Internet TV: In the air.

• Author: Swann, Phillip
• Position: Future - Home banking services via interactive television

Banking by interactive TV sounds like a glitzy new delivery channel. And experts have been predicting its launch for the last decade. Bank markets should stay tuned, according to this update. It's still coming - only slower than forecast earlier.

Cable and satellite TV operators today are rolling out millions of digital set-top boxes that offer interactive services. Some studies have suggested that up to 40 million Americans will have interactive TV by the year 2005. So, is it likely that interactive TV will develop into a major new delivery channel for financial services?

The answer is a qualified "yes"--with the understanding that interactive TV banking may not become a reality as quickly as some experts had predicted earlier.

At least one giant U.S. corporation is betting that the delivery of financial services on interactive TV will become a reality. That company is the software maker Microsoft, which is creating applications for interactive TV set-top boxes and selling the financial software package, Microsoft Money. It also has partnered with CNBG to produce the popular website, MSN Money www.moneycentral.msn.com.

However, Ed Graczyk director of communications and marketing for the Microsoft TV Group, speaks cautiously about the short-term potential of interactive TV banking. Graczyk says cable and satellite companies currently are focusing on providing entertainment-based interactive features such as "video on demand" and "digital video recording." The sagging economy is the main reason why. Gable and satellite companies are having cash-flow problems and research indicates that consumers are more likely to pay extra fees for entertainment services rather than chore-based features such as banking and ordering groceries online.

"TV-based banking is not on the hot list of interactive TV services waiting to be deployed," says Graczyk, who once was a marketing official for MSN Money Central. "If you are a cable operator, you are focusing on the low-hanging fruit -- entertainment services that will make money."

The shaky economy has also delayed deployment of digital TV services in many states and slowed the overall growth of interactive TV in the United States. Some cable operators are cutting back their investment in hardware and infrastructure costs needed to deliver interactive services to the home.

This is also hurting the effort to deliver interactive banking services.

"The poor economy does make it tougher," says Graczyk. "I expect...