Net offers way for firms to bank on TV

The Internet may be breathing new life into television banking. As computer and software companies, cable operators and television manufacturers pursue ways to make the Internet accessible through TV sets, the future for banking by television may have brightened with AT&T's recent decision to acquire Tele-Communications Inc.

AT&T, because of its telephone heritage, has the two-way communications capability that the cable television industry is vying for. TCI has the high-capacity pipes of cable TV, reaching 13.5 million homes in its own right and many more through programming and other alliances.

For years, bankers have been eyeing two-way cable as a potential mass market channel for delivering remote services. There's a television in almost every US household and 70 per cent are hooked up to cable, compared to 40 per cent who own personal computers with modems.

The cable industry, led by TCI, is intent on distributing a new generation of set-top boxes with Internet access. These boxes will sit on top of television sets.

The technology has developed considerably since some failed cable banking experiments in the US earlier this decade by Meridian Bank (since absorbed into First Union), National Westminster Bank and Shawmut Bank (now Fleet Financial Group) and Barnett Banks (now owned by NationsBank).

Mr Andy Sernovitz, president of the Association for Interactive Media in Washington which includes 12 banks among its 300 members, says the advent of the Internet took some of the steam out of early interactive TV experiments.

"The Internet came so fast and so suddenly that everyone was surprised by its scope," Mr Sernovitz says. With advances in security and software, "many obstacles to interactive banking have been removed. To put banking on the TV instead of the Internet is only a matter of construction."

He says the AT&T-TCI combination will "bring more resources to the table to build in high-end functionality. We're a lot further along than anyone had expected."

AT&T's interest in cable should give banks a greater appreciation for their role in interactive television, says Ms Catherine Corby, who oversaw Barnett Banks' early experimentation and has been a strong advocate of the medium.

Now director of retail strategy at Earnings Performance Group of Short Hills, New Jersey, she says: "The investment is too massive for banks to think that they'll be the leaders".

"The telecommunications companies will lead the way with the infrastructure into the homes," Ms Corby adds, and banks can focus on being content providers that profit through strong brand identities and relationships with customers.

According to one estimate, AT&T would spend five years and $9 billion (£6.5 billion) to upgrade TCI's network to carry voice and Internet-style data traffic.

Within five years of completing the deal, AT&T hopes to sell access to the Internet to 30 per cent of TCI's cable customers.

AT&T sees it as a worthy and competitive investment because cable companies and regional telephone companies called the baby bells own the only direct communications links into homes and businesses.

TCI also happens to be involved in a joint venture with BankAmerica, Intuit and @Home Network, which attracted new attention to cable as a potential financial channel when it was announced in March this year. BankAmerica is the lead shareholder and expects to keep the system open to other financial institutions.

Over the TV, consumers would be able to check account balances and transfer funds between accounts; electronically receive, review and pay bills; manage investments; shop and apply for mortgages, other loans and insurance; and prepare and file taxes. Services are expected to be available in 1999.

Mr Michael de Vico, executive vice-president at BankAmerica's interactive banking division, says the joint venture "has not been affected" by its merger deal with NationsBank nor AT&T's with TCI.

"Television, in terms of a customer device, is a natural," Mr de Vico says. "With the growth rates in Internet usage, now is the time to invest in this delivery channel. Our goal is to be a primary provider of financial services over interactive TV."

For its $48 billion, AT&T would purchase most of TCI's cable and digital assets, including its 42 per cent stake in @Home, whose interactive technology reaches 100,000 customers. TCI would rank second to Time Warner Cable in subscribing homes.

AT&T spokesman, Mr Mark Siegel says it is "too soon to tell" what plans AT&T has for interactive banking.

"We don't know enough to say what specific offers we'll have," Mr Siegel says. "But the idea is to give people maximum choice and flexibility in all the communications choices they get." For example, "if someone wants high-speed Internet access all day over the TV, we'll make it available."