The Internet may be breathing new life into television banking.

As computer and software companies, cable operators, and television manufacturers pursue ways to make the Internet accessible through TV sets, home banking strategists have new reason to hope that a long-awaited channel to the mass market will soon be a reality.

The potential market numbers have always been intriguing. Virtually every American household has at least one television, and about 70% are wired for cable. That compares with personal computer penetration of about 40%, and many of those do not have modems enabling on-line connections to outside services.

PCs have been the line of least resistance so far, but a recent rise in TV-based Internet services leads to the possibility that people are open to using TVs for more than just entertainment.

Supporting this view is a Dove Associates Inc. survey of 238 consumers and 73 financial institutions. Three out of four of the consumer respondents said Internet TV banking is a good idea, 40% expressed an interest in using it, and 28% said they would or might switch banks to get it.

"I was surprised by consumer receptivity at this time," said Edward L. Neumann, a director based in Dove Associates' Washington office. "We don't believe this is just a technology looking for a problem. It must be taken seriously."

Mr. Neumann and Edward Bachelder of Dove presented their survey results last week at a meeting of the Online Banking Association of Corte Madera, Calif., which has been actively studying Internet TV technology and its potential.

Economics are beginning to work in its favor. Set-top boxes that let people view the World Wide Web through televisions cost as little as $100.

Microsoft Corp. is buying equity interests in cable companies and earlier this year bought Web TV Networks Inc., which sells an Internet TV appliance for less than $200. NetChannel, WorldGate, and WebPassport are competing in that emerging market.

International Data Corp. of Framingham, Mass., projected that 290,000 consumers will be using Internet TV services by the end of 1997, rising to 8.7 million in four years.

Nicole Vanderbilt, digital commerce analyst at Jupiter Communications in New York, said she sees a proliferation of non-PC access devices including set-top TV boxes. Six million households will have non-PC devices by 2000, she said, and one-third of those will also have PCs.

Given such indicators, bankers are beginning to see that "the TV provides a distribution channel with enough critical mass to achieve many of the objectives that the industry has laid out for remote banking," said Mr. Neumann.

In keeping with retail bank marketing priorities, financial institution executives told Dove Associates that they were most interested in using the electronic delivery capability to attract, retain, and deepen relationships with customers. One out of four respondents said they viewed TV banking as a way to reduce costs. Asked about their primary concerns, 41% said they were worried about security risks, 22% about customer demand, and 17% about cost.

They were split about bottom-line impact: 46% expected the technology to improve profits, 40% saw no change, and 14% said profitability would be reduced.

A few bankers looked into interactive television before this recent flurry of interest. Barnett Banks Inc. reached 20% of its eligible customers in the area of Orlando where it participated in Time Warner Inc.'s Full Service Network pilot.

The Jacksonville-based bank learned that "one-size-fits-all is a myth," said Catherine V. Corby, its former director of electronic delivery strategy.

Now a consultant with Earnings Performance Group of Short Hills, N.J., Ms. Corby said bankers must understand that "consumers demand choice" and must adjust their strategies accordingly if they are ever going to get beyond current home banking programs' typical 1% to 2% market penetration.

"Decide who you are building an on-line service for and then ask those customers what it is that they want," Ms. Corby told the Online Banking Association meeting in Washington.

"Segmenting the customer base is the key," Mr. Neumann said. "The 65% of DDA (demand deposit account) customers who are marginally profitable are the ones you will want to migrate to a remote channel."

But the Dove research indicated that attitudinal obstacles must be overcome. "Privacy is paramount," Mr. Bachelder said, because of general concerns about on-line security and the fact that TVs tend to be in living rooms or family rooms. And there is the matter of "comfort level."

In the Dove survey-because of its small sample Mr. Bachelder said its findings are "suggestive" but not scientifically conclusive-only 3% of consumers were comfortable with Internet-TV banking. That compared with 21% comfortable with PC banking and 54% with telephone banking.

"As the price of the units going down, and as more consumers use them, they are going to get more comfortable with them," said Tripp Rackley of Athens, Ga.-based nFront, which designs Web sites for financial institutions. "It is going to be a good channel for utilizing the Internet at all possible points."

Ms. Corby continues to be a believer in TV banking, pointing out that television is "the device for which 98% of consumers have made space." She said home PCs are nearing saturation simply because households are running out of room.

Dove Associates said people with the greatest interest in Internet TV banking tend to be young, single, and automated teller machine users. Respondents between ages 25 and 34 were twice as interested as those over 55.

The survey showed that those most interested in Internet TV banking have Internet access at work but not at home. Among those who expressed interest, 51% had access to the Internet only at work, 34% had access only at home, 30% had neither, and 44% had both.

Half of those interested said they were likely to use the service daily, with account inquiries, funds transfers, and bill payments at the top of their transaction preference list.

"Internet TV banking should be targeted at Generation Xers who use computers at work but do not have one at home," said Mr. Neumann.

The technology offers "a window of opportunity to reach prime prospects with a strong interest in self-service oriented transactions, and an opportunity for daily and weekly contact with the financial institution."

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