Read About Us at the Speed of Light!   






History has long acknowledged that the "Ides of March" can be a significant time in life and in business affairs. Depending upon one’s perspective, it can be foreboding or foretelling. Consider the following events that transpired during the week of March 15, 1999:

  • Fleet Financial announced its plans to acquire New England rival BankBoston Corp.
  • Steve Forbes announced his intentions to run for U.S. President in the Year 2000 election.
  • Several hundreds of bankers gathered in Atlanta at the Consumer Bankers Association’s annual Auto Finance Conference.
  • In its cover story, Business Week magazine announced a new quarterly supplement aimed at CEOs for the new millennium.

What did these four seemingly disparate events have in common? Two words: The Internet. From something that seemed so out of the mainstream of our daily lives just five years ago, the Internet has rapidly transformed so many aspects of the world around us that it is mind-boggling. The Internet has already altered how things are done in Washington, on Wall Street, in corporate boardrooms, at our desks at work, and in our own homes. Let’s look beneath the surface of the four events highlighted above.

Internet Banking and Internet Brokerage will be the top priority for Fleet Boston Corp., the entity to be formed by the proposed $16 billion merger of the Fleet Financial Group and BankBoston. "We intend to build our electronic banking and brokerage services to become one of the world’s premier financial services companies," said Robert Higgins, Fleet’s president and chief operating officer, who would manage the merged $180 billion-asset company.

Steve Forbes not only launched his Presidential candidacy over the Internet, but he also pledged that his campaign would be run entirely over the Internet. Here is one of the wealthiest men in America realizing the power, the reach, and the economic efficiencies of this medium to reach millions of people. Forbes is adapting traditional political campaign strategies to meet the voting population where they are becoming more and more likely to be reached, and that is in an online cyber-world that transcends barriers of time and of geography.

The growing role that the World Wide Web is playing in auto purchases was the prime topic of the Auto Finance Conference of the Consumer Bankers Association. "Banks are facing a tectonic plate shift because of the changing challenges in the distribution of cars and financing through the Internet," said Joe Belew, the trade group’s president. Consumers now arrive in showrooms armed with a wealth of information gleaned from hours spent surfing the Net. Some banks and dealers today offer loans over the Internet, leading many to worry that the time might not be too far off when consumers will be able to find the cheapest loan rates in the nation at the click of a mouse. Local lenders will be disintermediated from their traditional roles in the highly profitable world of consumer finance. Competition will no longer be coming from the bank down the street or even from GMAC or from Ford Motor Credit, but will emanate from some virtual entity representing a pool of funds looking for investment opportunities within a variety of communities spread across the globe.

And finally, Business Week’s cover story touted "E-Business: What Every CEO Needs To Know." "Electronic business is perhaps the most sweeping transformation of the corporate landscape in decades," wrote Kathy Rebello, Managing Editor of Business Week’s "Whether it means hanging a shingle out on the Web or reshaping every nook and cranny of a company to tap into the power of the Internet, the E-business revolution is upon us. And little will stay the same."

As these events above indicate, the Internet industry as a whole has been moving at break-neck speed, with rapid development and deployment of products for the World Wide Web as more end-users become wired everyday. And with the increasing use of the Web for a variety of Electronic Commerce purposes has come an increasing demand for Internet Banking Solutions from Financial Institutions. This Business Case will explore the role that BellSouth can play as an Internet Banking Solutions provider for its many Financial Institution Clients.

Before looking at Internet Banking explicitly, it will be useful to understand the fundamental components that comprise many customer-supplier transactional activities. As Figure 1.1 below illustrates, the interaction between a customer and a supplier can be broken into four distinct parts: the End-User Communications Device, the Information Transport Medium, a Specialty Business Transaction/Application Platform, and a Warehouse of Business Data.

The business model illustrated in Figure 1.1 can apply to a consumer getting information on his bank accounts over a telephone or a PC, a physician listening to lab reports or viewing CT-scan images, a student registering for courses at a university, a business person taking a Distance Learning or Continuing Education class for professional development, or someone simply ordering merchandise from a paper or an electronic catalog. When broken down into its constituent parts, it becomes easier to understand how all of these various activities are very much alike and how BellSouth can help facilitate these transactions.

In certain circumstances, BellSouth is involved in the deployment of the Communications Devices. BellSouth’s traditional role has been as the provider the Information Transport Medium, one that is evolving to include digital information over the Internet. More and more, business customers are looking to BellSouth for the Specialty Business Transaction/Application Platform and several of these types of solutions are already in our portfolio. While generally the purview of the business customer, there is even a role that BellSouth can play in the development and management of a Business Data Warehouse since we do exactly that for ourselves.

Figure 1.1
Customer-Supplier Interaction Diagram

No one would ever question whether having a consumer use a telephone to dial-up his bank and listen to a computer tell him his bank balances is a far-fetched idea. In fact, BellSouth has helped hundreds of Financial Institutions deliver Interactive Voice Response (IVR) services to do just that. Stripped of its mystique, Internet Banking is no more than Visual IVR Banking! It is the same basic bank account information delivered graphically instead of verbally, using a PC instead of a telephone, transported digitally over the same phone lines that exchange words in a more traditional analog communication. In fact, the same technology platform that BellSouth uses to facilitate IVR installations for its Clients is also the foundation for delivering Internet Banking services.

With this business model as a backdrop and as a supplement to other BellSouth Electronic Commerce strategies, this Business Case will explain the opportunities that await BellSouth in providing Internet Banking Solutions and Online Financial Services to its Financial Institution Clients.

Some of the highlights of this Business Case are:

  • There are almost 4,000 Financial Institutions within the BellSouth nine-state territory, and over 95% of them have yet to pick an Internet Banking Solution Provider.
  • Expenditures on Internet Banking Services are expected to grow from around $100 million in 1998 to an aggregate of almost $1 billion by 2002 as more and more Financial Institutions deploy Internet Banking Solutions.
  • Internet Banking is forecasted to be one of the hottest retail banking initiatives as banks solve their Y2K issues since Financial Institutions have many motivating factors pushing them in this direction, both for internal efficiencies and from external competition.
  • Households using Internet Banking and other Online Financial Services are anticipated to grow from 10 million to over 30 million in the next 3 years.
  • Consumer Internet Banking is the lynch pin that ties a Financial Institution to its Internet Banking Solution provider for other additional lucrative Online Financial Service add-ons.
  • The biggest opportunity for BellSouth lies in operating an Internet Banking Service Bureau for Community Banks, the largest segment of our Financial Institution Clients. We have conservatively identified an initial target market of almost 800 Financial Institutions for this BellSouth Internet Banking Solution.
  • All the individual piece parts and expertise to offer an outstanding Internet Banking Solution already exist within various BellSouth organizational units.
  • BellSouth can accrue some internal economic benefits and generate new revenues by using the foundation of Internet Banking to offer Electronic Bill Presentment services to its own customers as well as to those of other utilities, all on behalf of our Financial Institution Clients.
  • With a market share of about 15% of the identified target market, BellSouth Internet Banking should generate new revenues totaling almost $50 million over 5 years and cumulative net income of almost $5 million over the same period.
  • Increasing BellSouth’s market share penetration to the 35% range will generate new revenues in excess of $140 million over 5 years with the corresponding net income contribution totaling almost $15 million.

These conclusions are explained in great detail in the remaining sections of this Business Case. As Victor Hugo said over a century ago, "There is one thing that is stronger than all of the armies in the world, and that is an idea whose time has come." The Financial Services Group of BellSouth Business Industry Marketing believes strongly that the time for BellSouth to become a serious Internet Banking Solutions provider has indeed come.






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