BANK SYSTEMS & TECHNOLOGY
Community Bank Systems+Technology
Cover Story
Eagle Bancshares Feathers its Internet Nest
justrightbank.com and NextBill.com Extend Eagle's E-Commerce Reach
By: Kristi Nelson
As community banks move beyond merely having a Web presence, many are rethinking their strategies. Eagle Bancshares is not only sharpening its e-banking vision, but also reorganizing for the future.
Earlier this year, the $1.2 billion holding company officially launched justrightbank.com, a co-branded Internet banking site, to position Eagle's wholly-owned Tucker Federal Bank as Atlanta's community click-and-mortar bank. At the same time, it acquired a majority stake in NextBill.com, a spin-off of Brinkman Technologies (BTI), Carrollton, Texas, that provides turnkey electronic bill presentment and payment (EBPP).
"We've examined our company and are retooling and redirecting our physical and intellectual capital to promote an entrepreneurial culture capable of operating at Internet speed," said Rick Inman, CEO of Tucker Federal Bank and new president and CEO of NextBill.com.
The two moves are interrelated, according to Inman. "Electronic bill presentment and payment is really one of the cornerstone strategies of justrightbank. As a community bank, we were looking for a way to participate in the migration from paper-based to electronic-based payments."
Inman feels strongly that if banks don't pay attention to EBPP, they may find themselves in the same situation they did with credit cards. "Check processing and payment is one of the last areas where banks have a strategic advantage," he said. "They need to make sure they don't see that eroded or they really won't have much of a future."
The Tower Group, Newton, Mass., predicts online bill payments will expand from 1.3 million to 10 million by the end of 2002. "The EBPP industry is still young, but is projected to boom to 33% of all wired U.S. households over the next four years," said Mark Brinkman, president and CEO of BTI and chief technology officer of NextBill.com. "We think NextBill.com is poised to capture a sizable portion of that new market."
Tucker Federal contracted with Brinkman to design its Web site and also uses BTI's ACH product. Last fall, the bank agreed to be a beta site for the company's new Nextbill product. That led to Eagle's investment in the spin-off company.
NextBill.com's EBPP system follows a paperless, direct-billing model, whereby merchants e-mail bills directly to customers. By relying on two inexpensive and existing technologies - the Internet to e-mail bills directly to customers and ACH to process payments - merchants can keep control of billing and payment processing in-house.
Customers can set payment options, such as the date they want the payment to clear and the amount they want to pay, and view marketing messages offered by the biller. The transaction is then warehoused by NextBill's system until the date the customer selected to make the payment, when it is automatically processed via the ACH.
justrightbank has begun using Nextbill to present loan bills to its own customers. "Just from the bank perspective, it can't be easier," said Sheila Ray, formerly chief operations officer of Tucker Federal Bank and now president of justrightbank.com. "We bill a customer without producing a piece of paper and without any intervention by anyone on my staff. The payment file is pulled in like a normal ACH file, so there's no additional labor. This is a real win for the bank."
In September, it will start offering a service bureau license to middle-market business customers for electronic bill presentment and payment. Business customers will be charged a small monthly maintenance charge, along with a per-transaction charge.
Several customers have already expressed interest in the service, according to Ray. One of them, a utility provider, surveyed its customers and found 30% were interested in receiving bills online. Because it offers a true differentiator in the Atlanta market, Ray anticipates the service will attract additional business clients. "We're finding it has opened many doors for us to speak with potential customers."
Meanwhile, Ray is focused on recruiting online banking customers. To increase its current customer base of 2,100, the bank is offering free checking with no minimum balance, a $25 gift certificate from Amazon.com and a 7% money market account for consumers who sign up online.
Because its target market for free checking is GenXers, justrightbank.com is advertising on billboards, buses and GenX radio stations throughout the Atlanta area. It will also be participating in radio station promotions, including a palm pilot giveaway that will direct radio listeners to its Web site to sign up.
Recruitment activities are on the agenda for NextBill as well. The company has already started marketing to large billers and financial institutions. "It's the perfect answer for a financial institution," said BTI's Brinkman. "Because it's a service bureau-based system, they can put it in-house and make it a profit center."
In addition, NextBill is working to develop other versions of the product to fit the needs of smaller billers. "We're going to be releasing a system next year that will allow small companies to utilize this technology with virtually no up-front costs and cut their billing costs by up to 80%," said Brinkman.
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© 2000 Miller Freeman Inc.
8/1/00, Issue # 3708, page CB2.
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