Consumer acceptance of PC home banking will come more slowly than is widely thought, a recent study suggests.

The study, by Mentis Corp., included interviews with banks, consumers, and vendors, and used U.S. Census data. It placed the number of current PC banking users at 500,000. Mentis predicts that the number of users will grow to fewer than four million by 2000.

By contrast, New York-based Jupiter Communications Co. has put the number of PC-based home banking users at 700,000, and predicts the market will grow to approximately 13 million users by 2000. Tampa-based Payment Systems Inc. estimates PC-based home banking is done in one million households today, and predicts at least 16 million one-user households by 2000.

Mentis' figures are based on an estimate that less than 7% of households are headed by a person who has the characteristics of a prime PC banking candidate: between 30 and 45 years old, annual income above $50,000, and having at least a bachelor's degree.

Other factors affecting openness to PC home banking, according to the study, are consumers' familiarity with on-line services, their role in household financial management, and their current use of other self-service banking channels.

The Mentis report also said that PC home banking programs are not yet sophisticated enough to attract and hold users. "The infrastructure is still fairly immature," said James B. Moore, president of Mentis.

The study found that many of the people who meet the demographic profile already have tried electronic banking services and found them to offer limited benefits.

One major problem Mr. Moore sees with electronic bill payment services, for example, is that they often are anything but electronic: in many cases, the services are merely writing paper checks when ordered by a consumer to pay a bill.

"Electronic bill presentment is a necessary trigger for the commercialization of electronic bill payment," he said. "As long as consumers are presented with paper envelopes and remittance slips, they're not going to change the way they do things."

He said the consolidation of bill originators will likely facilitate electronic bill presentment.

"There's already great consolidation of billing origination volumes in a relatively few number of companies," he said. According to Mentis, 6 billion of the 17 billion total bills originated each year are generated by 2,200 companies.

"If these companies decide to deliver bills electronically, the volume could be sufficient to stimulate an electronic payment alternative for the vast majority of consumers," he said.

The good news for PC home banking is that the graphical capabilities of the computer increase the likelihood that consumers will use it, Mentis found. This also bodes well for interactive television, but poorly for delivering banking through screen-based telephones or hand-held computer devices.

Mr. Moore said the TV ultimately will become the device of choice for electronic bill payment.

"Only cable TV providers have the broadband technology capable of supporting interactive video exchange, a commercial medium that outperforms all others, including high-capacity fiber optic lines," he said.

Recent regulatory changes make the emergence of interactive television even more likely. The Telecommunications Act of 1996 lets telephone companies and cable providers get more involved in information origination, management, and distribution than ever, and this could speed the development of interactive television projects.

Mr. Moore said the cable providers' and phone companies' experience in mass marketing could help promulgate electronic banking.

Further, mergers between communications companies, "will enable all electronic conduits into the home to be owned by single entities with revenue based on traffic volume over those channels, compelling the companies to develop new services," he said.

For example, a telephone company could buy a cable company and deliver telephone bills over the TV set, and offer the same accessibility to a utility company, Mr. Moore said.

"Add a couple of insurance companies and another large biller and you'd have a large volume of the billing volume going to the average household."

All of this has major implications for banks.

Since, in such a scenario, financial institutions would not own the delivery channel, they would not be able to charge transaction-based fees.

It also presents obstacles to promoting individual bank brands. Just as a retailer puts its brand a product and places it on a shelf owned by a separate distribution company, banks may have to figure out how to differentiate their services by the way they package and present information.

The proliferation of personal financial management software is one indication that consumers are willing to pay for such management of their information, Mr. Moore said.

The importance of packaging suggests that banks should be investing in user-friendly interfaces to services, the integration of channels to show one face to consumers, and the management of information, he said.

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