As I write this column, the Olympics are under way in Salt Lake City. The Americans have just swept the snowboarding medals and a pair of Canadian figure skaters were edged out of a gold medal by the dubious voting of some European judges.
The human drama of athletic competition aside, what I have found to be the most shocking occurrence during these games was the Bank of America ads touting their Internet banking and online services. Imagine, a major financial institution willing to spend millions of dollars to promote their Web offerings on prime time. Who'd have thunk it?
All kidding aside, the timing of the pro-Internet Bank of America ads could not be more propitious. Despite ongoing dot.com demise, more Americans than ever before are turning to the Internet. According to statistics recently released by the Department of Commerce, the number of Americans on the Web grew by 26 million from September 2000 to September 2001, an average of two million new users per month. Thanks to this influx, 143 million Americans-roughly 54 percent of the current population-access the Internet on an ongoing basis.
Of course, this boom in Web use does not necessarily translate into a gold rush for providers of online financial services. Indeed, there is still a substantial learning curve for the industry to surmount. Simply put, just because an institution is capable of handling Internet banking doesn't mean its customers are suddenly going to flock to it. They have to be convinced of its value first.
Which is why I admire the Internet promotion efforts of institutions like Bank of America and MasterCard, which, through its MasterCard RPPS division, has launched an initiative to educate consumers on the value of electronic bill presentment and payment. After all, before a bobsled races across the finish line, people have to push it first.
But while I think Internet banking will ultimately be successful consumer offerings, there are some moguls that still need to be crossed. To me, first and foremost is the perception that Internet services are only of value to the wealthy. Financial institutions are partially to blame for this view since some have relegated advanced Internet offerings into the wealth management arena, in hope of capturing the lucrative Baby Boomer business.
While this strategy may ultimately prove successful, it ignores the fastest growing segment of the Internet market-lower income Americans. Indeed, according to the Department of Commerce, Internet usage has been growing fastest among the lower income group-25 percent annually in households earning less than $15,000 a year.
Up until know, some financial institutions have viewed the Internet as little more than a way to attract and retain upper-end clientele. A better and potentially more lucrative approach may be to refine a mass market approach for Web services. Unlike the Olympics, a lot of bronze can outweigh the value of a gold medal.