Just Thinking

If you had to choose the most surprising business development to occur over the last few months, the demise of dot-com enterprises would have to top the list. After all, anyone who has taken economics 101 knew that at some point the United States economy would have to slow down.

But as recently as eight months ago, many analysts believed the dot-com economy would sail through this cooling down period. No one I read predicted that so many e-businesses, especially e-retailers, would fall so far so quickly. Indeed, I am no longer shocked when I open my copy of InternetWeek and find yet another e-tailer has joined the likes of pets.com in bankruptcy.

The good news for the financial services sector is that, so far at least, few financially-oriented e-commerce ventures are on this list of failure. That's not to say some businesses have not fallen on hard times-online stock trading for example-but for the most part, many bank Web ventures seem to have what it takes to weather this economic downturn. Indeed, according to a recent Andersen Consulting report, future dot-com successes will be slow growth niche-oriented companies with a desire to improve customer experience, keep personal customer data in-house and have appeal beyond GenX or GenY customers. This describes financial service dot-coms to a tee, and reiterates what many successful sites already know-people and businesses may not want to spend money over the Internet, but they are more than willing to use the technology as a service to help them save or better manage money. It's an important distinction, and one that will likely insure the survival of financial service-oriented e-businesses.

But this is not to say the road ahead will be smooth. The fear of an overall economic downturn has dramatically decreased the amount of money corporations are willing to spend on IT improvement. A study recently released by Merrill Lynch reports U.S. IT budgets only grew 5% during fourth quarter 2000, down from 11% the previous year. This raises a question that chills financial technology suppliers: Will banks continue to automate if the businesses they service do not?

Of course, it would be terribly short-sighted for banks to abandon the technology dividend. Computers are here to stay, and consumers and businesses obviously want to use the devices to make their lives easier. Progressive businesspersons realize this, and will continue to invest in the medium and its offshoots.