Financial Services and the Digital Divide MacroMonitor Marketing Report Vol. IV, No. 6 April 2000

The differences between households that have PCs at home and those that do not are gradually starting to disappear. However, we are rapidly reaching the point where the increases in PC penetration will occur because young, newly forming households are much more likely to own computers than are older, established households. With the introduction of basic low-priced computers and Internet appliances–in addition to employer programs for employee ownership of computers with Internet access, along with (potential) government programs to make PCs widely available–we may see universal Internet access inevitably. However, just as government intervention was necessary to enable universal access for the telephone, getting all households on the Internet will take a significant level of effort and time. In the interim, a huge distinction will exist between households that have Internet access and those that do not: the digital divide.

PC and PC Financial Services Users by Region

Although PC use for financial transactions is accelerating, doing one's financial business on the Internet using the PC generally trails behind doing other functions on the Internet using a PC. However, growth is occurring in PC financial services use. This growth is primarily evident among specific demographic segments such as households with higher levels of education, higher incomes, younger household heads, and earlier life stages. In spite of the fact that PC financial services are available anywhere (so long as a phone and a PC are available), greater use is evident on the two coasts and in large metropolitan areas. For financial services, therefore, the digital divide has a different form. For financial services, with their critical role in enabling consumers to attain their life goals, the learning curve is somewhat steeper than for other Internet activities. Although increased use of financial services on the Internet correlates with higher incomes, education, and younger age, computer capabilities play an important role. And geographic regions and metropolitan areas figure largely into the calculation for where future growth is likely.