Racing to offer online services

Improving or expanding Web-based customer service seems to be a strategic focus for many financial services providers.

Indeed, the demand for these types of services is on the rise, according to a joint study conducted by Carreker Corp., and the Gartner Group, entitled A Study on Competitive Strategies for Payment Mediates in an E-Business World, released this past September.

Pierre Giraudon, managing director at Carreker, a financial software maker in Dallas, Tex., said 29 per cent of large Canadian organizations are currently using some type of Web-based cash management services and predicted that by 2003 that number will rise to 63 per cent.

Of the 550 corporate clients surveyed by Carreker, 60 per cent said they were willing to make e-payments. The study revealed continued apprehension on the consumer side toward online banking, while the corporate side appears more willing to embrace the idea.

Transitioning to online

Montreal-based insurance and financial services company Le Groupe Promutuel last year became the first company in Canada to use mySAP Banking, according to SAP Canada Inc.

A major economic player and exclusively Quebecois, Groupe Promutuel has 1200 employees, with over 350 outlets throughout the province, belonging to close to 400,000 insured members. It brings 35 mutual associations together under one banner and offers insured members a range of insurance products and financial services.

Groupe Promutuel is said to be using mySAP Banking, including core banking processing, customer relationship management, and profit analyzer, to provide core banking services, and to build a platform to leverage the Internet to deliver new services and products to customers more effectively.

Carl Cleary, vice-president of Finance and Corporate Affairs for Groupe Promutuel, notes that they were looking to make better use of management information to gain a more complete vision of customer relationships.

SAP describes mySAP Banking as enabling banks to achieve a single view of the customer across all lines of business. It claims to offer high-performance capabilities for strategic planning, financial accounting, costing and enterprise-wide control combined with key industry-specific solutions for profitability analysis, risk analysis, customer relationship management and fully integrated bank customer account systems.

Business banking online

The Canadian Imperial Bank of Commerce (CIBC) announced in November that it is the first Canadian bank to offer business banking on a single Web site. Aimed mostly at medium- to large-size corporations, the bank is providing CIBC Business Banking through a Web-based electronic delivery platform that is completely browser-based. Corporations sign on with the financial institution, which in turn provides the company with user IDs and passwords on a department to department basis.

The bank’s system employs Atlanta-based S1 Corp.’s Open eFinance software architecture, which it customized to fit its needs. Written in Java, it incorporates HTML, XML, JSP and CORBA technology components, and is deployed on Unix-based hardware on IBM’s AIX operating system and DB2 database. The project took two years to complete and implement.

“Replacing the legacy systems with a Web-based system was complicated,” said Steve Webster vice-president, business deposits and payments at CIBC in Toronto.

The service offers an array of banking needs such as balance inquiries, file transfers, e-payments and account transfers. He added that medium- to large-size companies, as opposed to small businesses, would be more likely to benefit from the offering.

Given who its users are, and the sensitivity of the information that will be processed, security is of paramount concern and is protected using 128-bit Secure Socket Layer (SSL) encryption and firewalls, according to CIBC. On the user side, he said corporate customers sign in and are asked to enter a 16-digit user ID; on the third attempt, if the ID is entered incorrectly they are asked to consult an administrator. There is also “an eight-digit alphanumeric PIN number as an extra level of security we provide for the releasing of payments to ensure no unauthorized payments occur,” Webster added.

The service is said to save time and money via a current day reporting capability that allows corporate treasurers to know their cash position in real-time. This enables them to invest unused cash immediately, earning them better rates in the market by investing earlier in the day. They can also move funds around the world in any currency, and do it any time from any location, according to CIBC.

Although CIBC is the first Canadian banking institution to offer a complete array of banking under one Web site, in the U.S., Fleet Boston and U.S. Bank Core are currently using similar online systems.

Quebec’s one-stop shopping

The National Bank of Canada and ClicCommerce, a Quebec business-to-business (B2B) company 90 per cent owned by the bank, last fall launched ClicInc, as the first B2B electronic marketplace of its kind in Canada, according to the companies.

Tony Meti, National Bank’s senior vice-president of commercial banking for North America, said ClicInc is part of the bank’s plan to evolve faster than its clients.

“The e-procurement portal will now allow our clients to save substantial dollars in terms of their purchases and efficiency,” he said. “Every company has to buy stationery, for example. Studies indicate that companies can save 80 per cent buying it over the Internet and this can help save money.”

Meti said the National Bank has a 65 per cent penetration rate and about 150,000 clients, up to 30,000 of whom he expects will be actively using the B2B marketplace by the end of 2002.

It is a Canadian first in that it offers both a private marketplace, which enables buyers and suppliers access to the platform, and a public marketplace, which is open to everyone free of charge.

Meti added that the National Bank has been “very selective” about who will become suppliers on ClicInc. However, Guy Berard, president of ClicCommerce, said it won’t be selective to the point of exclusivity.

Berard said that one of the main advantages for suppliers like IBM Canada, which is already on board, is that they get preferred access to an additional pool of about 180,000 clients. He added that the coming months will bring more features such as auctions and automated requests for quotations.

“We are rolling these things out at the pace that we can train the market,” he said. “We are strongly leveraging on the relationships the bank has built over the years with the small and medium, as well as large, businesses in Quebec.”

As Meti pointed out, however, this venture didn’t come cheap.

“The actual portal was several million dollars,” he said. “The cost will be absorbed. If you want to keep your position, you have to keep investing. In terms of revenue stream, this will be worth several more million dollars than we paid.”

Wooing business customers

Then, last December, Bank of Montreal (BMO) announced the launch of Online Marketplace to provide small business and mid-sized enterprise customers with “an easy-to-navigate electronic service to meet their procurement, information, administrative, reporting and processing needs.”

eScout, an e-business services provider, is the first offering in the BMO Marketplace with its online purchasing system, accessible through As the Marketplace evolves, BMO plans to add products such as auction, tendering, and region-specific services.

“No matter how big or small, customers can benefit from having access to a wide range of products and resources via a single web site in addition to a variety of discounts and promotions that will be offered on an ongoing basis,” said Marnie Kinsley, BMO’s executive vice-president, E-Business, in a news release.

To encourage Canadian businesses to try Online Marketplace, the eScout service will be offered free until October 31, 2002. After that date, a yearly membership fee of $49.95 plus tax will enable full access to this eScout service for up to three users per company.

“Based on our experience of offering eScout’s services to our small business customers in the U.S., we know our customers in Canada will find these new services valuable as well. In fact, in the U.S., we are consistently experiencing more than 40 percent growth month over month in Harris Bank’s eScout membership and more than a 50 percent increase in purchasing activity,” announced Kinsley.

In addition to a multi-year licensing fee, Bank of Montreal has committed to invest CDN$10.8 million in eScout.

Online accident insurance

RBC Financial Group last November began offering its customers an RBC Insurance Internet application to obtain online personal accident insurance coverage for situations involving accidental death. The insurance available through the RBC Insurance Web site at gives eligible customers the choice of receiving either $1,000 or $2,000 of complimentary coverage (the latter includes $1,000 for a spouse). Customers can also buy additional personal accident insurance coverage by applying directly online. The program is not available to customers in Quebec, Prince Edward Island and Manitoba.

The application process is described as easy to complete with no health or medical examinations required. Coverage starts on the effective date outlined on the Certificate of Insurance, which is sent by mail once the application is verified and confirmed.

“RBC Insurance is focused on providing customers with exceptional products and services – both in person and online,” announced Jim Westlake, chairman and CEO of RBC Insurance. “We recognize that customers are looking for more choice and convenience and are committed to enhancing our Internet capabilities to meet their needs.”

— With files from Albert Leonardo and Julie Clow