Home Bank Customers Grow to About 44,000

By DAVID O. TYSON

The American Banker estimates 44,000 consumers and small businesses now use microcomputers and terminals to do their banking from homes, offices, hotel rooms, airport club lounges, and other remote locations.

Twenty-two banks, thrift institutions, and credit unions are in full commercial operation with home banking programs; 25 others are in pilot tests; and another 15 have disclosed plans to offer bank-at-home services eventually.

In terms of customers, Chemical Bank is the leader in this emerging way of delivering retail financial services. The New York bank has issued personal identification codes, or PICs, to 21,000 individuals so they can access Pronto, its videotex system built around home banking.

Previously, Chemical Bank had reported only the households that are signed up for Pronto, currently 16,000, since it issues an encoded software diskette to each. But in many of the households, more than one individual uses the disk to bank via Pronto and each individual has his own identification code.

This put Chemical and other banks using special software at a disadvantage in determining market position, since such software is not required by many institutions offering home banking. The Bank of America, heretofore considered No. 1, has an open system that relies for identification on the personal identification codes, passwords, and account numbers that the user himself enters, not codes entered automatically by a software program.

To standardize its survey, the American Banker asked chemical and other institutions to disclose the total number of personal identification codes issued to home banking customers.

On that basis, Bank of America is second with 16,000.

Third probably is Citibank, which had 1,000 in its HomeBase pilot test and is believed to have converted most to Direct Access, its new fully operating program. Citibank declines to disclose how many use Direct Access but says new customers have been signing on steadily since it was introduced in December. Its Focus asset management accounts, an upscale product, also can go on line since October.

Fourth is Madison National Bank, Washington, with 650 in its proprietary system, up from 550 in October. Beyond that, no institution appears to have more than a few hundred on-line customers. The growth has been slow. It is expected to accelerate as the technology catches on and banks improve their systems and add enhancements.

Only one band has dropped out of home banking recently — Farmers State Bank & Trust Co., Jacksonville Ill., which had seven customers in a pilot test of the system it designed.

In the American Banker issue of Oct. 29th, Continental National Bank, Miami, was shown incorrectly as having 950 online customers, which would have been a huge increase. The bank acknowledges that it furnished a total combining ATMs and home banking customers. Its home banking customers now number 270.

Chemical bank issued a news release on Thursday, announcing it now has more than the 16,000 households in Pronto and noting this was a 150% increase since last July.

"It appears that electronic banking and information services are taking hold," the release said.

The bank said a survey shows that 53% of Pronto subscribers have incomes of more than $50,000 and 36% earn between $25,000 and $50,000 annually. The largest age group comprises those between 35 and 49 who account for 44% of users. Almost 45% have college degrees and 39% have graduate degrees.

"More than 1,200 households now are signing on monthly, and the percentage of those new Chemical is 18%, up from the 16% September figure," Robert B. Willumstad, senior vice president, said in the announcement. “They also tend to open new accounts with the Bank. The average Pronto user has more than twice as many accounts with the bank as non-Pronto Chemical customers.”

Chemical said that households in which two people use the service accounted for 41% of the total. In 7%, three or more use it.

The aggregate numbers seem certain to grow. For example, the New York market is under a barrage of advertising and in-branch promotion by Chemical's competitors — Manufacturers Hanover Trust Co., Citibank, and Chase Manhattan bank. All rolled out full commercial home banking programs late 1984. None will say how many users have signed on.

The next program to go live probably will be that of Security Pacific National Bank, Los Angeles. It has repeatedly delayed plans to hook into Gateway videotext system in Orange County, Calif., via VideoFinancial Services. Early February now is the target.

VideoFinancial Services also has a deal with CompuServe to be the gateway for banks into that on-line information service. William S. Harris, the VideoFinancial president, says a series of announcements are forthcoming.

Another system operator — Shuttle Corp., Redmond, Wash. — expects to put Louisiana National Bank, Baton Rouge, on line in the first quarter and says it has contracts with other institutions.

The NCR Universal Credit Union, Dayton, Ohio, has formed a cooperative to share research and development expenses with three other credit unions and expects the others to go live in April on CompuServe. NCR Universal itself has 150 on-line customers.

And Southeast Bank, Miami, is considering making its service available to personal computer users, not just through Spectre terminals required for Viewtron, the videotext system in southern Florida.

Viewtron has fallen far short of its promoters' hopes. Mr. Harris of VideoFinancial says it has 3,200 to 3,500 subscribers altogether and the home banking customers in that group number less than 1,000.

Whatever the exact number, only 74 of them are in the four other Viewtron banks with operating or pilot programs. The rest are in Southeast, which has not disclosed the number. Lester Freeman, Southeast marketing officer, did not respond to telephone requests for the total.

The problem is costs for the user. Though it brings in videotext pages of beautiful color and graphics, the Spectre terminal is $600 to buy or $39.95 a month to lease as part of a subscriber package. But its use is limited to Viewtron.

By contrast, the owner can use a microcomputer for a growing array of functions, either on line to a videotext service or off line with his own software. He sacrifices high resolution color and graphics for a text-only system that is more diversified. He may pay more for it but he can do more.

Corrected April 21, 2016 at 5:13PM: This post is part of an occasional series of classics from our archives. The story below appeared in American Banker on Jan. 21, 1985, and discusses the results of a survey of banks about at-home computer banking use.