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Though it's difficult to assign an industry's shift to a particular year--it's akin to dating the year of the industrial revolution's birth--it's fair to say that 1995 marked the year that financial services collided with the information industry, And the deals that were struck exemplify the opportunities, advantages, complexities and pitfalls that encompass this convergence.
Most apparent in the wake of this shift is that banks are looking to redefine themselves or hold on to their identities as they encounter market pressure and new competitors. But, as industry analysts and consultants suggest, the days of traditional banking are gone. "Customers and their desires for service are going to be served by people who are going to be significant competitors to what were traditional banks and financial services companies of the past," says William E. Storts, managing partner of the financial ideas exchange of New York-based Andersen Consulting. "In the future, banks are going to have to be a lot more networked, free market and competitive than
they are
consolidated, regulated and bureaucratic." The industry has certainly seen the success potential in this perspective by observing the likes of GE Capital, says Storts, who sites the company as having more assets, loans, credit card holders and investments than Citicorp.
Thus, 1995 is the year banks have taken stock and taken action--strategic measures they hope will ensure their survival--and in some cases, that has meant partnering with companies that were once considered the enemy. The deals of 1995 speak volumes about the future of financial services.
Regionals Bank on Security First Network's Success
Given the emergence of new alternative delivery channels, many deep-pocketed financial institutions that have the resources to invest in on-line banking have taken only preliminary steps on the Internet. Only one live Internet bank exists in America--an institution launched by Lexington, KY-based Cardinal Bancshares, with the investment deals struck by Atlanta-based Wachovia Corp., Columbus, OH-based Huntington Bancshares and Owensboro, KY-based Area Bancshares. "Security First Network Bank is a completely different economic structure than a traditional bank," says Michael Karlin, president and COO of SFNB, "because we cover the entire United States without any branches. Based on that and the fact that we deliver so much data to the customer, we believe we can...