There aren’t many business-world celebrities whose every move attracts media attention similar to that of a movie star. Just a handful of business personalities are able start projects that generate the hype of an in-production Steven Spielberg film, or a new singer discovered by David Geffen.
In the business world Charlotte’s own Hugh McColl, former Bank of America chief executive officer and one of a handful of business leaders who contributed to the revitalization of downtown Charlotte in the 1990s, is one of these personalities. McColl doesn’t create the same fervor as Paul McCartney might stir up during a leisurely stroll down the street, but whatever direction McColl gazes, whatever new endeavor he undertakes, you better believe that people are stopping to look and to listen.
The Wall Street Journal provides testament to McColl’s influence on the business world when it began selling copies of his hand-drawn mug shot — a famous feature of the infamous newspaper — on eBay.
These days McColl has changed his focus from traditional banking to Internet banking. His company, McColl Partners, which bills itself as delivering “tactical leadership and independent advice to growing companies,” pays close attention to technology firms that are developing the little pieces needed to construct the entire online banking pie. McColl, who is tired of discussing why he chose to come out of retirement so quickly, recently chatted with Daniel Pearson and discussed what he believes is in store for the future of online banking.
What is McColl Partners’ primary focus?
McColl Partners has clients that are involved in online banking, and we are, in addition, involved with people who are creating electronic products that are financial products as opposed to just banking products.
What technologies are you starting to see emerge for the online banking arena?
I think when you go back to the beginning, when I was working with Nations Bank and Bank of America, my own judgment was that people anticipated greater gains in that area (online banking) than were actually happening. It really was a question of how are people actually going to use Internet banking? What has evolved is that people use it in conjunction with other delivery channels. Exclusive Internet banking is probably more prevalent among younger people than it is, say, with people my age, although people my age may very well use the Internet to move money from one account to another, to bring up their accounts, including their investment accounts, and other things to see what is happening.
And so if you could argue that instead of being exciting that a lot of that is prosaic. It’s just another important channel. Now there are people who use the Internet and Internet banking as a way to price shop, whether it’s mortgage loans or other types of products, where price is one of the main ingredients. Of course at the end of the day what matters the most is being able to deliver to the customer. I think the word for that is “fulfillment.”
That is, it’s one thing to sell something but then you have to deliver it.
What’s really happening is that a lot of people have realized that and a lot of the product work is now designed around making it easy for the client to access information and making it easy for them to carry out a frame of action. So a lot of that is going on at this time and more and more applications are being developed.
Are you seeing literally dozens of software firms out there which are trying to create a piece that fits into that whole puzzle?
I think the answer to that is yes. They are in here everyday. We are constantly seeing people bringing us bits of ideas they think that banks and financial institutions would be able to use. A lot of them center around customer information and products. Such as data gathering about customers, profiling, etcetera. I’m sure the larger banks have developed much of their own products and use these ideas where appropriate.
I think one of the most important things going on is the security issue that surrounds Internet banking. There are people pushing hard who are trying to make it invisible to others. One of our clients, a company called Kasten Chase, has been working with banks, the military and businesses in developing products that ensure privacy. And that’s the thing people worry about the most.
The interesting thing there is that media attention to online security has really tapered off over the last 18 months or so.
Well, I believe there’s a logic to that I you think about it. All of us have been very willy-nilly to walk into any clothing store or restaurant and put our credit card down on the table and pay the bill. The card then disappears and comes back sometime later for you to sign it, and we’ve actually delivered all of our numbers into somebody else’s hands when we do that. We do it in stores and we’ve gotten kind of used to it. It took us a while, including me, to learn to trust putting your card number into eBay. In my case Amazon.com, because I buy a lot of books, has my credit card number and I don’t even think about it anymore. Once one gets used to it, and sort of comfortable with it, the issue declines as a problem.
Are there legal and regulatory issues popping up as a result of online banking privacy?
Well, I couldn’t comment on that. I don’t work for a bank anymore. I’m a year out of the bank. I’m not a lawyer. There are issues that federal authorities continue to look at but I don’t foresee any of them, at this time, getting in the way of the business. Whatever the issues are they are manageable.
A Forrester Research study shows that 70 percent of banks don’t think the Internet will have any sort of impact on branch distribution. Does the US banking industry also believe that online banking won’t become as popular as customers completing transactions in person?
My own judgment would be that large banks that are engaged with consumers have in fact created online banking in depth because they know their customers want an alternative to bricks and mortar. Maybe not a full substitute but an alternative. Over time one would imagine that more and more transactions will be migrated to the Internet or through other electronic means, like ATM machines and the telephone. As more and more transactions are completed electronically and customers become more and more comfortable with it arguably, over time, it could displace -well not could, will — displace some of the physical facilities.
A lot of banks that have not gone as far as others are now looking at acquiring this capability. We find there are people who are interested in acquiring these banks that have already been established or in acquiring software that move them forward logically so they don’t have to develop the technology themselves.
Outside of security, what are some of the trends in online banking you are watching closely?
The ability to go all the way through and complete a transaction, like borrowing money or whatever, so that you actually complete the transaction and the money goes into your account without you ever having to walk into an office an sign anything. Now, there are ways this can be done electronically now by using computers and by using computers in connection with faxes and other things. There are people who have broken that code, but ultimately that’s the test — to be able to complete a transaction at the computer. One thing is that significant with that is the bill passed in the Senate, the Electronic Signature Bill, which is significant in allowing people to fully execute a transaction online.
What needs to be done to get the public to warm up to this?
I can’t say I know the answer to that. I think that, candidly, young people have a higher adaptation rate than older people. You could argue that all it takes is another generation and it will happen. It’s just the natural cycle of what happens. The second thing is really very low tech, and important, and that is the time it takes for people to get online and have a transaction go through. I think the technology that moves us to faster access, getting to a Web site quicker and executing a transaction quicker, is the real meat and potato issue. But they’re very real ones. Then that gets into the design of Web pages and how easy it is to navigate through the site you are working with. And they’re not all equal. Some are much better than others.
More Internet banks are on an ASP model now, and you do just go to that Web site and access your specific financial information on that Web site as opposed to online banking in its nascent stages where you had to get a disk and download a program and get that to work. This does make it faster and I think that has contributed to a dramatic increase in users because of that ability.