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Special
publisher's profile: Banking
Virginia's top banking
officials on the economy, the banking industry and doing
business in Virginia.
The major banks in Virginia
are a driving force in the state’s economy and
a major influence on the regions they serve. We recently
interviewed four top banking officials in Virginia -
James C. Cherry (Wachovia, N.A.); G.S. "Sandy"
Fitz-Hugh (Virginia Bank of America); C.T. Hill
(SunTrust Banks); Barry Fitzpatrick (First
Virginia Bank); to find out their views on the economy,
technology and the banking industry.
How has
technology, specifically online banking and ATM use,
affected your banking practices?
James C. Cherry (CEO, Mid-Atlantic
Bank, Wachovia, N.A.): We have about 2 million online
banking accounts and we see that number continuing to
grow. Online banking is not as much a substitute for
service as it is an additional service. There was a
time when we (traditional banks) were all concerned
about online banking, saying that financial centers
and branch banks were going to die and everyone was
going to run to the telephone and the Internet to do
their business.
Well it turns out that isn't true.
Imagine if Wal-Mart (or any other retailer) came out
and decided that everyone was going to start buying
all their products by telephone or the Internet and
will no longer go to Wal-Mart. So going forward, we
are no longer going to open any new Wal-Marts. In fact,
we're going to start selectively reducing the number
we currently have. Everybody would say they are crazy.
Well, banks are retailers
also. And that's in essence what banks did. There was
a period of time when banks considered (doing) that.
What actually happened is that all the major existing
banks have extended themselves to include online as
an added service. There was even an online-only bank,
which may still be around, but they have no specific
niche anymore because virtually every major bank is
also online.
ATM use is also up and will continue to increase as
we extend our network. We've got 4.500 ATMs, the biggest
network in the east coast (4th largest in the country).
Other banks may have a larger network but ours is more
concentrated in one region.
This coming summer, when
we change the flags on all our financial centers, (from
First Union to Wachovia) our presence isn't nearly as
noticeable today as it will be. You'll be able to go
to any of these ATMs in our market for service. The
combination of that change (the branch conversions),
and some pent-up marketing we need to do, will help
increase our visibility in Virginia. There is a glimpse
of that change (and the new logo) since Wachovia Securities
is headquartered here in Richmond.
Barry Fitzpatrick (Chairman,
President, CEO, First Virginia Bank, N.A.): Absolutely,
our customers are doing a lot more banking online. I'm
proud of the "state of the art" technological
platforms that First Virginia has developed for these
customers. They are truly second to none and deliver
the total banking service over the Internet to the fingertips
of our customers.
In addition to our complete online
service for consumers, First Virginia provides businesses
a choice of two electronic banking alternatives. These
systems offer products and services that meet the needs
of every business . . . large or small. Our commercial
customers can take advantage of balance transfers, automated
payments, wire transfers, account management, stop payments,
electronic payroll and a myriad of other services, all
in the comfort of their own office.
These technological innovations
for our retail and commercial business lines have truly
changed the way customers can choose to do their banking.
Make no mistake about it though, many people are still
writing checks and banks have found more and more efficient
ways of processing these checks through the effective
use of technology.
I view online electronic
banking as a part in the evolving financial delivery
system - not a final answer, and in my opinion, viewing
this service as a cost saving alternative for banks
would be a mistake. Providing online banking to our
customers costs a lot money, but the cost is justified
by the potential value customers receive by using this
technology. Technology has given First Virginia the
chance to enhance customer relationships and increase
the number of services that can be provided. That's
the goal of First Virginia's strategy regarding online
banking and it's working. My philosophy has been to
provide the best options so that customers can make
the right banking choice for themselves when they want
and where they want . . . whether in person at a branch,
over the telephone, by mail, or using the Internet.
As far as ATMs are concerned,
they have proliferated to the point that they are available
almost everywhere. And the reason this has happened
is because customers want them. The stored value, debit
and other access cards also continue to expand in usage.
The customers of our bank and others obviously see the
value of this convenience and believe these to be services
that are worth the cost. Having 24-hour access to their
accounts is something that they not only want and appreciate
. . . but need. This has been quantitatively demonstrated
in our experience.
As you know, our ATM machines
notify cardholders of applicable fees several times
prior to imposing the fee, thus giving the customer
every opportunity to choose not to do the transaction.
The acceptance of the fee is almost 100%. On the other
hand, I have never seen a fee for any service, whether
it is in banking, commerce or government that is welcomed
with open arms by the parties expected to pay the fee.
At this point, I believe that logic has prevailed and
the public and political constituencies recognize that
this account access system provides a value that certainly
merits the price.
G.S. "Sandy" Fitz-Hugh,
(President, Virginia Bank of America): We are absolutely
seeing an impact from technology. Our online banking
is growing at about 200,000 customers per month. We
are up to 4 million customers who have active online
banking accounts and it is becoming much more accepted.
Of the 4 million, 1.8 million are doing monthly bill
pay. And the people who are into monthly bill pay are
really excited about it. We've come light years in our
ability though how we handle it - the easy and speed
at which you can pay your accounts.
We are also seeing exponential
growth in ATM usage because there is such a proliferation
of ATMs all over the world that overall transactions
are growing and will continue to grow. We look more
and more on the ATM as supporting the branches. You
put a branch in a location and then add a network of
ATMs. And workplace ATMs are becoming more popular as
more businesses want their customers and employees to
have banking access within their space and not have
to worry about going out. In fact, we're seeing companies
that are willing to pay for the ATM, or at least willing
to share the cost.
C.T. Hill (Chairman, CEO, SunTrust
Banks, Inc.): Online banking is a very attractive
and popular service for us. The interesting thing has
been - it is more of another delivery channel for our
customer base than it is people opting out of other
delivery channels. It is interesting in the way online
banking has developed. If you go back 25 years and you
had the branches. Now you have the branches, you have
24/7 call centers, you have online banking and you have
ATM networks. You have all that together and where we
may have had someone coming into a branch four times
a month, they may still be doing that. They may still
be doing that and using the call center a couple of
times and going online and the ATM.
We simply have more touch points
with our customer and more opportunities to provide
better service. It's been more of an added benefit to
the customer than it has been an added cost savings
to us. Bill paying (online) is also becoming more popular.
Small businesses are using online banking more and more.
So I think we're always looking to enhance the features
we offer online. We do a lot of consumer lending online.
That is very popular. It's the convenience people can
do whenever they want and it's a very active part of
our service delivery system.
ATM use is also up and a
very popular delivery channel for consumers. You mentioned
the fee issue and our experience is that with our very
extensive network throughout our franchise, customers
of SunTrust can use those ATMs without a fee. You then
have the question of what is called "foreign ATM
transactions" where a fee comes in. Our experience
is that consumers are pretty savvy and understand that
having one of our cards in their pocket, with our large
footprint, is a smart thing to do. By the same token
if they are caught somewhere and want to use a foreign
ATM, they understand they will have to pay for the convenience.
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