Sometime during the next 18 to 24 months, the Internet will cease to be a novelty and will instead be part and parcel of everything you do as a financial institution. A case in point, Rockland Bank, a start-up in Colorado, plans to open its virtual branch simultaneously with its two brick-and-mortar branches.

We don’t blame you if you are skeptical of these pie-in-the-sky claims. It’s widely believed that home PC penetration is plateauing at about 40% of U.S. households. That may be true, but the percentage of households using the Internet is still ramping up rapidly, and by year 2000 will be higher than the penetration level of PCs. How’s that?

• Web-Enabled TVs: Microsoft’s purchase of WebTV is further validation that the Internet is coming to a TV set near you. Today you can buy a set-top box for $300-400 to add Net connectivity to your TV through conventional phone lines. Within a few years, higher end televisions and VCRs will have this capability built in.
• E-mail Phones: Experts disagree whether consumers will take to scaled-down e-mail via phones. We think they will if the price is right. InteliData began selling e-mail phones for $99 (after $100 rebate) if users sign on for a year’s worth of interactive services for $99.95. The company is betting that the cell phone model of subsidizing hardware to sell services will pay off.
• Out-of-Home Users: You don’t have to own a PC to use the Internet. Starbucks is experimenting with Internet terminals. Several airports including Seattle’s now have public Internet access kiosks. And many companies are making limited Web access available to employees.

What should you do in the next 18 months to prepare yourself to compete in cyberspace for large numbers of online-savvy households?

1. Differentiate your online offerings

2. Provide top-notch online customer service

3. Get noticed