Interactive television might sound like the stuff of science fiction, but many bankers are tuning in to its potential as a conduit for home banking services.

Although it has yet to get the development dollars that have been poured into personal computers or screen telephones for home banking, two-way TV has recently begun attracting serious attention.

Proponents say it combines the best attributes of the other high-tech alternatives. Televisions are as ubiquitous and as familiar to the average consumer as the telephone, and their video graphic capabilities - equal to or better than those of most PCs - come without the hassle of booting up.

The cost of the interactive service - the vaunted information highway into the home - as well as its eventual look and functionality remain open to question.

But it is widely assumed that cable TV companies will eventually replace their channel-switching boxes with more advanced interactive devices that could handle a banking or payment transaction as easily as a program choice.

With at least one large-scale pilot already begun by a major cable TV company in Florida, the promise of interactive television looms larger than ever before.

Financial institutions ranging from the tiny State Bank of Fenton, Mich., to National Westminster Bancorp in New Jersey are scrambling for position, often by participating in projects coordinated by technology providers.

Home banking via interactive TV has already been through growing pains. Earlier attempts - notably an effort by Eon Corp. to deliver a service package that included shopping and banking - failed or were stalled, largely due to federal licensing technicalities.

Because of the technology's nature and the low barriers to using it, bankers were not hurt. Today, they are increasingly aware of the ambitious market projections and looking for ways to get in on the action.

One of the first banking companies that acted on its curiosity about interactive television was Meridian Bancorp, Reading, Pa. In July 1993, it signed with Eon, formerly called TV Answer Inc., as part of a development group that included Intuit Inc., J.C. Penney Co., Domino's Pizza, and other big-name consumer marketers.

But after a proposed pilot fell through last summer and "it became obvious that this wasn't going to be in the cards," Meridian started to explore other routes to the same end, according to Joseph Pendleton, a senior vice president.

"I don't know whether that program will ever see the light of day," Mr. Pendleton said. "We continue to feel very positively about it."

Eon recently obtained a Federal Communications Commission license that may help ease the way for its stalled test. But legalities aside, Mr. Pendleton pointed out, other problems face banks eyeing interactive television.

Cost is the biggest sticking point. Though most consumers own the basic platform - namely, a television set - the set-top box that actually provides interactivity can cost hundreds or thousands of dollars.

The original interactive box proposed by Eon cost $700, Mr. Pendleton said. Analysts have speculated that the set-top boxes in Time Warner Inc.'s current Orlando trial cost as much as $7,000 each.

Unfortunately for banks, the prospect of home banking is not yet a strong enough motivator to justify such an expenditure, Mr. Pendleton said.

"When you're selling boxes to the consumer, entertainment sells," Mr. Pendleton said. "But when you start talking home banking, people pull out calculators and start to figure out what it's going to cost them."

The low level of consumer interest reinforces many bankers' opinion that interactive TV is the least important of the new home banking media, Mr. Pendleton said.

But according to Dale Reistad, a home banking consultant and former director of electronic payment products for Eon, market research indicates that banking is gaining importance among interactive television applications.

He attributed this surge of interest, in part, to the heightened involvement of Microsoft Corp. in home banking and to the fire that Microsoft's presence has lit under many bankers.

"Banking is starting to creep up on that list," said Mr. Reistad, who has long been noted for his advocacy of payment-system innovations, often ahead of their time. "But bankers usually wait until most or all of the risk has been drained from a business before they get involved."

Meridian is hedging its bets with PC-based banking options, but Mr. Pendleton still sees great potential for a "television banking" channel.

"There's a fairly large segment of consumers that might be likely to choose interactive television over other media, even if they had a PC in the house," he asserted.

Facing high hardware costs and competition from other, more popular, home banking devices, some ask why bankers should stay interested in television-based banking.

One answer is that, unlike the PC, the television can give bank customers quick access to basic services without "all this rigmarole to log on" to a personal computer, according to Mr. Pendleton.

Also, as interactive television gains momentum with cable operators, retailers, and other interested parties, the price of the set-top box is dropping rapidly - to a fraction of earlier estimates.

If simplified access is the feature that allows interactive television's promoters to get a foot in the consumer's door, lower prices are what will help complete the sale.

"Culturally, I don't think it's going to be a hurdle to overcome," Mr. Pendleton said. "If you watch the success of home shopping on QVC, people didn't seem to have too much trouble making this transition."

Secure in the belief that pricing will soon hit a level that large numbers of consumers can accept, some financial institutions are already lining up interactive TV partners.

Barnett Banks Inc. plans to participate soon in Time Warner's interactive television trial, which is, by most accounts, the boldest experiment of its kind to date.

This pilot, launched with a flourish of media hype in mid-December, will offer a wide array of interactive services to about 4,000 central Florida homes. Consumers should be able to get a range of basic banking options during the first quarter, according to Paul Lambert, Barnett's director of alternative delivery systems.

Customers will be able to inquire about accounts, pay bills, or transfer funds - just as they can by telephone or by personal computer.

Although he admitted that pricing would be an issue in any long-term decision to offer interactive television services, Mr. Lambert said he views the pilot as a way to test consumer receptiveness to the medium, independent of pricing.

"The perception is so different from the reality," Mr. Lambert said. "If an ATM were the old Pong game, this new TV service is like a CD-ROM game."

While Barnett also offers PC banking to customers, Mr. Lambert contended that "personal computers, at this point, require a longer learning curve."

And since most interactive boxes are powered by the same '386' chips that run basic home computers, the choice may only come down to whether the computer goes on top of the set or inside it, the banker added.

Apart from using the TV cable for service delivery, banks are eyeing its potential as a sales tool. NatWest is planning to sell mortgage products via TV rather than offer the more common transactional banking services.

Playing up the visual content and ready access that a television offers, NatWest executives see greater potential rewards in the higher level of financial services.

Working with Comcast Cable Communications Inc., the bank plans to put its interactive service in 5,000 households and real estate agencies in the next two months, according to Andrew G. DeMeo, vice president for interactive marketing at NatWest.

Consumers using the service will be shown information on the television screen illustrating financial products. People will also be able to see and consult with a sales person regarding the products.

Although NatWest "explored more simplified transactional options," Mr. DeMeo said the bank views its offering as the next wave of home banking services.

Overall, he did not see much difference between the television and the personal computer as the delivery channel.

"They all do the same thing - not one of these devices adds anything," he said. "People who enjoy sitting in front of PCs will do that. People who watch TV will do that."

One of the most touted benefits of PC banking is the appealing demographics of the average users, who tend to be educated and affluent. But as Mr. Pendleton of Meridian said, banks must also reach out beyond this group to more of the mass market.

"I'm not constructing a bank to serve just those (upscale) people," he said. "We've already got 30% of our customers not coming into branches, but we've got to double that, and we can't do that if we're only appealing to the smaller group."

Lobbying banks to reach out to the masses is the Interactive Television Association. The Washington-based trade group helps members - including Meridian, Eon, State Bank of Fenton, First Data Corp., and US West - hook up with potential partners and explore opportunities in interactive television.

Although he realizes that the medium is still nascent, Andy Sernovitz, the association's president, said home banking could become interactive television's "killer app," opening a market for bankers that is much broader than that of PC owners.

"The average TV viewer is not a computer person," he said. "A big chunk of interactive TV people will be computer people, but another chunk of them will be your average 900-number caller."

Since cable companies and other service providers are already footing most of the bill for research, development, and hardware, Mr. Sernovitz asserted, banks could easily choose partners and get involved with little effort or cost.

And given cable operators' skittishness about regulation, he said, they would be compatible allies - loath to blur the line between industries, as Microsoft has been accused of doing with its financial programs.

Mr. Sernovitz also raised the possibility that interactive television could act as a great equalizer among financial institutions of different sizes - a shift that could revolutionize retail banking competition.

"On a TV screen, State Bank in Fenton, Mich., and Chase Manhattan Bank look the same," he said. "State Bank is leaps and bounds ahead of anyone" in interactive TV. "They're going to scare a lot of people. She is way ahead of the curve."

The "she" to whom Mr. Sernovitz referred is Carolyn M. Spicer, senior vice president for retail banking administration at State Bank of Fenton, a unit of the $205 million-asset Fentura Bancorp.

The bank's screen phone program has so far been outpacing its work with interactive television, Ms. Spicer said. Like Meridian, it was left high and dry when Eon could not go ahead with its TV test. But as the telecommunications industry matures and the red tape is untangled, State Bank stands ready to shift back into high gear.

Ms. Spicer said the bank intends to roll out interactive television to 3,000 of its 10,000 customers beginning in late 1995.

Pleased to remain a "content provider" while an unnamed partner handles all the nitty-gritty, Ms. Spicer said reaching out to customers by this method can reduce the "churn rate" and foster more personal relationships - a strong selling point to small banks for interactive TV.

"I think the community banks can do this," she said. "There's no such thing as waiting to make the right choice."

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