THE fact that Saambou, which owns the high-profile internet banking arm, 20/Twenty, is under curatorship has put the spotlight firmly on the viability of SA's online banking propositions.

The most aggressively marketed online financial services offering in SA was 20/Twenty and it became one of the most influential individual marketing programmes to woo customers to online banking.

If 20/Twenty were to cease operating tomorrow would that scare customers away from online banking and online financial services in SA? No. It is true that online financial services have changed since the concept was launched 18 months ago. First came the downsizing of the Bluebean.com e-shopping offering and then Absa's decision to stop free internet services to non-clients by the end of March.

However, it is likely the demise of 20/Twenty would trigger a flight from standalone independent internet banks to the internet banking arms of one the big four established banks.

After the current uncertainty, the challenge for the big four's internet banking operations is to ensure that their models are sustainable.

There is a real opportunity for success. Take for example Wells Fargo. It was a traditional bricks and mortar bank that embraced internet banking and attracted a quarter of its clients to online banking. Its average online customer profitability is 50% higher than for its offline customers.

If SA's online offerings are to prove sustainable, several steps must be adhered to. While the number of subscribers and page views are all- important, our research has proven high online penetration of a bank's customer base does not automatically translate into profit.

The risk exists that customers sign up, but do not end up using it regularly. Customer profitability depends on the ability to offer customers the right products, at prices that allow the banks to make money.

Absa followed the example of Barclays Bank, which partnered with Freeserve, to drive customer acquisition through free internet access. Both banks registered large numbers of online customers. But unlike Barclays, which now has the biggest online customer base in the UK, Absa's service did not attract enough advertising revenue or incremental banking profits to justify its existence.

FirstRand's eBucks.com success is dependent on its ability to generate enough profitable traffic.

Standard Bank's Bluebean, initially launched as a discounted online retail portal, has now repositioned itself as a pure financial services site. Like other retail banks, its challenge is now enticing enough users to its website without having to use a fortune in advertising expenditure.

The US experience has taught us that online customer penetration can be increased significantly through targeted advertising the strategy followed by 20/Twenty. Unlike the US, though, internet access in SA is still relatively sparse and as a result, other local banks have been wary to advertise their own websites aggressively .

Contrary to the advertising message promoted by 20/Twenty, traditional banking is still strong. Retail banks have significant assets, including a strong brand awareness and large customer bases. Also, they are increasingly offering multiple channel access as, in practice, customers want the flexibility of being able to use the web, telephone banking and branches when it suits them.

SA's big four can achieve online success if they do so as part of a broader banking offering. Success will depend on the acquisition and retention of the right clients to offset the steep start-up and acquisition costs.

Huggett and Moolman are, respectively, vice-president and manager of Bain & Company.