If only they would work as hard on access.

kelly

Chicago Tribune


 Online banking starting to click

Photo caption:

 Jomo Morgan of Bank One shows Maya Norris how to use a kiosk
   in the Bank One lobby. (Tribune photo by David Klobucar)

   By Melissa Allison
   Tribune staff reporter
   March 23, 2001

   For most of the 1990s, U.S. consumers had the same attitude about
   online banking that Dominic Siriann has now.

   "I wonder how safe my money is in there," the Chicago sheet-metal
   worker said after standing in a teller line at Bank One's headquarters
   branch in the Loop.

   Siriann makes no secret of his preference for the assistance of human
   tellers and the time-tested security of ATMs to banking in the fast,
   wild expanse of the Internet.

   Indeed, consumer fears about banking online have held back the
   ambitions of an industry that sees the potential for huge cost savings
   and efficiencies-if only their customers would embrace the computer.

   "No question that bricks and mortar is the most expensive way to do
   it," said John McCoy, the former chief executive of Chicago-based Bank
   One Corp., who led a charge into Internet banking during his long
   career. "It's a lot less expensive dealing ... over the Internet."

   These days, banks see a change afoot. The concerns of Siriann and
   others like him notwithstanding, more consumers are beginning to use
   the Web-based services that banks have been offering for several
   years. The industry, in fact, sees enough progress that it is
   launching a renewed marketing push to lure customers online.

   Among the initiatives: Grabbing skeptical customers such as Siriann
   when they enter the bank lobby and leading them to kiosks, where
   booted-up computers await. That type of hands-on sampling worked for
   ATMs when customers were skeptical of those now-familiar devices, the
   industry figures, so why not try it for Internet banking too?

   The numbers support the push for online banking, showing that the
   number of households accessing their accounts through a computer
   nearly doubled in 2000, to 12.5 million from 7 million a year earlier.

   That momentum suggests that by 2005, about 43.3 million-or 59 percent
   of all households with online connections-will use the Internet to
   bank, according to online research firm Jupiter Media Metrix.

   Consumers are more willing to bank online these days because more have
   grown comfortable with the Internet in general, and are attracted by
   banks' expansion of online services beyond checking balances and
   transferring money. They also want to avoid teller lines and telephone
   queues, and they have more faith in the security of Internet banking
   now that it has been around awhile without widespread security
   breaches.

   Customers' questions about security still linger, however, and have
   been aggravated by reports of cyberfraud, such as the recent case in
   which a Brooklyn busboy was accused of using the Internet to breach
   the bank, brokerage and credit card accounts of more than 200
   individuals on Forbes' "Richest People in America" list.

   Eager to attract online customers, banks and their trade groups
   carefully construct online security and privacy policies that they
   hope will reassure consumers. And new technology is introduced
   regularly that purports to provide increasingly greater security for
   online banking and commerce.

   Banks want customers to flock online because it costs less, after
   initial start-up costs, to answer customers' questions and handle
   transactions over the Internet than at a branch or ATM.

   A teller transaction typically costs a bank $1 to $1.50 on average,
   while Internet transactions cost less than 5 cents, according to
   Gartner Financial Services in Durham, N.C.

   That's what has inspired a string of Internet-only banks to crop up in
   recent years, beyond the online services rolled out by traditional
   banks. Though they have had mixed success, online banks with few or no
   branches can pay higher rates on deposits than branch-based banks.

   E*Trade Bank, for example, pays at least 3.1 percent on checking
   accounts with balances of $1,000 or more. The national average is 0.78
   percent for interest-bearing checking, according to Bankrate.com.

   Such high rates are possible only because of E*Trade Bank's low
   overhead. The Arlington, Va.-based unit of E*Trade runs its entire
   banking operation from one location, with about 400 employees.

   The bank's operating costs are one-third to one-half the cost of a
   traditional brick-and-mortar bank with the same $11 billion in assets,
   estimated company representative Deborah Newman.

   Those economics, along with a desire to meet growing customer demand,
   have driven hundreds of banks of all sizes to launch online banking
   sites in recent years.

   Most sites allow customers to view account information, transfer money
   and pay bills from their laptops and home computers. Some offer
   investment account data and transactions.

   Other applications are coming, including the ability to view and print
   account statements and canceled checks, something Bank One hopes to
   offer in Chicago this summer.

   "We get a lot of calls from people looking for copies," said Bruce
   Luecke, general manager of Bankone.com, which was launched in mid-1997
   and now has almost 900,000 customers.

   "This would allow the customer to access that information without
   having to come in or call us," he said.

   Experts say the next push in online banking will be to make it more
   human.

   Basic account activity can be handled by a computer, but people prefer
   to interact with a person for more important questions and advice,
   said Larry Cohen, director of the consumer financial decisions group
   at Menlo Park, Calif.-based SRI Consulting Business Intelligence.

   The human interaction could come over the phone, through real-time
   conversations online, or through branch employees helping customers
   learn how to use online banking.

   "They could show people at kiosks in the lobby how to use it, how to
   sign on," Cohen said.

   Last week, Bank One installed several kiosks throughout the Chicago
   area to introduce more customers to its online banking site. Plans
   call for more than 500 nationwide by the end of the year.

   "It gives customers something to touch and feel and see how easy it is
   to use," Luecke said.

   The strategy worked last fall in Phoenix, where kiosks for
   WingspanBank.com, Bank One's Internet-only bank, were placed in some
   branches. New accounts rose, Luecke said.

   Still, some consumers will remain unconvinced, even by kiosks in
   branches. Siriann, for example, cannot shake the notion that there are
   people surfing the Web looking for accounts to pillage.

   Will he ever try Internet banking?

   "Maybe in a year or two, if there are no big problems," he said.

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