Many bankers see interactive television as the answer to their home banking prayers.
Meanwhile, the TV industry is abuzz about its next technological leap: high-definition television.
Will banking by HDTV follow? Does HDTV have what it takes to make banking a multimedia channel for the masses?
While the technology is intriguing, most bankers see it as too far off to worry about. It may be closer than they think.
WHD-TV in Washington, the first digital broadcasting station in the United States, has been transmitting high-definition pictures since last August.
With a super sharp picture and six-channel surround sound, high- definition television is like having a movie theater in your home. But you can't buy a set-yet. HDTVs won't be on the market until Christmas 1998, about the time broadcasters will be required by the Federal Communications Commission to be sending digital signals.
TV is not at the top of most bankers' minds, because virtually all of today's on-line banking services are delivered via telephone lines to personal computers. But many technology experts anticipate a "convergence" that in future years could make TVs and PCs functionally equivalent, if not one and the same.
What's more, some marketers see television as the much more likely path to a mass market. TVs are in almost all households; PCs in roughly one- third, and many lack the modems necessary to go on-line. And television signals have information capacity, or bandwidth, unmatched by other media.
At 20 megabits per second "we could download the Sunday New York Times in less than one second into every home in Washington," said James C. McKinney, project director of WHD-TV, the experimental station. "That's more data than any bank will ever have to transmit."
For banking to get in on that communications boom, it may have to change its image. Catherine Corby, the former Barnett Banks Inc. delivery systems strategist, said it must learn from the techniques of media companies to make financial services more palatable, even entertaining.
"We need to redefine what we're doing as something other than 'home banking,"' said Ms. Corby, who recently joined Earnings Performance Group, a Short Hills, N.J., consulting firm.
WHD-TV is providing a glimpse into television's future by transmitting signals to two receivers-its own.
"We're providing the signal to equipment manufacturers like Sony, Mitsubishi, Philips, and Thomson so they can build television equipment that matches the standard adopted by the FCC," said Mr. McKinney.
Digital broadcasting is characterized as "point to multipoint"-a single source, or tower, sends out signals to many endpoints, or homes. It becomes interactive when the Internet or a two-way cable serves as a return path.
"The cable industry is going to be a very big player" in digital broadcasting, said Peter Waldheim, chief executive officer of the Association for Interactive Media in Washington. "It brings in a big fat pipeline, accelerating the speed at which people can both download materials and respond."
Nat Ostroff, vice president of new technology at Sinclaire Broadcasting in Baltimore, said that when every home device has its own Internet address, people could have information such as bank statements "specifically sent to them and no one else."
With high-definition TV, "the data rate is so fast that we can deal with tens of thousands of people simultaneously and still not affect our ability to send pictures and sound," Mr. Ostroff said.
It would not matter that the bandwidth delivered to the home would often be much greater than what the consumer needs to send messages back out. Those return communications, perhaps E-mails or catalogue orders, would require far less than full-motion video capability.
WebTV, a relatively fast Internet modem that Sony and Philips/Magnavox have been selling through retail stores since last fall, delivers a primitive version of interactive television, using telephone lines in both directions. It has not been configured to interact with on-screen television programming, but the capability is evident.
WebTV, along with other versions of set-top box technology, is "smart- card ready," which could dovetail easily with banking innovations like the Mondex or Visa Cash stored value systems.
"You can download your smart card at home, which would give you in essence an ATM in the home," said James M. Shelton, executive director of the Online Banking Association. "The bank at a minimum can cobrand the access card and provide a range of electronic shopping services."
Under a Dec. 24 decision, the FCC will allow broadcasters to transmit virtually any variety of data digitally at the rapid rate of 20 megabits per second. Program pictures and sound would be in the same data streams as information, such as Internet pages.
It is up to the TV manufacturers to decide what their equipment will handle. Manufacturers can either incorporate computer data in their designs or stick with today's TV-programming model.
The same goes for computer manufacturers; they can discard information meant for televisions or create "convergence" products combining elements of PCs and TVs.
Americans' comfort with the TV explains the buzz about interactive television. "Ninety-nine percent of U.S. households have a TV set; only 98% have a phone," said Mr. Waldheim of the Association for Interactive Media.
"A bank could have its very best salesperson for every single financial product it has doing a sort of home infomercial about that specific product," said Mr. Waldheim. Customers could browse on the screen, then connect to a live service representative for help with specific questions or to complete an application.
Beyond account information and basic transactions, banks could offer a wide range of services and multimedia access.
"That means not the kind of numbers and graph presentations we have today, but full-motion video into the consumer's home of a customer service representative talking to a consumer," Ms. Corby said.
Others look farther into the future, to a time when digital television and related services take off symbiotically.
KPMG Peat Marwick principal Dominick Cavuoto uses the example of a grandmother buying Junior a gift trust. "If the bank is offering the capability to buy into a gift trust, it could also be hot-linked to Hallmark," he said. Grandma could connect to Hallmark, select a card to notify the recipient of the trust she is establishing, and then send the card with a click of a button.
"We can look for this in 2002," Mr. Cavuoto predicted.
A lot has to happen for that kind of "value chain" to come together. There would have to be alliances among banking companies and television networks, among others. Appropriate equipment needs to be developed and distributed, and digital broadcast transmissions would have to be routine.
"Companies that want to be major players are going to have to invest some research and development dollars and kick the tires of interactivity," said Mr. Waldheim. If they wait a few years "then they've waited too long and others are going to have the distinct advantage of building the relationships," he said.
Barnett, working with Time Warner's Full Service Network in Florida, is the only bank to have made a sizable investment in an interactive cable television service. But it went into the venture realistic about banking's "tag-along" status.
"A lot of this movement is being driven by the consumer electronics companies and software companies," Ms. Corby said. "The consumer electronics and entertainment industries are not waiting for banks to get together and come to them; they're doing it on their own."
"If the consumer buys HDTV, he will be buying it for entertainment," Mr. Cavuoto added. "Financial services will piggyback on that capability in people's homes."
Back at WHD-TV, Mr. McKinney said the high-definition future is not all that far off. By the end of next year, he said, "we're going to have (HDTV) stations on the air and equipment in the stores."
"It's certainly going to be a high-end product in the next few years, but in 10 years you may find it is a product that people have to have, just like they have to have a VCR today," said Mr. Ostroff at Sinclaire Broadcasting.
Ms. Corby thinks it can happen even sooner.
"With digital television you are going to see even faster convergence," she said. "You have an intelligent high-definition device sitting in the home with which people are comfortable." As precedents she cited the rapid spread of cellular phones, fax machines, and the Internet.
Pricing will be key, Ms. Corby said: "If the price is well into the four digits you're going to see slower consumer acceptance than when it comes down."
On the skeptical side, telecommunications consultant Gary Arlen said HDTV has little more to offer than that "the picture looks prettier." When asked why a bank might be drawn to the technology, the president of Arlen Communications, Bethesda, Md., replied, "They wouldn't."
