INVESTMENT IDEAS
Consumer banking sure seems like an online natural – after all, money is nothing but information – yet most banks have been relatively slow to embrace the Net. According to a recent International Data Corporation study, however, online banking is close to hitting critical mass.
By 2003, says IDC analyst Paul Johnson, a full 86 percent of banks will offer Net services, ranging from bill payment to credit management, from loan approval to discount brokerage. Four years from now an estimated 40 million Americans will do their banking online, up sharply from 8 million last year. Check writing looks destined to go the way of butter churning, and the only reason ever to go to a physical branch will be to suck cash from a wall.
That's a quantum leap from just a few years ago, when Citibank reps first handed out free home-banking floppies to people stuck in long ATM lines. Most anyone who adopted online banking early was confronted with arcane modem settings and buggy proprietary software. But the huge market caps for budding ecommerce outfits have made a very convincing argument – in terms the pinstripe-and-wingtip set intuitively understand – that banking over the Web is the future.
Leading the early pack are Citibank, Wells Fargo, and Bank of America. All offer bill paying, still online banking's biggest draw. Once the Y2K hurdle is past (banks just hate the idea of vanishing money), the effort to get it all online will go full throttle. If you're looking to cash in on the trend rather than just follow the herd, here are some intriguing ebanking stock plays.
Banking on the Net
| Company| Ticker| URL
| Citigroup| C | www.citi.com
Financial behemoth getting serious about the Web.
| E*Trade| EGRP | www.etrade.com
Combining ebrokerage and ebanking.
| Intuit| INTU | www.intuit.com
Increasing demand for personal finance software.
| Bank of America| BAC | www.bankamerica.com
Already counts 1.4 million online customers.
| Wells Fargo| WFC | www.wellsfargo.com
The leader in rolling out advanced services.
| NEW MONEY
| Look Ma, No Tellers
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