With the free-flow of capital shut off, it may seem like the pressure to innovate is off. We don’t think so. Despite the bloodbath among consumer Internet sites and the closing of three prominent Net-only banks, WingspanBank, Security First Network Bank (SFNB), and CompuBank, end-user demand for online banking continues to grow at a phenomenal pace, even surpassing our last forecast made during the peak of the hysteria (OBR 59, April 2000).

Those banks each closed for unique reasons: Wingspan was doomed from the outset because of problems at its parent, FirstUSA/Bank One. SFNB, despite being the first mover in 1995, never gained a following online and was turned over to Royal Bank in 1998 as part of a larger licensing deal with SFNB’s parent, S1. With Royal’s recent purchase of Centura, it no longer made sense to support two U.S. brands, so SFNB was rolled into Centura. Finally, CompuBank never had the right mix to attract customers. They launched in late 1998 with a decent product set but an amateurish Web site, the kiss of death for an Internet-only operation. Having failed on the consumer side, it used Softbank money to remake itself into a small business bank, but time ran out before it communicated its new positioning to the world.

We think these failures have little bearing on your 2002 plans. If anything, they reinforce what you already knew: even with branches, it’s damn tough to move market share in the transactional checking space. But Web-based content can be effectively used to support a multi-media promotional campaign. For instance, Bank of America, which is blitzing our area with print and radio ads for its MyAccess checking, has added a prominent link to the product on its home page.

Focus online marketing efforts on products that consumers readily purchase outside the branch, namely loans , and to a lesser extent investments, especially high-interest savings accounts. We’ve updated the 2002 Strategy Matrix to help you make sure you’ve covered all the bases.