PALO ALTO, Calif. – Four members the first month? None the next? You call that a successful launch? You do if it's Internet banking and it's the final months of 1993. On Nov. 17 that year, Stanford Federal Credit Union launched its CUOnline service, "beating Wells Fargo, BankAmerica and just about everybody else by more than a year," says the credit union's Sam Tuohey. A few months later, in April 1994, the Telnet service was replaced by a full-blown Web site. To celebrate the 10th anniversary this year, the credit union used that original Web page as its home page at www.sfcu.org during the week of Nov. 17. "We knew the anniversary was coming up and we wanted to do something to mark the occasion," says Tuohey. As vice president of marketing back then, he had a hands-on role in the development of the new service, along with Margaret Wold, who was marketing manager then and now is vice president of business development. Along with their own jobs, they've seen online usage grow from those first four members to about 600 regular users a year later to about 16,000 of 41,000 members online now, a penetration rate of 36% that Tuohey says the CU aims to grow to 45% by the end of 2004. That's a marketing challenge. In 1993, it was a new technical challenge, too. For instance, in the test phase, controlling ports could be problematic, allowing one employee to see another employee's data. "Obviously that had to be fixed before going live," Tuohey recalls. But once they did, the revolutionary Telnet service offered live transaction and balance data and account transfers, as well as rates, office hours and a promotional message. "We were 24×7 from day one," Tuohey says. "A few months later, we created a Web site and poked the Telnet CUOnline through HTML, using a UNIX system running on an HP9000 D210. "It's long gone. I think a former IS employee gutted it to use the tower for the case of his homegrown PC. Today, CUOnline is run on a combination of four different systems, each a standard Win2000 server running SQL. We funnel the data from those four systems through a couple gateways into the Web server." Of course, that processing capacity and connectivity didn't exist then. Nor did the pioneers at Stanford FCU realize they were about to enable the first few online bankers who a decade later are part of a consumer demographic in the hundreds of millions worldwide. "The driving force was to serve our members' needs," Tuohey says. "We wanted to do what was being called home banking and were happy with the fact that the Internet as the medium didn't require us to purchase 30 or 40 modems and issue thousands of floppy disks. "I was pretty clueless, but I must say that by the end of 1994, our then-CEO Warren Marshall had a pretty good idea of what was possible with the emerging technologies and with electronic banking services in general." The Stanford FCU experience also offers an early example of the blending of marketing and technology for people as well as hardware and software. "Selfishly, I liked the fact that the Marketing Department got to mess with the technology," Tuohey says. "Our data processing department was small and so busy at the time that they welcomed the help," he says. "Obviously the routing and server management was initially handled by the DP employees, and a consultant, but during the alpha and beta tests and post-live, Marketing took the lead. I actually did the VI editing on the pages." Didn't Impress the Tech Gurus But were the locals impressed? Not if your locals are the folks who helped put the "Silicon" in "Silicon Valley." "Stanford Federal Credit Union may have been the first financial institution on the Internet, but 24 years before that, Stanford University people helped create the Internet," Tuohey says. "Stanford people were using the Internet already – Gopher, Archie, FTP, e-mail – to conduct their business. Adding the credit union to that routine seemed natural enough," he adds. "Some of our members' reaction to our introduction of the service was `What took you so long?' " That attitude reflected in the local press, too, Tuohey notes. While the credit union and banking press, and a couple technology publications, picked up on the story of the birth of Internet banking, the university's press didn't pick up on it all, he says. " Not a word." Tuohey also says he is not aware of the occasional rumbling heard from other quarters that Stanford FCU was not the first financial online. "Do you mean there's disagreement about that? I haven't heard," Tuohey replies when questioned on that point. "I remember someone telling me that another credit union back East may have had a Web site before SFCU. "Maybe. But as far as online banking itself, I've never heard a challenge." And ultimately, it all comes down to the old adage: "What have you done for me lately?" As Tuohey points out: "Although neat from a nostalgic perspective, being the first is really irrelevant to our members," the veteran CU executive observes. "They're really interested in what their credit union is doing for them today. And that's good. We really need to continue to innovate to stay relevant. "There are all sorts of interesting things we need to be doing to help improve our members' financial lives." -

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