A new survey on home banking throws cold water on recent estimates about how hot the market is.

SRI Consulting concluded that no more than 10% of U.S. households will be banking on-line regularly in three to five years.

The Menlo Park, Calif., firm said that while 33% of the 109 million households own personal computers, only 7% have tried on-line banking - and many abandoned it quickly.

The 10% estimate falls well below those of other research groups. For example, Booz-Allen & Hamilton has said 16 million households - roughly 16% - will be banking just via the Internet in 2000.

"The hype curve is just far above the reality line," said Larry Cohen, director of SRI's consumer financial decisions group and chief author of its study. "People pick (home banking) up and try it and are disappointed, then they drop it."

Optimism has been rampant in some quarters. Dudley Nigg, an executive vice president at Wells Fargo & Co., estimated 30 million households will use the Internet by 2000. He said 110,000 Wells Fargo customers do banking on the Internet today, and predicted two million would do so within five years.

Voicing a more conservative view, Citicorp chairman John Reed has said it could take half a century for on-line banking to gain mass acceptance.

SRI, which polled 3,600 families, said "early adopters" of technology who have high banking needs represent a paltry 4% of households - and not all of these are necessarily interested in remote banking.

"A computer does not guarantee willingness to use on-line banking," said Maria Woodward, an SRI program manager.

SRI identified two groups of consumers banks could have trouble converting: those who lack technology savvy and those with minimal banking needs.

"Each of these groups has different hooks, if you will, to get them on board," Mr. Cohen said. Expanding beyond the early adopters is "going to require figuring out how to service their needs."

Authors of other home banking studies were quick to disagree with SRI.

Wayne Cutler, vice president in financial services at Booz-Allen, said SRI's five-year prediction sounded "incredibly low."

Mr. Cutler said banks are improving their on-line products, making them easier and more useful. "The attractiveness is going to continue drawing in more and more people," he said.

The American Banker consumer survey last year, conducted by the Gallup Organization, showed 7% of those owning PCs were using them for banking. The survey covered only people with financial institution accounts; 7% would translate to between 4% and 5% of total households.

Synergistics Research Corp., in a survey unveiled at last week's Retail Delivery '96 conference, came up with 7% home banking penetration among households with at least $15,000 of annual income.

Jupiter Communications and Find/SVP said in a joint study this fall that 2.1 million use home banking and as many as 7.2 million more might start within a year, bringing the household penetration to a maximum 9%.

"We strongly found that financial services are a potential killer application for home PC owners," said Adam Schoenfeld, a Jupiter analyst and co-author of the study.

Jupiter estimates 36 million households will be on-line by 2000, and one in 10 may be banking on-line by 1998.

"All of that depends on providers building excellent products and marketing them, and right now that is a wild card," he said.

SRI executives agreed that the technology would improve and that more consumers would grow comfortable with it, but they still differed about the speed of adoption.

"SRI has traditionally been more conservative in projections, simply because they feel that there's a lot more things that get in the way," said Ms. Woodward.

"Look at interactive television," she said. "Everyone was touting it to the heavens four years ago, and nothing ever happened with it."

Gary Meshell, director of the financial services industry consulting practice at Price Waterhouse, said he "disagreed vehemently" with SRI.

"I don't think it factored in the dynamics that the marketplace is going through right now," he said.

He pointed to Integrion, a remote banking consortium formed this year by International Business Machines Corp. and a group of banks that has relationships with 60% of U.S. retail bank customers.

Home banking, he said, will soon have "a critical mass of consumers and an economy of scale."

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