How business, doctors and journalists prey on your food anxieties I

COMPUTERS/COMMUNICATIONS
Who wins
home banlzing?
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Richard A . ShaYer is
founder of Technologlc
'artners, a tecnnology
consLliing com^.ary
in New York City,
antl publisher o'r
iechnotogic Computer
Lefler.
TECHNOLOGY ISN'T EVE2YTHI\G . Often, it's
not even the most importan t thing . I think we're
going to see this vividly demonstrated in the
home banking <strong>business</strong> .
Truscbusters at the Justice Department
scared offMicrosoR from its planned acquisition
of Intuit, which sells soffirare that enables
you to pay vour bills, balance your checkbook
<strong>and</strong> do vour taxes by computer . The government
complained that a combination of the
companies would gice Microsoft an unfair advantage
in the emerging world of electronic
commerce . That would hurt banks, credit card
companies <strong>and</strong> other financial institutions .
I think the government is wrong, Years ago,
when semiconductor companies created the
digital watch, the experts assumed that chip
companies (like Texas Instruments) nrould walk
away ss-ith the natch <strong>business</strong> . After all, thev
had the superior techni <strong>and</strong> those oldfashioned
watchmakers in Switzerl<strong>and</strong> had the
inferior technology .
It didn't work out that way . Watch manufacturers
just bought the semiconductors they
needed <strong>and</strong> ran marketing circles around'I .
Expect similar adapti ve behavior on the part
of financial institutions . It's quite possible that
Citicorp will end up using home banking software
written by Microsoft . But Citicorp can buy
technology elsewhere, or reinvent it itself if it
has to . Citicorp has been using computers since
before Bill Gates was born .
During the next year, upstarts from the
world of technology «'ill enjoy some successes in
on-line commerce, capturing portions of the
relationship between financial service institutions
<strong>and</strong> their customers . The new, technology-based
companies, however, probably won't
make significant <strong>and</strong> lasring gains in financial
<strong>business</strong>es . The banks, credit card companies,
brokerages, mutual fund managers <strong>and</strong> insurers
are too big, too smart <strong>and</strong> too entrenched to
be pushed aside by Microsoti .
In Germam <strong>and</strong> Japan about 90% of all
banking transactions are alread~ being done online
. The shift is coming more slowh- here, but
we do have electronic bill payments through
such companies as Intuit, Checkfree, National
Payment Clearinghouse <strong>and</strong> Interactive Transaction
Partners .
Sexier on-line financial sercices will arrive
here, probabh, in a vear or two . I'm hoping for
an on-line service that would allow us-kith
no added transaction fees-to inquire about our
checking <strong>and</strong> sa% ings account balances, transfer
ti nds, pay our bills, comparison-sitop for
savings instruments, fuss over our Itt,~s, manage
our credit card accounts, apply for loans,
peruse our stock portfolios, execute trades <strong>and</strong>
mavbe even settle our gambling debts at offshore
Internet casinos with untraceable international
currencV .
The banks <strong>and</strong> brokers are preparing for
that day . They have used computers for years in
their back rooms to wire monev, clear securities
<strong>and</strong> the like . Now, automation is coming to
the front window . Recently, for example, NationsB
;nk <strong>and</strong> Bank of America bought the
rights to the klanaging Your Money personal
finance sofnvare <strong>and</strong> intend to license it broadly,
customizing it for other financial institutions
to help them maintain ties with customers who
want home banking .
Credit card companies face competition in
digital commerce from such voung companies
as CyberCash, First Virtual Holctings <strong>and</strong>
Banks, brokerages <strong>and</strong>
mutual fund managers are
too big <strong>and</strong> too smart to be
blitzed by Microsoft .
TelequipCorp . (see .ltichaelGiarttrrco ;column
on the folloiving page) . The upstarts, however,
won't find Visa <strong>and</strong> MasterCard to be pushovers
. The card companies have 300 million
users <strong>and</strong> tremendous br<strong>and</strong>-name recognition .
Mutual fund giant Fidelity Investments is
using the Internet's World Ylride Web to cut
costs, primarilv in distributing prospectuses .
The company looks at the Internet as an interesdng
new interactive channel that can supplement
existing mail, in-person <strong>and</strong> telephone
services . Fidelitq also is using its on-line presence
to find potential customers, as well as to do
some market research .
When, a year or so from now, big financial
services companies have made clear their strategies
for interactive electronic commerce, I expect
their strengths to be all the more apparent .
Among other advantages, financial institutions
have experience with the pace at which
consumers are willing to accept new technolog},
in such sensitiNe areas as personal finance .
They remember, for example, that home
banking didn't happen ten years ago, when it
was widelv predicted, <strong>and</strong> that it has takcn
three decades for automated teller machines to
become commonplace . =
For6es . August 14, 1995
204ES73413
163
http://legacy.library.ucsf.edu/tid/agf97d00/pdf