Does home banking have a future?

Does home banking have a future?

Home banking pilot projects are now only dim memories. But with new technology, like Bell Canada's ALEX service, there are renewed efforts to provide the public with greater financial products and services. The Home Information Revolution. Home Banking: The Coming Revolution in Financial Services. Banking From Home: The Wave of the Future.

For much of the last decade, it was impossible to pick up a newspaper or trade journal without being bombarded by headlines such as these. In the United States and Europe, most major financial institutions had home banking projects on the drawing boards. In Canada, every major bank was seriously evaluating the business case for initiating one. The home information revolution was upon us. Or so we were told. But, it never really materialized. Instead, the banking industry was left with a trail of unfulfilled promises ... a legacy of disillusionment and disappointment.

As we enter the '90s, only a handful of the early home banking projects remain. What went wrong? Was home banking a fad that ran its course? Or have we just reached a new plateau in development? While the future of home information services is far from a sure thing, there is still solid evidence to suggest that the demand for these services may be as strong as had originally been thought. But, the banking industry has so far failed to come up with an acceptable product that yields added value and can be offered at an attractive price. If nothing else, the early pilot projects have taught us a great deal about what does and what doesn't work in the marketplace.

What has changed?

The market for home information has changed significantly since the trials of the early 1980s. Consumer attitudes and behaviour patterns have been shifting. Consumers today use telecommunication links (including voice, data and fax networks) to replace a host of routine activities formerly undertaken as face-to-face transactions. In the retailing industry for example, studies suggest that catalogue shopping via telephone, already the fastest growing segment of the retail industry, could soon account for as much as 50 per cent of consumer purchases (up from 28 per cent today).

In the financial services industry, an entirely new generation of customers, who have always had access to ABMs for routine transactions, expect that innovative financial institutions will continue to extend the convenience and efficiency of electronic funds transfer beyond the bounds of ABM networks. In …