On-Line Banking: Company Aims to Bring Video to PC Banking Series: 12
(American Banker; 04/09/98)

Putting a fresh face on an old vision, one of the pioneers of banking  by 
kiosk is promoting a new place for video-conferencing: the privacy of  the 
home.

   Richard J. D'Agostino hopes his current venture, Videogate Technologies  
Inc. of Charlotte, N.C., can meld the appeal of self-service remote banking  
with the benefits of a face-to-face sales pitch.

   Videogate's Web site will offer free software and a listing of businesses 
ready to receive video calls.

   Immodestly comparing his idea to the Yahoo search engine, Mr. D'Agostino  
said he has the key to making "video on demand" live up to its long-ago- dashed 
expectations.

   Among the obstacles have been the difficulty of handling data, voice,  and 
video information through conventional call centers, the absence of  video 
directories, insufficient telecommunications bandwidth, and high  costs.

   "We are not developing for yesterday's market, we are developing for now  
and tomorrow," Mr. D'Agostino said, conceding that in at least one key  area, 
high-speed telecommunication, his technology may be ahead of its  time.

   But even that should change significantly in the near future. After a  
series of false starts, cable television operators, including Tele- 
Communications Inc., have begun offering access to the Internet via cable  
modems. They handle data at rates ranging from 2 to 40 megabits per second,  or 
36 to 700 times faster than the 56-kilobits-per-second computer modems  that 
are the highest-speed on the market today for telephone lines.

   The race for more bandwidth accelerated in January when leading personal  
computer technology companies announced an agreement with regional Bell  
telephone companies to increase the capacity of telephone lines.

   Under the generic name of digital subscriber line (DSL), this embryonic  
system is expected to transmit data at rates ranging from 1.5 to 9 megabits  
per second, or 27 to 162 times faster than 56-kilobit modems.

   Although slower than cable, the DSL specification is being hammered out  by 
Microsoft Corp., Intel Corp., and Compaq Computer Corp. These PC modems  are 
expected to be easier to install and cost less than cable modems.

   The faster rates of data transmission should bring television-quality  video 
to computer screens at the same time that financial and consumer- technology 
industry observers are heralding a convergence of PCs with TVs.  Developing a 
technological infrastructure for rich video communication  between consumers 
and businesses is the next logical step, Mr. D'Agostino  contended.

   Videogate intends to offer free access to its software and Web site when  it 
comes on the market in July, and to charge businesses between $1,000 and  
$4,000 a month for a listing and a video-enabled link from its Web site.  
Competitive professional-quality video conferencing systems cost up to  
$40,000.

   Videogate is touted as a dramatic new approach to electronic commerce,  but 
detractors express doubt that a market exists for it. They point to  numerous 
disappointments in video kiosk developments-including Mr.  D'Agostino's former 
company, Personal Financial Assistant Inc., which was  bought and then closed 
down by New York Life Insurance Co. The message may  have been that high-tech 
and high-touch do not mix.

   David D. Strunk, vice president of NationsBank Corp.'s strategic technology 
group, describes Videogate as a "compelling" product that "meets  a real 
consumer need."

   "It opens up a whole new realm that has not existed before," he said.  "It 
offers high-quality graphics and text from the Web with a live agent  that can 
guide a person through" a complicated transaction.

   Unlike conventional call centers that preserve computer data and telephone 
lines in separate telecommunication links, Videogate's system  converts video, 
audio, and other data into digital packets that travel  across the Internet to 
call centers.

   By placing experts in mortgages, insurance, mutual funds, and other  
products in a central location accessible by video link, financial  
institutions could be on call to address highly complex and specialized  
consumer needs around the clock.

   "The ability to near-instantly connect to an expert and potentially  close 
the deal on the spot is a compelling vision," said Mr. Strunk. "As a  consumer, 
you are probably as hot for the deal as you are going to get."

   Three financial institutions, one insurer, and an automobile company are  
currently negotiating with Videogate, as is banking software vendor  Broadway & 
Seymour Inc.

   NationsBank is not among this group, Mr. Strunk said, but the bank has  used 
Personal Financial Assistant's kiosk technology.

   Although having a customer service representative on hand is probably  not 
necessary for routine transactions, Videogate's system enables  businesses to 
combine information from their Web sites with any consumer  software they are 
running on their computers.

   For example, a tax preparer with H&R Block could talk over the phone to  a 
customer while demonstrating, remotely, how its Tax Cut software works.

   "This allow more sophisticated forms of human interaction to occur
 electronically," said Tony Plath, director of the University of North  
Carolina's Center for Banking Studies and a member of Videogate's board of  
directors.

   "You don't need to leave home to buy a mortgage or solicit investment  
advice, and you have the choice about whether to turn the camera on or  off," 
he said.

   Consumers don't even need a camera unless they want to be seen by the  
person they are talking with. That kind of visual intimacy may provide the  
support that time-stressed consumers need when wavering over a financial  
decision.

   Mr. Plath said the technology is most useful "when you need some kind of  
emotional reassurance that you are doing the right thing," which can come  from 
eye contact with a sales representative.

   Other observers are concerned that these ideas will collapse under the  
bandwidth requirements that can tax the telecommunications and Internet  
infrastructures.

   "When you pick up the telephone, it is only on Christmas and Mother's  Day 
that you find 'all circuits busy,'" said Kevin T. Flanagan, company  spokesman 
for PictureTel, an Andover, Mass., company that makes video  conferencing 
systems using private phone lines.

   "With the Internet, just logging on at lunch time is sluggish," Mr.  
Flanagan said. "It isn't capable of business-caliber video conferencing."

   "It is going to be a long time before consumers have the equipment to  have 
two-way video streaming into the home," said Robert Davis, managing  director 
in the competitive strategy practice of Dove Associates Inc.,  Boston.

   At a time when many banks view home banking as a way to "drive down  
transaction costs, it seems like this would drive them back up again," Mr.  
Davis said.

   "It is only going to make sense for a small segment of customers who are  
willing to bank from home," said Edward L. Neumann, director in Dove  
Associates' Washington office, who has extensively researched the  interactive 
banking market.

   Even if 10% of bank customers are conducting some form of home transactions 
by 2000-at least double the current level-Mr. Neumann estimated that few of 
those would be receptive to the service.

   Mr. D'Agostino said he would be more than happy with a single-digit- 
percentage market.

   He said he learned while developing video kiosks that banks generally  never 
knew whether the person who walked up to them was a millionaire or a  homeless 
person.

   "All people who use this and who call banks have a common bond," he  said. 
"They have money."   Copyright c 1998 American Banker, Inc. All Rights 
Reserved.  http://www.americanbanker.com