Screenphones Show Signs Of Life

Despite overall slow growth and one major setback, screenphones are enjoying a rejuvenation of sorts, thanks to a few hefty contract signings and the advent of important enhancements.

Citibank's decision in late July to pull the plug on its Chicagoarea screenphone experiment was a punch in the stomach to screenphone marketers. Even prior to the Citi development, screenphones were struggling for space on the interactive platforms being developed by banks. According to a March 1995 study by the Bank Administration Institute, only 14 percent of institutions were supporting screenphones, while 70 percent were leveraging the telephone and 38 percent favored PCbased banking.

Lately, however, screenphones are showing new signs of life, at least in Texas, where Banc One has signed with Visa Interactive to revive this access method for patrons in the DallasFort Worth area. Characteristics of the current Banc One programand other recently announced programsshow the industry has learned from past experiences about the best way to market a screenphone.

Two years ago, Banc One announced it was launching a screenphone program using US Order phones, but never followed through because "there wasn't a product to put in the marketplace," says Bruce Luecke, vice president of alternate delivery at Banc One. Since then, GTE has added various services, such as textbased caller ID and directory information, to the US Order phones, as well as its brand name. In addition to providing full banking services, Banc One will allow customers to perform nonbanking transactions, such as making purchases from mail order catalogues. Banc One will hawk the GTEbranded screenphones through direct mail, as well as through participating GTE Phone Mart stores in the region.

New openness

In the past, banks made screenphones available primarily through their own channels only, and offered only bank services through the phones. Banc One's screenphone distribution strategy shows a new willingness on the part of banks to cooperate with other players to achieve their goals. "We don't want to be in the phone business. We just want to be able to provide our customers with access to banking services," says Luecke.

Notes Kevin Curtis, an analyst at the Yankee Group in Boston, "Screenphone activities came to a halt for a while, partly because they were being deployed solely as a banking transaction platform. Now you're seeing a rebirth because the vendors are beginning to change their strategy. They are beginning to ally themselves with a number of partners to deliver more services and value."

In testimony to Banc One's faith in the screenphone's allure, it anticipates signing on 5,000 customers by next yearsome 100 eager consumers bought the phone before Banc One even made the announcement. It is charging $5.95 a month for banking services and $150 for the phone. That's another change from Banc One's earlier discussions with US Order (now owned by Visa Interactive) to offer screenphone services, as two years ago, the devices would have gone for as much as $700.

Bolstering the screenphone market further is First Tennessee Bank's renewed commitment to selling the phones. Like Banc One, First Tennessee had checked out the screenphone option more than two years ago when Bell South was looking for companies to join a Nashvillearea pilot. The bank opted out because the backoffice mechanism for bill payments wasn't up to snuff. Now that the technology is up to par, the ball is rolling again. "Sprint is the one that's actually selling the telephones," says Susan Terry, marketing information manager at First Tennessee in Memphis.

The bank expects to distribute about 6,000 phones by the end of next year. The phones will offer bill payment, funds transfer, account information services, as well as textbased directory assistance and the ability to place orders from store catalogs by swiping a credit card through a reader on the phone. The devices will sell for $240, and $11 monthly for all services beyond directory assistance. "Since we first started talking to US Order, we learned that the screenphone has to get less expensive. Once you drop the price to $150, people will buy them," Terry notes.

Pershing gives a push

Discount brokerage services also are giving screenphones a boost. PC Financial Network, Jersey City, NJ, the discount brokerage arm of the Pershing division of Donaldson, Lufkin and Jenrette, just teamed up with Online Resources & Communications Corp. to offer services through screenphones. PC Financial Network sees the screenphone as the perfect alternative to touchtone services, which require customers to painstakingly enter in stock symbols and manuever through extensive voice menus.

Interestingly, PC Financial Network is making the screenphone the centerpiece of various marketing efforts. For example, Pershing customers who open an account with $10,000 in cash or securities will pay only $74.95 for the phone with no monthly fees, says Carl Blandino, senior vice president of Online Resources. Screenphone users also will receive a free PC cash assetmanagement account and their choice of a free MasterCard debit card or Gold MasterCard debit card.

Not only banks and brokerages, but vendors are putting more faith into screenphones. Oracle Corp., for example, has chosen the screenphone as its device of choice for its entree into the interactive market. Oracle will collaborate with Philips Home Services to install an electronicmail service into the Philips screenphone. The service, which will run through an Oracle server, will provide access to the Internet and other electronic mail providers. It should debut in the first quarter of 1996.

"There is a role for simple devices that overcome some of the obstacles currently posed by the PC," says David Downing, a spokesman for Redwood Shores, CAbased Oracle. "PCs are too expensive and complicated for most people. Seventyfive percent of U.S. homes do not have a PC."

Oracle sees huge potential in providing through the screenphone some of the services currently only available via PCs. "As the Internet becomes more pervasive, and as the services available become more interesting, we think consumers will want to access them. But we don't think they will do it though a traditional PC."

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