Net Gains

Atlanta-based NetBank seems to have found a winning formula for online banking. With checking accounts now comprising about half of its 133,000active deposit accounts, it is moving away from rate-sensitive money market and CD depositors.

NetBank's infrastructure is made up of Edify Internet banking applications hosted by NCR, core systems processing services from BISYS, and item processing from Intercept. Routine call center requests are outsourced to Teletech. Other service providers include CheckFree (electronic bill payment), UVEST Investment Services (brokerage), Mortgage.com and PNC Bank (home equity lines).

Laila Samawi-Utley, executive vice president of systems and operations and CIO of NetBank, discusses the technology of Internet banking with BS&T associate editor Ivan Schneider.

BS&T: What's your background?

SAMAWI-UTLEY: My entire career has been in banking. Back in the late 80s, I started out as an operations analyst, the lowest position in operations, and worked my way up, touching especially all of the corporate cash management products. I wound up running the corporate cash management system at NationsBank, which was really the precursor to online banking.

BS&T: Earlier in your career, could you have pictured what's available now?

SAMAWI-UTLEY: Throughout my entire career, the biggest bane of my existence was the fact that the technology was available, but it was never leveraged within banking. We've always moved money electronically, but unfortunately, we'd put these clumsy, manual processes behind them which made the offerings to our customers very expensive.

Virtual banking has always made so much sense to me, because unlike most businesses that have leveraged the Net, banks have always moved their transactions electronically.

BS&T: How would you characterize your systems infrastructure?

SAMAWI-UTLEY: What we have here is a hybrid model. We outsource certain pieces of our environment to vendors that actually house the hardware, while we maintain control and responsibility for the source code, especially the front-end portion of our offering to the customers.

We customize and build a lot of the services and products through which we have direct access to our customers, and we maintain and develop additional functionality on top of that presentation layer. What we tend to outsource is the core banking piece that in the past has been managed by large service bureaus very effectively.

BS&T: What's the benefit of a hybrid model?

SAMAWI-UTLEY: A hybrid model that allows you to leverage both internal resources and external resources of partners makes your ability to scale and meet market demand unlimited. You don't want bottlenecks anywhere in your organization. Unfortunately, if you completely depend on in-house or on outsourced systems, to some extent you are limited as to what you can expect and what you can do.

BS&T: What are your plans going forward?

SAMAWI-UTLEY: The most important thing is making sure that our infrastructure continues to support the rapid growth we've had. We have a wonderful infrastructure, but we're looking forward to huge growth. In the last quarter, we opened up 29,000 new accounts.

BS&T: What kind of infrastructure do you have for managing partnerships?

SAMAWI-UTLEY: We're really blessed in that we have a fantastic technical team, and our professionals here are really incredible. They developed the partnership architecture in such a short time-45 days. That's really a reflection on the quality and the knowledge and the technical expertise that we have here. They absolutely built something that we can reuse in all models for our partners.

More importantly, I look at the quality of what they built and the structure and the design. As we go out there and partners approach us, as they do every day, I can say, "I feel confident that integration is no big deal."

BS&T: Competitively speaking, what keeps you awake at night?

SAMAWI-UTLEY: There's really nothing that keeps me awake as far as being scared. I look at how profitable we are and where we are in the market as a leader, and what keeps me awake at night is how I'm going to spend all of the money.

BS&T: So I guess the question is more of who you're keeping awake at night.

SAMAWI-UTLEY: I'd have to agree with you. There are probably quite a few that we're keeping awake at night, but that's good-the success of our competitors is our success, and our success is their success.