July 12, 2007

Wireless Banking

By Jim Barthold

Banks are ponying up for wireless services that make customers' lives—and their own—more flexible and convenient.

ERF Wireless technology is accomplishing something almost as important as making the trains run on time (and probably more important if you don't live on Amtrak's Eastern Corridor). Banks are using ERF Wireless to improve their inter-office communications and - hold onto your deposit slips, folks - extend their hours.

Of course, this isn't George Bailey here, so that's not the primary reason banks choose ERF Wireless for telecommunications. They want to save money - not yours, theirs - and "courier costs for these banks, just to collect the checks in the afternoon and drive 50 to 100 miles to the operations center every day is unbelievable," said Dean Cubley, CEO of ERF Wireless. "They don't have to do this any more. They can scan it in at the branch level, and it's instantly available at their clearinghouse. Not only that, but they don't have to close that branch bank at 3 o'clock to get the credit on those funds by the end of the day; they can actually keep that branch open for cashing checks until 5 or 6 o'clock."

That's technology helping people do their jobs better and save money. Unfortunately for traditional wireline providers such as the cable industry, which always seems to be just this close to entering the commercial businesses space, these banks are doing it via point-to-point unlicensed wireless spectrum.

Beyond keeping banking hours, banks are also similar to today's telecommunications conglomerates because they've been acquiring smaller branch offices and consolidating them into mega-banks (MBOs?). They've also been acquiring humongous (that's a technical term) telephone bills.

Show me the money!

"Our typical customer is paying the local telephone company anywhere from $15,000 to $30,000 a month in T-1 charges," said Cubley.

Apparently, that kind of money isn't enough to turn the heads of cable operators in Louisiana where ERF is snaring big business customers like U.S. BankNet, First Federal Bank and Jeff Davis Bank because ERF is, indeed, signing up big business customers.

"It's possible that (cable operators) could attack that market, but I don't believe they will be able to give anywhere near the bandwidth that the banks are going to need," Cubley said. "This (ERF offering) is a level above DSL; a level above cable modems."

ERF uses Motorola Orthogon dual-link dishes that can deliver anywhere from about 20 Mbps to 300 Mbps and operates most links in the 60 Mbps two-way range.

"They're not inexpensive," said Cubley, citing yet another difference between his company and the traditional cable operator, "but they are robust."

Hurricane alley

That helps a lot because ERF is running its business in an area that hurricanes love. So far, he said, the annual visit by some named storm has been a selling point in the company's seven-year monitoring and maintenance plan.

"Their T-1 experience during the hurricane season two years ago made them start thinking about this," Cubley said. "Two of the banks were hit hard by Hurricane Rita; one was already a customer and continued to operate. Even though some of their branch buildings disappeared, our wireless backbone continued to operate. As soon as they got a temporary building to start operating again, all they had to do was plug back into the tower."

The bank across the street, now also an ERF customer, "was totally out of business for some period of time because they couldn't get their telephone lines back in service," he said. "They said: 'Never again. We're going wireless; we won't let that happen again.'"

ERF Wireless has weathered more than hurricanes. Founded in 2003, it's also weathered the perception that point-to-point wireless is a risky business thanks to the flameouts that industry saw in the late '90s when companies like Teligent and Winstar shot sky-high like Independence Day fireworks and exploded just as spectacularly. ERF's belief, as emphasized on its Web page, is that "wireless broadband networks will become a 'third pipe' as both an alternative to and extension for DSL and cable modem services."

While those failed efforts held the same belief, ERF's message seems to be holding true with banks and a commercial and residential network WISP business throughout Central, West and South Texas.

There's the money

"There is a synergy between those networks and the bank networks in that what we do for the banks is provide long-term monitoring and maintenance of their networks. To do that, we either have to contract with a local service in the area or develop it ourselves. We've chosen to develop it ourselves by acquiring some of the more promising wireless ISPs and using them as a base," said Cubley.

It's not a loss leader.

"We generate recurring revenue from that as well as utilize those resources that are in the area of the bank networks to support the banks," he said.

Maybe that's another reason banks seem to like these guys; they know how to make and manage money.

- Jim Barthold