The need to do so is clear because in Europe, non-traditional competitors are challenging incumbents by restructuring and developing new channels to woo customers from established financial service providers. These new competitors include major retailers who offer in-house checking accounts, loyalty programs and multiple data-set smart cards to provide new levels of customer service and competitiveness that could take traditional banks out of the loop.

"Deregulation and consolidations in the United States have many of the country's banking and financial service providers looking closely at various routes to becoming truly global competitors," said Harry Hoyle, Senior Vice President of INTECO.

"We feel it would be very valuable for them to take a hard look at similar services being offered in areas such as the UK where financial services have evolved ahead of those in the U.S. The environment there can provide some valuable clues as to where financial services may be headed in the United States and globally."

INETCO's recommendations for the industry include:

1. Keep the PC-banking service simple and attractive. The temptation to differentiate offerings by loading them up with features and options should be resisted. That only increases complexity and creates barriers for the consumer.
2. Treat interactive banking as a set of complementary channels. PC, digital TV and digital cellphone banking, as they emerge in the U.S., should not be treated as separate entities. The same customers will need multiple platforms to access and manipulate their financial information.
3. Target "technology-dependent" households. This household type is the ideal test bed for new products. If these households do not embrace a service, it is unlikely other groups will.
4. Develop financial services as a gateway to electronic commerce. Banks who evolve their PC-banking services quickly will see a strong competitive benefit. PC banking customers are among the heaviest purchasers of goods and services via the Internet. PC banking services create many opportunities to provide financial services and to become customers' gateway to electronic commerce.
5. Investigate the viability of "enhanced person-to-person telephone services" channels for financial services. Although still unknown in the UNITED STATES, this service introduces "commoditization," a necessary first step to future PC-based financial services and a major opportunity to reach a wide audience.
6. Partner with cable MSOs and providers of electronic program guides (EPGs). As cable MSOs introduce digital cable technology and attendant data services, bank account access will become one of the most frequently used applications. There are opportunities as well as risks, which are outlined in the report.
7. Partner with digital cellular phone manufacturers and network data service providers. Some countries are leading the United States in penetration of digital cellphones. They already provide a good indication of the types of cellphone banking services that customers will find valuable as this technology evolves and grows in the U.S.
8. Investigate banking relationships with retailers. Examine how your bank's service could be extended as regulatory restraints are lifted.
9. Acquire corporate "extranet" accounts. The first bank to offer services to desktop "intranets" within the corporate environment will be well positioned to enhance market share of electronic banking channels.
10. Plan to consolidate financial services. The opportunity exists for banks to build strong customer loyalty by becoming providers of advice and help for household assets, trading stock, pricing and buying insurance, paying bills and other financial services. Although consumers like the low fees associated with electronic channels, most don't like being "on their own" when it comes to financial services.

Future Interactive Banking Customers is based on data gathered through more than 200,000 household interviews worldwide since 1993. INTECO's research subscribers can access the 40-page report in print or via the Internet. Banking's new competitors include major retailers who offer in-house checking accounts, loyalty programs and multiple data-set smart cards to provide new levels of customer service ... that could take traditional banks out of the loop.

About INTECO

INTECO conducts thousands of interviews each year in the United States and Europe to determine consumers' propensity to adopt new technologies. Large-scale surveys are conducted on a regular basis to ensure a continuous source of up-to-date, high-quality data for analysis. From this information, INTECO analysts have gained extensive knowledge of the causal factors in technology acceptance, and the evolution from early adopter to general acceptance of new products.

For more information on Future Interactive Banking Customers or INTECO Corporation, call 203-866-4400.