WHAT EVERY VIRTUAL MALL NEEDS: A VIRTUAL BANK
Cover Story: Information Technology Annual Report
Think that only Silicon Valley technoids and new media hipsters are setting up shop on the Internet? Think again. First Union Corp., a superregional bank in Charlotte, N.C., is about to launch the Internet's first bank-sponsored electronic marketplace.
When CommunityCommerce opens for business this summer, it will operate as an electronic mall, with virtual tenants such as Naturally Fresh Co., a gourmet food producer, and the Durham (N.C.) Bulls, a minor league baseball team. Just "outside" the mall on another screen will be electronic banking offerings from First Union. Banks "have always been a central part of a community," says Bill Farris, First Union's senior vice-president for marketing and strategic planning. This, he says, is "just a natural extension."
COMPETITION ABOUNDS. CommunityCommerce was the brainchild of First Union CEO Edward E. Crutchfield. Worried about inroads into his businesses by nonbanks operating with lower costs, he wanted to build a service-delivery system that would cost less to operate than a branch and still be easy for customers to use. To make transactions secure, the system encrypts credit card numbers before they hit the Internet.
So far, only about 1% of banking transactions are conducted from home. Meanwhile, First Union already has plenty of competition in electronic commerce on the Internet from the likes of MCI Communications Corp. But the bank is determined to establish a big presence before rivals do. "The train's coming down the track," says Edgar D. Brown, senior vice-president for alternative delivery. "You can either throw the switch and try to have it come your way, or watch it go by." By Kelley Holland in New York