One such leader in the banking world, who came to India for Convergence, wasTony Burkhart, managing director, iDLX Technology Partners. iDLX TechnologyPartners provides technology and technology-enabled services to financialinstitutions. The company's mission is to deliver high-quality,cost-effective, low-risk solutions to IT related issues faced by itsclients. In India, this company has a joint venture with HCL, and hasfacilities in Chennai, Gurgaon and the US.

Burkhart calls Internet a new competitive landscape. And, he says that thefocus should be on the competitive advantage while Internet banking isjuxtaposed against brick and mortar institutions. Topping the list ofcompetitive advantages in Internet banking, according to Burkhart, isopportunity since there are no binding rules on time and place. The otherfactors which make Internet banking successful are low cost and speedysolutions. Talking of cost, he says, per transaction cost of Internetbanking is 27 times less than ATM banking. But, he stresses that security isa core issue, and that it must be addressed well to be able to derive themaximum benefit out of online banking.

Looking at the big picture, he says, no bank or FI should jump into Internetbanking just for the sake of it. People must understand their own businessstrategies first. Says Burkhart that two things are important: Banks mustidentify their posture in Internet, and select their approach.

Posture can be of three types, he explains. It could be strategic, tacticalor defensive. Strategic posture refers to an organisational position thatincludes a well-defined strategic vision of a target market, identificationof specific products to be implemented, and integration with the anticipatedlift that will be provided to the institutions as a result. Tactical postureis an organisational position where an institution has not yet defined aspecific strategic vision for its Internet direction but is willing to moveone or more products into place to test their viability prior toincorporation as a strategic initiative. Defensive posture is a positionwhere the organisation has chosen to implement Internet-based servicessolely on perceived market place pressure and currently believes that itwill not be a niche player in this area.

Besides posture, it's the approach that is of prime importance. Approach,says Burkhart, can again be classified into two types -- integration andsegregation. In integration, one is using the existing application, withmodifications, to introduce Internet banking. On the other hand, segregationis a process where one sets up entirely new infrastructure for Internetbanking. Adds Burkhart that Indian banks must adopt one of these approachesto get a headstart in Internet banking.

He gives an example of how integration is different from segregation, interms of Internet banking. It was a case study of two banks which wereestablishing a fully automated Internet account opening process. Bank A hadadopted the integrated approach and Bank B the segregation method. It wasfound that Bank A had exceeded the budget three times, was not on time inimplementing the project and finally its project had to be postponed. Notonly that, Bank A had missed its Y2K deadline. Bank B, however, was muchbetter off. It was within its budget, on time and it managed to implementthe project successfully.

The moral of the story, says Burkhart, is that one must understand theposture of the organisation, review the potential long-term impact of theposture, understand risks, and select the right implementation approach. Andof course, implement with caution, he adds.

Although it's upon the banks and FIs to decide which option to go for, thepreferred approach, he says, following strategic posture should besegregation. Those institutions that have firmed up their Internet strategyand decided that it will be an on-going integral part of the future would bebest served by developing a new and segregated infrastructure. This meansestablishing a unique operational division to include hardware platforms,technical support, and customer service areas.