Shawmut National Corp. has pulled the plug on its attempt to provide banking services via interactive television.
The New England banking company and AT&T Corp., which in January announced a joint project to test the new medium, suspended the effort after running into repeated snags.
Initially, they had expected to start the program in the second quarter.
Shawmut, which is merging with Fleet Financial Group, was one of a handful of banks dabbling in perhaps the most cutting-edge of interactive service technologies. Most bankers see personal computer networks as a more realistic opportunity, while some are testing telephones enhanced with small display screens.
Shawmut executives cited a lack of customer interest in two-way TV after months of "concept testing."
"What we've found is that the amount of demand out there for this product at this price point is too low," said Barbara Riefler, director of retail distribution and planning for Hartford- and Boston-based Shawmut.
The Home Center - the name AT&T gave to its set-top cable box and remote control - was priced at $350. It was going to be sold initially through AT&T Phone Center stores. Neither the bank nor AT&T had set prices for the banking services themselves.
Ms. Riefler said the bank's research showed that less than 5% of customers would buy and use such a system for financial services.
A source close to the project said Shawmut was also dissatisfied with the level of sophistication of the system, which uses ordinary phone lines as opposed to the more powerful broadband technology used in some other interactive television tests.
Ms. Riefler balked at this assertion, saying the customers were "comfortable with the concept," just unwilling to pay the going price.
Monty Hoyt, a spokesman for AT&T's consumer products division in Parsippany, N.J., confirmed that his company decided last week to stop work on the interactive television device.
"AT&T has decided not to bring the Home Center to market at this time," Mr. Hoyt said. He also cited a lack of consumer readiness and said AT&T made its decision independent of Shawmut.
Shawmut had made only a "minimal" investment in the project, Ms. Riefler said. Mr. Hoyt said AT&T spent a "considerable" amount on developing Home Center since early 1994.
Shawmut was the only bank working with AT&T on the interactive TV project. But other banks, including Barnett Banks Inc. and National Westminster Bancorp, are working with other partners.
Last December, Barnett announced plans to join an interactive television trial in Florida, led by Time Warner Inc. That pilot has been slow getting off the ground, and Barnett is still in the development stage with the cable conglomerate. Natwest said earlier this year it would work with Comcast Communications Inc. to sell mortgage products to consumers and realtors via interactive television.
"Financial institutions are generally slow to embrace a new idea, but a number of banks were interested," Mr. Hoyt said.
Although interactive television could prove promising for financial services and shopping, past pilots and research have generally indicated the technology is insufficiently advanced and too expensive for mass customer acceptance.
Like the PC-based banking services that have taken more than a decade to find a market, interactive TV may take several years before capturing a critical mass. Experts believe consumers are unlikely to demand interactive TV until the price comes down.
Shawmut is not the only bank to have canceled an ITV project. Meridian Bancorp of Reading, Pa., invested about $100,000 in a 1993 project led by Eon Corp., formerly TV Answer Inc., said Meridian senior vice president Joseph Pendleton.
After plans for a pilot fell apart in 1994, Mr. Pendleton said Meridian shifted gears and began focusing more of its alternative-delivery energies on personal computers.
He said "the infrastructure is just not there" for interactive television. But he added that once cable operators expand the range and power of their systems, the medium could hold great potential to reach customers "who are not inclined to use PCs."
For now, Mr. Pendleton, like many bankers, feels he "can't afford to throw money at every possible channel."
Ms. Riefler of Shawmut said the flurry of home-banking announcements in the nine months since the Home Center deal was announced have greatly improved the viability of personal computers.
She said Shawmut for now is placing interactive television behind PCs on the priority list.