Money and Banking: Dot Com Banking - Expand Your Insight

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U.S. Banks on the Internet

"Concentration, Technology, and Market Power in Banking: Is Distance Dead?" Financial Industry Studies December 1998 (Text or PDF)

Money and Banking
Dot Com Banking

Dallas Fed analyst Karen Couch and Dallas Fed bank examiner Donna L. Parker take a look at Internet banking.

Internet banking is emerging as more than a means of putting existing services online. Innovative partnerships and strategic alliances have provided many revenue-generating opportunities. Some bank web sites have bundled information and services in useful ways to create a sort of electronic resource center or virtual mall with links to other services and vendors. By positioning their web sites as an access point to a range of service offerings outside their traditional lines of business, banks are generating new fee income from advertising, referrals and commissions from their web partners.

Some financial institutions are making use of "screen-scraper" technology, which aggregates account data from various web sites with customer permission. The web site then becomes a portal for all of a customer's financial transactions. One recently launched banking web site uses screen scraping to assemble all of a customer's financial holdings onto one web page, including stocks, mutual funds, e-mail, credit cards and other account-related information. The site also provides "virtual personal assistants," which can help with personal chores, shopping, travel services, news, calendars and personal-organizer tasks.

A much-anticipated new service is bill presentment, which is expected to do for the banking industry what online trading did for the brokerage industry. Bill presentment technology consolidates a customer's bills on one web site to allow the review of detailed invoices online. A few banks already offer bill presentment, which requires them to enter into networks with billers, such as utilities; others are in the testing stage. More than 15 million households are expected to receive their bills online by 2002, according to Jupiter Communications, a technology consulting firm. As such, bill presentment offers a huge marketing opportunity for banks to gain insights into customers' buying habits, payment records and risk profiles.

Karen Couch is a financial industry analyst and Donna L. Parker is a bank examiner at the Federal Reserve Bank of Dallas.

SUGGESTED CITATION:
Couch, Karen and Donna L. Parker (2000), "Dot Com Banking," Federal Reserve Bank of Dallas Expand Your Insight, October 1, http://www.dallasfed.org/eyi/money/0010.html