Most online banking programs feature the same features and benefits. Add some pizzazz to your offerings and distance yourself from the encroaching herds.

Last month we looked at fee-based revenue opportunities for online banking, an important medium-to long-term aspect (3-5 years out). But in 1998, it’s not about fee income but differentiating your financial institution (below); serving your wired customers online; and getting noticed.

First, we’ll assume that you’ve already implemented or are working on the five basic Web banking functions. If not, these are first priority:

Where do you go from here? We think the best ways to make a name for yourself online in 1998 and 1999 are in three areas:

• Push services, also know as alerts, e-mail, Webcasting, Netcasting, or outbound messaging.
• Bill presentment and automated payment processing services.
• Privacy-protection and fraud-prevention services.

We’ve written about this so much during the past four months our word processor practically refuses to type these buzzwords any longer. But there is a reason we are harping on this subject. Not since the invention of the ATM has there been such a promising new way to differentiate banking services. Following are five push tactics designed to bring you fame, fortune and new customers next year:

1. Send “event” reminders by e-mail, fax, or voice message a few days in advance of any due-date such as CD renewal, IRA funding, loan payment due, etc.

2. Offer free rate watch services sending a message when loan or investment rates hit user-preset values. Can be used on mortgages, CDs, bonds, and other loans. Alternatively, users could signify a target loan amount/payment.

3. Send balance alerts when checking, savings, money market, or overdraft protection accounts reach prespecified high and low limits. Since not everyone checks e-mail every day, consider fax and/or voice message options.

4. Offer “deposit assurance” with confirmation messages whenever certain types of transactions occur such as checking account deposits, out-of-state POS purchases, telephone transfers, etc.

5. Provide activity-based messaging services that give account holders a heads-up whenever account activity surpasses the preset trigger points. Citibank highlighted this tactic in a recent credit card direct mail piece calling it Fraud Early Warning (Brochure copy reads: “If we notice any unusual spending on your account we may alert you to confirm that is was you who incurred those charges.”)

Digital Bill Payments

We have long advocated a go-slow approach to offering so-called electronic bill payment. The customer service headaches have made electronic bill payment less than optimal both for consumers and financial institutions.

It’s time to end that cautionary thinking. Web-based bill presentment is just around the corner and with it will come the critical mass of billers ready and able to receive payments and accounts receivable information completely electronically. You can start now to position your company as a player in this area. When the Microsoft/First Data venture gets off the ground in 1998, there will be a flurry of consumer interest. Take advantage of the hype by being the first bank on your block to put bill presentment on its Web. You could end up being the local expert source on the subject for years to come.

There are several ways to go about positioning yourself as a digital payments pioneer:

6. Develop your own in-house bill presentment program with just one or two local billers. You get a head start on the field, while differentiating yourself and the biller as highly innovative.

7. Enthusiastically embrace the Microsoft/First Data joint venture, MSFDC. Get in the press now as the first financial institution to publicly commit to offering the service. Work with MSFDC to put a customized version of the bill presentment demo onto your Web this fall.

8. Become the first bank to offer “100% Pure Electronic Bill Payment,” by limiting bill pay merchants to just those that offer end-to-end electronic payment.

9. Become the first bank to offer “100% Guaranteed Bill Payment.” Back up your marketing claims with a bullet-proof guarantee that takes full responsibility that all payments are made on time.

10. Help users put their payments on autopilot by automating repetitive payments, setting up preauthorized debits, having bills automatically charged to credit cards, establishing automatic average payments, and consolidating redundant accounts (e.g. roll those three $50 credit card payments into one home equity account/payment).

Privacy and Fraud Prevention

In August’s FutureBanker (published by American Banker), cyberpundit John Perry Barlow, founder of the Electronic Frontier Foundation, advocates an unusual role for banks. Become the “Swiss Banks” of the Internet, providing total confidentiality for buyers. Banks would issue Internet aliases that consumers would use to conduct transactions on the Internet. Merchants would know only that the bank guaranteed good funds. The consumer’s identity would be confidential, only divulged under court order. An infrastructure would be needed to handle delivery of physical goods. Shippers such as Federal Express could contract with the bank to divert shipments to the proper party.

This is probably more privacy protection than the average law-abiding citizen needs, but it’s worth pondering. There might be a happy medium that banks could fulfill. The whole area of financial privacy and fraud protection has been a source of discomfort for consumers for several years. And the Internet has only exacerbated the situation. Financial institutions, which rate high in consumer trust, could step in and take on the role of privacy fiduciary.

This month MasterCard and Visa have done their part to boost consumer confidence in card products. First, MasterCard formally extended the $50 maximum liability to debit cards. Visa one-upped them by declaring a new “zero liability” policy on all its card products (if the stolen card is reported within two days, $50 otherwise).

Here are some of the things you can do in 1998 to become a financial privacy advocate:

11. Offer branded e-wallets, such as that from CyberCash. The wallet allows consumers to pay by credit card without revealing their number to the merchant. This will boost consumer confidence in purchasing goods and services from unknown Web merchants. It will also prevent the kind of screw-ups experienced by ESPN SportsZone which had an unauthorized user access an order processing file that contained credit card numbers. (The security breach was not malicious…no accounts were compromised.)

12. Provide credit report information, either through a relationship with the major marketers of merged credit reports, Credco’s Confidential Credit, or CUC’s Privacy Guard. For an easy solution, simply provide a link to the online credit reports at QSpace or Experian when its service goes back online (see opposite page for details).

13. Develop a fraud protection icon such as “100% Fraud Free” or “protected by yourbank.” The intent of the label would be to ensure users that whenever they use your checking/ATM/credit card, they needn’t worry about being on the hook for fraudulent activity. You already absorb these costs anyway, why not get some credit for it.