Ray Van Eng (10/24/96)
But for the consumers especially those living in North America, the Internet may have found the next killer application - Internet banking. That seems to be the conclusion of a recent Jupiter Communications & FIND/SVP study titled 'The American Home Financial Services Survey'. The Jupiter survey has found that 55% of Americans with a PC at home are using their computers to manage their finances. All in all, there are 9.2 million households now using online or Internet based financial services and consumers say that they are willing to pay up to $10 a month for such services. Jupiter thinks the reasons for consumers' acceptance of online banking are because they are already using the Internet/Intranet at work and often the PCs that they purchased for home use come bundled with some type of financial software such as Intuit's Quicken or Microsoft's Money. But is the PC a preferred platform for electronic financial services (EFS)? About 20% of the PC owners surveyed actually say that they might want to use the TV instead of the PC for online banking. The preceived ease of use of our familiar TV sets might help to explain that. This is interesting, as we know from another survey done by Yankelovich Partners Inc., 31% of the people indicated that they would not be interested in purchasing a PC in the next five years. Putting these figures into perspective, that would mean that TV set-top makers and Internet TV service providers could have a very compelling reason for marketing their products and services to the general public just based on Internet banking alone. Sony and Phillips may seem to have the foresights about this when they designed their first WebTV access set-top devices to include options for electronic commerce via smart card slots for online banking activities. The other question we should also ask is - Is the Internet really the ideal channel for EFS, after all, many banks already provide some proprietary online financial services via the telephone or dedicated networks? The answer, according to James S. Mahan III, CEO of the Security First Network Bank (SFNB), is yes, the Internet is a better choice than a dedicated home PC to host connection. "Consumers are more interested in managing their finances than managing another software program on their home-based PC.", Mahan commented. SFNB should know. They are the first Internet bank in the world which opened its door a year ago in October 1995. Now, they say that they are getting 800 new accounts every month since May 1996, some of them come from far away places such as Israel. Also, 54% of their clients have a combined household incomes above $50,000 (versus $42,000 for an average household) with 80% of them having college degrees. Seems like SFNB has the prime crop of users for potential online interactive services (of any kind). So it is no surprise to learn that the Pineville, KY based financial institution is planning to expand their online service offerings to include business accounts, loans, insurance, brokerage and other options. But wait a minute, SFNB is a very small bank with only one physical location in that quiet community up in the Kentucky mountains (a new branch in Atlanta, GA is in the works). How could a customer in Los Angeles, for example, deposit money at SFNB over the Internet? Well, that person can't, but SFNB suggests a number of ways to accomplish that, e.g. direct deposit, sending in a check, using wire transfer, Automated Clearinghouse (ACH), the U.S. Postal Service or have Federal Express or another trusted courier to handle the cash transport. What about security over the Internet, aren't the consumers concerned? Yes, it is still a factor, but Jupiter says that consumers are more preoccupied with privacy (afraid that their financial and personal data are being waylaid and picked up by others) than security. I think if the bank feels safe about financial transactions over the Internet, the public would likely go along with that also. By the way, SFNB says their banking transactions with customers are FDIC insured. The Federal Deposit Insurance Corporation is a U.S. government agency that oversees and insures deposits of up to $100,000 per depositor, per bank with some conditions apply, provided the bank follows established guidelines for sound banking practices. The Security First Network Bank can be reached at http://www.sfnb.com. |