Fear, not greed, will drive banks onto the Internet, according to a new Internet banking report from Jupiter Communications.
"Banks must be on the Web by the end of 1997," advises Jupiter's Scott Smith, principal analyst on the study, which says bankers' fears of losing customers to increasingly aggressive non-bank competitors will drive them to the Net. "The largest U.S. banks have to strike soon or miss the market."
The winners? Consumers who will save money banking on the Web and technology suppliers that help banks and other financial institutions do Internet transactions, according to the report.
Some 2.5 million households banked online by the end of 1996, Jupiter estimates, predicting 4.5 million households by the end of this year and 18 million by the end of 2002. That translates to 3.1 percent of U.S. households banking online last year and 18.6 percent by the year 2002.
Jupiter concluded that Internet bank fees charged customers will shrink as free service becomes the norm. Bankers must justify Internet banking as a competitive tool and cost-saving measure.
The report also noted that an online banking transaction costs less than one percent of serving that customer in a bank branch.