard Greenwood, Fidelity's CEO, said.
Fidelity's move to Internet protocols is unusual in the banking industry, said Catherine Allen, CEO of the Banking Industry Technology Secretariat (BITS), a group affiliated with the Bankers Roundtable.
"Most banks are moving toward having Internet protocols as part of their IT infrastructure, but for most it will not be the entire basis for their technology," Allen said. Smaller banks like Fidelity can start from scratch more easily, although other financial institutions may take similar steps as they add Internet banking to their offerings.
"In today's environment, the Internet is going to play an important role. We wanted to be sure there is not a separate application for the Internet, as opposed to the backbone that we can run in branches," Greenwood added.
That means a single database on customer accounts, something many financial institutions don't have because they created a new database each time they added new ways to bank, such as branch, ATM, phone, or Internet.
Fidelity's troubled financial past actually served as an advantage--its existing, aging technology, "not anywhere near state of art" in Greenwood's words, was fully depreciated. So Fidelity started from scratch, with Internet protocols.
Greenwood positions its Minnesota mall branch as an important step in Fidelity's transformation into an Internet-savvy iBank.
Mall of America faced the loss of its only onsite bank branch for 540 merchants, 13,000 employees, and 40 million shoppers a year over a change in an ATM contract. Mall owner Simon DeBartolo Group (SDG) cut a deal with Americash, an independent deployer of ATM machines, to operate ATMs in the mall. Stripped of its ATM franchise, the local bank bolted.
Fidelity was Americash's cash machine--the bank provided cash for the ATMs, and Fidelity customers got free use of Americash ATMs. That tie lured Fidelity to Minnesota.
iBank provides Philips screen phones to mall merchants. That way retailers can order cash, then pick it up in 20 minutes, and also can accept foreign currencies--an estimated 20 percent of mall shoppers are from outside the United States, so currency conversion is an important feature.
"This was a significant opportunity for us to test our philosophies and technologies on how we do business," James Stutz, Fidelity's president, said. "I call it an acid test--we're not doing this in some backroom laboratory. We're doing it live."
The screen phones come equipped with a smart-card reader to identify an employee authorized to do the store's banking, and security is no less a focus for Fidelity's upcoming Internet launch.
"We will employ the strongest security out there," Greenwood vows.
Fidelity, or iBank, has standard Internet banking software, from S1 Technologies, a subsidiary of Security First Network Bank (SFNB), already, but it's waiting to add two enhancements before it goes live on the Net, probably in June.
The first is a financial planning module that it developed as a contractor to giant CalPers, which provides health and retirement benefits to more than a million California government employees. The second is a credit application that can be used to apply for any kind of bank loan.
Later in the year, after a May-June rollout of the unified system, iBank will add online stock trading to its current offerings of mutual funds, annuities, insurance, and certificates of deposit.