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1997 Press Releases
Tripp Rackley Interview
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From "Online Banking Newsletter," June 9, 1997
Tripp Rackley
President and Chief Executive
nFront
What’s the advantage of outsourcing a Web site?
The biggest reason is that it’s a lower-cost option for the bank. Secondly, your Internet site must be up and running 24 hours a day, and these banks don’t like to worry about that.
Another reason is that when your software is running in-house, the bank has to worry about making software updates. They can’t make changes as quickly. We update the system on a daily basis.
We started out as a software development shop, but out of necessity, we ended up being a service bureau.
What’s different about nFront?
We have focused on fully interactive branches. Many of our competitors are either focusing on bringing accounts online, or making their Internet branch an ATM. We offer the complete package - both account opening, financial planning, marketing and selling - along with servicing the accounts on the back-end, which includes account balances, funds transfers, information on cleared checks, and bill payment.
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At the small-bank end of the market, nFront is an emerging player in the business of providing Internet banking solutions. Last month, the one-year-old company signed six community institutions, and plans to add many more this year.
The Athens, Ga.-based company began as a software development firm, but quickly added a service bureau function to meet demand from bank clients. Today, the company specializes in creating, hosting, and maintaining Internet sites for banks who want to outsource the entire project. nFront’s flagship product is a Windows NT and SQL server, which gives customers access to balances and histories, funds transfers, bill payment, account applications, and customer service. One institution that has implemented the product is First National Bank and Trust of Pipestone, Minn., at the Web site www.banking.com/fnbpipe.
Tripp Rackley is responsible for the company’s overall vision, and is also instrumental in its software and hardware development. The company owns the registration rights for the domain name www.banking.com.
Rackley received an Engineering degree from Georgia Tech and has completed post-graduate work in Business and Human Computer Interfaces from the University of Central Florida.
Rackley recently spoke with Online Banking Newsletter editor Steve Weber.
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The other unique thing that we’ve done is carve a niche with community banks. Our smallest bank is $30 million, and our largest is $550 million. Our product is scalable for any size bank, but given the Internet’s speed of change, we’ve found much more success in working with community banks, who can make decisions a lot more quickly.
Can customers use a PFM like Quicken or Money to connect?
Not currently. Our approach with the community institutions is that the Internet is really the way to go. When OFX [Open Financial Exchange] is up and running, then they will be able to use PFMs also.
Will OFX give big banks an advantage?
It will favor the large institutions first. Then once it becomes really mainstream, it will take care of everybody. OFX is going to be driven by the core processors and everybody being able to support rolling it out. The big banks have more resources to make sure that happens on time.
How much does your product cost?
It depends on the institution’s asset size. It starts as low as $50,000.
Is there a monthly fee?
We charge based on a software model. We don’t charge per-customer, although a lot of other companies do. We believe that this is an investment that the bank is making, and they should be able to turn a profit on it. If you get locked into a per-customer charge, it’s hard to do that.
Are your clients going on the Web as a defensive move, or offensive?
Every bank goes online for different reasons. We tend to see four main strategies.
First, the institution may be in a market where growth has stagnated, and they want to expand their customer base. Some are looking to go nationwide, and others decide to target a nearby major city. It wouldn’t be feasible to open a branch in that city, but it’s possible for them to advertise an Internet service there, and cherry-pick the customers they want.
Secondly, some institutions want to maintain their customer base while they reduce costs. For example, we have a client in the Midwest who experiences a lot of snow-birding, where the customers go south for the summertime, and take their accounts with them. With online service, the bank can tell their customers that they don’t have to move their accounts.
The third approach we see is a mixed strategy of reducing costs, keeping a high-tech image, and growing market share.
The fourth approach - which is hardest, but potentially very successful - is the banks who don’t necessarily consider online service in any cost-justification manner. They know that this is where business is headed - not just banking, but all industries. They want to be there, and be prepared ahead of time.
What usage level can banks expect?
The institutions have been really pleased with the response. One of our clients has brought in about $4 million in new business, and converted perhaps 4 percent of their customer base to online in six months.
Do you offer your clients a guarantee against security breaches?
A lot of people have tried to break into the system, but it hasn’t happened yet. We don’t give a written warranty, and I don’t think that anyone else does either. But companies like ours carry insurance for errors and omissions to help cover this. We have not been hacked into, nor have I heard of any other company that has.
Would you consider targeting mid-sized institutions?
We would. Right now, we are focusing on community banks because of the sales cycle. But we can take our product into any size institution, and we will probably do the mid-tier banks through some form of a reseller arrangement.
How’s the market shaping up?
We’re all starting to see the domino effect. Last year we saw the initial banks that wanted to go online and be the leaders. Now we’re seeing banks beginning to go at this aggressively. We have signed six banks in the past 60 days, and have a tremendous number in our pipeline right now.
The exciting thing from our standpoint is that everybody has been talking about home banking forever. Now we’re starting to see the results. And we’re seeing banks being able to not only take on this high-tech project, but make money from it.
So it’s possible for banks to see a prompt return from their online investment?
Absolutely. When you look at the cost of online banking and the way our software is priced, you can compare that to the cost of one or two personal bankers over the course of a year. The kind of reward you can reap from it is tremendous.
What you’re looking at is having a personal banker that can work 24 hours a day, 365 days a year, who can service many customers simultaneously in the same, consistent manner.
You can think of the Internet branch as being your best people in your entire organization being wrapped into one, giving the same message. If you ask a bank who they would like to have talking with their customers, they’d say they want their chairman and the top vice presidents out selling and servicing customers all the time. In this case, they have the ability to do that.
Copyright 1997 Weber World Media. For more information, call 1-800-732-8104.
1997 Press Releases
