THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, March 26, 1995 TAG: 9503250299
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Long : 102 lines
When it was introduced in the early 1980s, the idea of banking from home flopped.
Consumers still weren't interested later in the decade when banks took a second pass at delivering financial services through home computers.
Still determined, banks are trying again. But this time around, several banks are offering home banking with a twist.
They are testing consumer acceptance of home banking through the Internet, the sprawling computer network that ties together a array of information sources.
In early January, First Union Corp. posted a lengthy description of its services, along with an e-mail address for inquiries and suggestions from Internet users.
More recently, the Charlotte-based company launched a system that will offer home shopping and banking services via the Internet.
Why would a bank move so quickly when many of the details for delivering these services profitably have yet to be worked out?
``We feel it's important to get in on the ground floor to help shape the standards,'' said Thomas Bartolomeo, vice president for marketing and strategic planning in First Union's bank-card division.
When first offered, home banking consisted largely of bill-paying services that also allowed customers to transfer funds from one account to another.
Today, home-banking menus are much longer. Some provide options like shopping for investment products and applying for a loan.
Among financial institutions, the drive to develop home banking has been spurred by the proliferation of computers in U.S. households. ``In 1993, there were more personal computers sold than TVs,'' First Union's Bartolomeo noted.
And in contrast to the machines available in the early 1980s, the personal computers on the market today are relatively inexpensive but much more powerful.
Meanwhile, computer novices are able to tap the Internet with less difficulty.
``It used to be very clunky for people to get onto. It involved a lot of text,'' Bartolomeo said. ``Now it's graphical and point-and-click,'' he said, referring to use of a hand-held ``mouse'' for making choices on a computer screen.
For banks investigating new ways to sell their services, the Internet has a special appeal, said Rob Krupicka, educational funding business analyst at Signet Banking Corp. Internet users, he said, don't hesitate to share their observations about what they read on the network.
Richmond-based Signet began using the Internet in February to promote student loans and offer advice on financing a college education. Tacked onto its package of information about scholarships and loans is an e-mail address to request loan applications, ask questions about college financing or comment on Signet's Internet material.
Signet won't be able to measure the success of its Internet promotion until students begin submitting loan applications later in the year, Krupicka said.
However, responses from Internet users already have yielded information that Signet could apply to other financial services on the Internet. ``We're getting a lot of great feedback,'' he said.
Krupicka declined to disclose how many responses Signet has received - other than to say the volume was greater than what the company expected.
For financial institutions, having a home-banking service is an extension of having a network of automated teller machines, one more way to deliver convenient service while holding down the cost of operating their brick-and-mortar branches.
But some banks have jumped into the unsettled Internet arena partly out of fear they might be bypassed by competitors exploring new ways of delivering financial services.
``Banks should be concerned,'' said Bartolomeo of First Union. ``You see a lot of nontraditional providers getting involved.''
Still, some obstacles could hamper broader use of home banking on the Internet. One is the security of sensitive information, including credit-card numbers and information on loan applications.
Despite the development of protective measures, concerns about privacy have been heightened by widely publicized thefts of telephone numbers and other private data by computer hackers.
Some financial institutions insist they have sufficient safeguards for passing sensitive information along the Internet.
Capital One Bank, a credit-card issuer that was spun off by Signet Banking Corp. this month, has begun soliciting card applications via the Internet. To protect the privacy of these applications, it chose an encryption technique that ``appears to be an effective way to protect on-line transactions,'' Capital One said.
Still, this protection had not been used long enough to be considered foolproof, the bank conceded.
In Virginia Beach, Naval Air Federal Credit Union is working on plans to accept loan applications via the Internet later this year.
``We're doing a lot of research and spending a lot of time making sure (the application system) is very secure,'' said Phil Richards, assistant vice president of strategic marketing and marketing at Naval Air.
The credit union, which has 127,000 members, posted a description of its services and eligibility requirements on the Internet in February.
``We felt it was important for us to get in early,'' Richards said. Because of the convenience of home banking, ``we're betting that this is technology people will use in the future.'' ILLUSTRATION: KEN WRIGHT/Staff
by CNB