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Technology is changing the way U.S. Bank is doing business.
By Jane Beckerdite
Goodbye checks. Hello plastic. Like it or not, electronic banking has taken over. It is finance—fast and furious.
“It’s becoming so easy now not to use a check,” says Joe Hasten, U.S. Bank Vice Chairman. “Consumer habits are changing. Younger people are the driving force of electronic banking, but older people, since they are no longer able to get their checks back, are moving there.”
Getting checks back is a thing of the past. Because of Check Act 21, the congressional bill that allows banks to scan them rather than ship checks back to the issuing bank and ultimately to its customers, the way capital is processed has drastically changed. Gone are the days of receiving a month’s worth of cancelled checks in the mail. Today, in order to balance a checkbook all you need to do is
log on to your bank’s website, download your statement, and review your cancelled checks—now called substitute checks—without ever touching a piece of paper.
It’s fast. It’s free. It’s the future. Hasten says he believes this growth is due in part to Check Act 21, which stemmed from the results of September 11 when planes were grounded for a week and unable to return checks to banks.
“The federal government had to pump a lot of money into banks to ensure (funding was available) so banks decided ‘let’s do this anyway.’”
 Joe Hasten, vice chairman, U.S. Bank |
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The end result is considered by most as a win-win situation as it saves both the banking industry and the consumer time and money. “What (customers) are required to get is an image replacement document. This saves banks a lot of money by not having to put checks on airplanes to settle with each other,” Hasten says.
Still, some people never will feel completely comfortable conducting financial matters without putting pen to paper. And that’s OK. “Checks will not be eliminated. What banks need to do is reduce the cost of processing checks knowing they cannot eliminate checks altogether,” Hasten says.
In 2003, electronic payments overtook paper payments by volumes. That includes debit cards, credit cards and online banking. “We don’t have good data yet on 2004, but we sense that the rate of acceleration of electronic data is growing and will have grown at an even higher rate.”
People are now more comfortable than ever conducting financial business over
the Internet. |
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The next step in the technology food chain is to allow banks to transfer the check images back and forth—something that is not yet fully available, but is in the works. Hasten says U.S. Bank wants to be reasonably ahead
of the customer’s needs but the technology hasn’t been fully tested yet. Investment costs for new technology are being shared among banks that will enable them to archive images and records, and transfer those records from bank to bank at rapid speed.
It’s important to keep in mind, however, that with increased use comes increased fraud. But U.S. Bank says it takes extreme measures to ensure its patrons’ finances are secure. In fact, they tests their website vulnerabilities on the hour. The mainstay to online security is encryption coupled with reminding the customer to keep his personal identification number secure.
“The key responsibility for us is to stay ahead of Internet fraudsters who are attempting to pierce the Internet. We’re constantly looking—testing and retesting security,” Hasten says.
Without doubt, the primary concern customers have regarding online banking is that they may be compromising confidential information. Phishing, essentially online thievery, attacks using both social engineering and technical subterfuge to steal consumers’ personal identity data and financial account credentials. Schemes use spoofed e-mails to lead consumers to counterfeit websites designed to trick recipients into divulging financial data like credit card numbers, account usernames, passwords and social security numbers. Hijacking brand names of banks, e-retailers and credit card companies, phishers often convince recipients to respond to their email requests and unwittingly divulge information.
But as it is with most things, an educated consumer is the best defense against fraud.
“What people who use checks and credit cards in person forget is that, when you leave the credit card receipt on the table at a restaurant, who’s to know someone hasn’t taken that?” Hasten asks.
Fraud, whether online or in person,
will never disappear. Still, Lisa Clark of
U.S. Bank media relations says people now are more comfortable than ever conducting financial business, like paying their bills, over the Internet.
“They’re more concerned about identity theft from things in the mail than from the Internet,” she says.
Negative aspects aside, there is definitely more upside than down to the advances
in banking technology, even for people
who refuse to partake by continuing to write out their bills by hand each month. And ironically enough, the checking-handling process, even though customers may be completely unaware of it, has drastically altered because of technological advances in the banking industry.
Ever write a check on a Thursday knowing that payday was on Tuesday? Better reconsider that notion.
“Technology now eliminates the float. It used to take a while for a check to clear. It now takes us one or two, maybe three days until a check clears. If it’s direct deposit, it’s available immediately,” Hasten says.
Clark concurs.
She said with image-scanning technology, that no longer requires the actual check to be shipped back to the customer’s bank, people are seeing checks clear a lot quicker.
“Things that used to take a week are now taking a few days. People can’t float anymore. You can’t write a check on Friday, because you get paid on Tuesday,” Clark says. “If you do that, you need to get overdraft protection. It’s cheaper.” |
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