Electronic Banking Brings Lobby to the Living Room Citibank Woos Customers by Ending Computer Transaction Fees

By Mark Trumbull and Laurent Belsie, writers of The Christian Science Monitor | The Christian Science Monitor, May 26, 1995 | Go to article overview

Electronic Banking Brings Lobby to the Living Room Citibank Woos Customers by Ending Computer Transaction Fees


Mark Trumbull and Laurent Belsie, writers of The Christian Science Monitor, The Christian Science Monitor


ARE you ready to change the way you bank?

Increasingly banks and technology firms think so.

They want to lure Americans on-line to pay bills, refinance mortgages, and buy investments from the comfort of their home- computer keyboards.

Citicorp, America's biggest bank, joined the fast-growing list of innovators Tuesday. Its Citibank subsidiary will no longer charge fees for electronic banking transactions, including those done by computer or telephone as well as at automated teller machines (ATMs).

Though losing revenue in the short run, Citibank hopes the cut-rate services will reel in new customers not just for checking accounts but for loans and investments, says spokeswoman Susan Weeks.

"That's got to be the wave of the future," says market researcher Gary Arlen, referring to the Citibank strategy.

Though only a tiny share of banking today is done from home, the long-run potential is too big to ignore. Within five years, 15 percent of the nation's 200 million checking accounts could be serviced on-line, predicts Mr. Arlen, president of Arlen Communications in Bethesda, Md.

The technological shift could transform the banking industry. After all, if customers don't need a hometown bank lobby anymore, do they need a hometown bank? Consumers may move their checking and savings accounts to institutions offering the best services and highest interest rates, even if they are 1,000 miles away.

"You will see in the next few years many banks going to national banking without branches," says Bruce Burchfield, chairman of Intuit Services Corporation, a subsidiary of Intuit Inc., in Menlo Park, Calif.

Microsoft a proponent

The loudest proponent of on-line finance, arguably, is not a bank but Microsoft Corporation, the software giant that stands to benefit from the proliferation of home computers. The firm's restless resolve to pioneer home banking was a key reason it recently abandoned a planned buyout of Intuit, which makes the leading personal-finance software. The United States Justice Department was trying to block the merger, and Microsoft didn't want its home-banking efforts delayed by a lengthy lawsuit and appeals.

For consumers, banking from home computers could be just the tip of the iceberg. On-line networks, led by the Internet, will open up an electronic marketplace that could grow to rival catalog shopping, which is a $53 billion industry.

But creating these new services and making them fraud proof will be costly, and the market's size is far from certain. Last year, for example, electronic commerce amounted to just $200 million in purchases by American households.

To lessen the risk of failure, many companies are pursuing their high-tech dreams through alliances. The players fall into several categories:

*Service providers, such as banks and other financial companies.

*Software firms like Intuit, whose programs help customers use services such as on-line bill-paying. …

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