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,
Allen, CEO of the Banking
Industry Technology Secretariat (BITS), a group affiliated with the
"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
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
(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
"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.