WORLD'S BEST INTERNET BANKS 2003

INTERNET BANKS

In the second of a two-part series, Global Finance identifies the Regional and Global Best Corporate/Institutional Internet Banks and Best Consumer Internet Banks, as well as global sub-category winners.

As the Internet banking marketplace has matured, it has also become more competitive, and consequently it is increasingly difficult for banks to differentiate themselves from rivals. What is it that the most successful banks do online? That is the question Global Finance set out to answer in its fourth World's Best Internet Banks awards.

A number of key characteristics, attributes and trends stand out among the leading Internet banks-the ones that were selected for these awards:

* On the retail side, banks that have made bill payment and presentment a centerpiece of their Web banking services have often had the most success in getting customers to actively conduct transactions online and to stay loyal to the bank. An example is Bank of America, which won the Best Global and Best North America Consumer Internet Bank awards. In corporate banking, robust online cash management offerings have played a similar role.

* Just because you have the technology doesn't mean your people aren't important. The leading banks invest a lot of time, effort and money into training their people how to use the Internet, how to market it, and how to show customers the ways in which it will make their lives easier.

* The top banks deliver global clients a single platform that allows them to access account information and conduct transactions on all their accounts from one screen or site, say bank officials. Take, for example, a global client that needs to monitor payroll, accounts receivable and incoming funds in real-time and then make the right transactions. "They don't want to have to go to three or four different places to execute these transactions. A single platform allows them to be more efficient and paves the way for straightthrough processing," says Diane Reyes, chief operating officer for Citigroup Transaction Services. Citigroup was named Best Global Internet Bank and Best Global Corporate/Institutional internet Bank and also received numerous other regional, country and sub-category awards. Citi's corporate electronic banking system, CitiDirect, is available in 90 countries and 21 languages, says Reyes.

* Corporate and institutional clients are demanding straight-through processing (STP), which is the seamless electronic processing of trades [FX, fixed-income or equity] from order entry to routing and execution. Banks that deliver STP gain more customers and transaction activity because STP helps clients reduce costs and enhance return on investment by executing and clearing transactions more quickly, say consultants.

* Taking the theme of efficiency further, clients are seeking services that make them proactive instead of reactive. Citigroup is rolling out to clients something it calls proactive event notification. It will alert customers by email, phone or PDA when certain events happen that affect their account or accounts. For example, Citi could page, call or email the client when a wire transfer of $1 million or more is made against the account or when an unauthorized check is presented, says Reyes.

* Leading banks are also differentiating themselves from the competition by beefing up security systems and privacy policies. Increased media and regulatory attention on hot-button issues such as identity theft, hacker attacks and online scams has only raised the stakes.

* Though it may seem obvious, banks that want to succeed online need to be quick to market with their latest service or product enhancements. Citigroup accomplishes this by taking Web prototypes-for example, a Web-page screen shot or product demo-to clients as it is developing a major new product or service. The bank seeks customers' feedback on features, presentation and ease of use and can make modifications on the fly. This makes for faster product rollouts. "On average, we're in the market within three or four months after the prototype session, compared with two years before," says Tariq El-Yafi, product manager for CitiDirect.