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 When
it comes to online banking, well, everybody’s not doing it, but
probably we should.
“When I first started using online banking myself, I thought it
was the greatest thing in the world,” says Joe Thompson, executive
vice president and head of retail banking for UMB Bank. “There are
no envelopes, no stamps, no mailbox, and no hassles. It’s easy and
convenient and can save you money, too.”
So, if online banking is so great, how come we are not, if you will,
all doing it.
“I think we realize it’s going to take some time for people to adopt
online banking,” says Russell Pemberton, vice president of Pulaski
Bank. “People have to feel very comfortable with it, and, when they’re
ready, we’ll be there for them.”
Increasingly, especially in the last year or two, people are ready
for online banking, and they’re doing it with greater frequency,
says Stephanie Smith, executive in charge of online banking for
Bank of America. “We’ve seen growth really skyrocket in the last
few years.”
Bank of America now has 4 million active online banking subscribers,
says Smith, and 1.3 million of those are actively paying their bills
online. She says those numbers are larger than any other competitive
bank. About 13 percent of the bank’s millions of active household
customers are doing at least some of their banking online, she adds.
"THERE
ARE NO ENVELOPES, NO STAMPS, NO MAILBOX, AND NO
HASSLES. IT'S EASY AND CONVENIENT AND CAN SAVE YOU
MONEY, TOO,."
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Joe
Thompson
executive vice president and head
of retail banking, UMB Bank
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At UMB, 20 percent of the bank’s 270,000 customers are banking online,
but only 10 percent of online customers are using the bill payment
feature, Thompson says.
Pulaski, which just this year rolled out its online banking service,
does not have utilization figures yet, but Pemberton says the bank’s
goal is to prompt 1,000 of its 20,000 customers to use its WebPay
service before year-end.
Online banking is the latest generation in off-site banking services.
Bank-by-mail has given way to bank-by-phone which is now, at the
end of its first decade of use, giving ground, albeit slowly, to
banking-by-personal computer. Each generation of service has saved
retail banks money by minimizing the employment of tellers and other
personnel while increasing convenience for business and household
customers.
Bank of America’s Online Banking and Quick Pay sales literature
reflects the times by promising, “It’s like having your own banker—24/7.”
UMB takes a similar tact for its Online Direct service as does Pulaski
for its In-Touch 24 On-Line and WebPay services.
And they’re right, too. With most online banking services, small
business (Large commercial customers often have separate portals.)
and household customers can check account balances, view transactions,
transfer funds from one bank account to another, and pay bills.
With some systems, customers can download account transactions and
information to household financial management software such as Quicken®
and Microsoft® Money. (If you are a Macintosh® user, be aware that
not all banks support you for all online services. Through Bank
of America, for instance, Mac users can obtain technical support
and can download financial data to their computer’s Quicken® program.
UMB does not support Macs, but Pulaski says its systems are Mac-compatible.)
In many ways, online banking is little different than telephone
banking; you see your transactions rather than hear about them.
It’s the bill paying service that really adds value. Using a protocol
known as Electronic Bill Presentment and Payment (EBPP), the service
lets users pay bills online (often including both business and personal
bills), send e-mail payments and receive some bills electronically.
Most systems allow customers to set up recurring payments for bills
that are always the same, such as mortgages and insurance premiums.
Users typically may also schedule one-time payments up to a year
in advance.
“When a bill comes in,” Pemberton says, “I just go over to the computer
and pay it, or schedule it for payment at a future date. I just
get it off my desk right away while better controlling my cash out.”
As Smith says, “Bill-pay is so convenient. You can pay bills at
any time of the day or night and easily pay a bill when you are
traveling on business or on vacation. It’s faster, more secure,
saves postage and gives the customer more control over the payments
and cash flow.”
Thompson points out that online bill payers actually shift postage
costs to the bank. “If you fully use the online bill payment feature,
you’re obviously going to save some money.”
How much you save depends on the customer’s level of use of the
service and how the customer’s bank charges for the feature. Pulaski
Bank charges nothing for the first 15 bill payments each month but
45 cents for each payment thereafter. At UMB, bill-pay is $5.95
per month for the first 20 payments and 40 cents for each transaction
over the threshold. Bank of America recently dropped all of its
bill-pay charges.
“In May, we made bill-pay free for all customers,” Smith says. “Our
research told us that active online bill paying customers make fewer
trips to the bank, maintain higher account balances and, frankly,
are more profitable to the bank. Since we made it free, we’ve seen
a significant new growth in adoption of bill-pay.”
Smith estimates that 75 percent of Bank of America’s online bill
payments are being delivered electronically by its service provider,
Check Free. For some payments, Check Free actually affixes postage
to an envelope. In either case, the customer saves first-class postage
costs.
Despite the obvious advantages of bill-pay, the rate of adoption
by customers has been slow, bankers say. Some say that balking customers
are concerned about the security of transactions; others are deterred
by monthly fees, and others by the simple change of routine that
bill-pay entails.
Realizing that old habits are hard to break, the banks offer extensive
tutorials, questions and answers, and even demonstrations through
their web sites.
“If you can demonstrate online services, people will try it,” Thompson
says.
For more information go online to www.pulaskibankstl.com,
www.umb.com or
www.bankofamerica.com.
Your bank probably offers online banking, also.
William V. Poe is principal of Poe Communications, a St. Louis
advertising and marketing communications firm. He now plans to begin
banking online.
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