Banks to Jupiter: Back at you
Bankers fire a return salvo at research that warns bankers stand to lose market share to online brokerages.
At its own financial conference, Jupiter backed down a bit from yesterday's pronouncement that online brokerages will outstrip bankers on the Net by the year 2002.
"The biggest player in online financial services will be big banks," declared Kenneth Stevens, CEO of Bank One Retail Group, a keynoter today at the Jupiter confab. He acknowledged that his view "flies in face of conventional wisdom."
"The current reality is that banks are central to the economic and social fabric...Banks are still the first choice of consumers for consolidating financial services," he added.
Other bankers also disputed the Jupiter report as a "red herring," "false dichotomy," and "moot point."
Stevens cited findings from Jupiter rival Forrester Research that said 64 percent of consumers make banks their first choice as providers of financial services. "Big bankers are positioned to be big players." However, he did agree that online brokerages have jumped out more quickly than banks. "Today, online brokerages are doing a better job than banks in this space," Stevens said.
Even Jupiter's Adam Schoenfeld toned down yesterday's prediction that online brokerages will beat banks on the Web and that Internet stockbrokers will control 50 percent of online personal finance activity by 2002.
"Any stark dichotomy is drawn way too boldly, but our contention is that brokerages have been more aggressive in building and branding online," he said.
"It's a false dichotomy that Jupiter set up," said Bob Shay, senior vice president of global electronic banking for BankBoston, noting that online brokerages have targeted traditional and discount brokers offline. "The target segment for online brokerages [and banks] is different."
Online brokerages target far fewer services than banks offer, Shay noted, suggesting that compared with brokerages, banking is a complex, difficult business to run with slimmer profits.
"It's a hearts-and-minds issue," added Blaise Heltai, senior vice president for online financial services at Fleet Financial Services. He contended that 80 percent of his bank's transactions aren't possible over the Internet, while nearly 100 percent of brokerage activity can be Web-enabled.
Another Bank One executive, Bruce Luecke, president for interactive delivery said comparing banks to online brokerages is a moot point.
"We're a financial institution that happens to be chartered as a bank. Whether you come at it as a bank or a broker, you're trying to solve the needs of the financial service customer. The comparison between the two is not a relevant topic," Luecke argued.
Added D.R. Grimes, CEO of online bank Net.B@nk: "Banks occupy a special place in the minds of consumers; today, it's not a competition for the same customer."
Grimes credited online brokerages with teaching banks about customer service on the Web and the importance of finding a niche. "Banks can improve their offerings, and over time I don't feel we are in competition with online brokerages."
Another Jupiter analyst, Nicole Vanderbilt, urged bankers not to yield easily to makers of personal finance software like Intuit's Quicken or Microsoft's Money.
"We think banks should be very aggressive about participating in these third-party interfaces, rather than being relegated to back-end processors," she said.
Vanderbilt noted that only 10 percent of Quicken's 10.5 million users use the Quicken Online Web site, even though 80 percent of those who use personal finance software are online.