Will We Ever Bank Online?

Recently I saw the inside of my local bank for the first time in years.

The first thing I noticed was a long counter with individual booths containing PCs. A sign overhead beseeched me to “Try Online Banking First.”

Unfortunately, I had an unusual situation that day that required a real live human. There are eight teller windows at my bank, but I noticed only two tellers on duty. There were 12 people ahead of me. I stood in line for about 15 minutes, only to be told I would have to see a bank officer or submit an e-mail explanation of my problem.

For all of this aggravation, I will cheerfully be charged US$2. That is my bank’s standard charge for teller service.

Something tells me that the proliferation of computers at the bank entrance, the absence of tellers at most of the windows, and the fee that is charged for the privilege of speaking to a teller are all designed to coerce me into banking online.

But try as they might, banks are having a tough time convincing the public of the convenience, safety and ease of online banking.

A Tough Sell

In a study released several weeks ago by Tower Group, 39 percent of respondents said their bank offers online financial services, but only 13 percent had used them within the month prior to the study. Only 18 percent had ever used them. On the other hand, among that 18 percent, 85 percent of respondents had used their brick-and-mortar bank within that month.

For banking institutions keen on curtailing service costs, the outlook would not seem bright. Recent research from Cyber Dialogue indicates that so far, online banking has not significantly reduced banks’ cost of doing business.

The technology is in place, the business plans have been drawn up and the marketing efforts are flashy and inviting, but U.S. banking customers are still giving online banking a thumbs down.

Forging Ahead

Nevertheless, high profile corporations are moving aggressively ahead in their effort to persuade banking customers to do their business online.

This month, Sony debuted its new online banking services in Japan. Sony Bank hopes its reputation and international identity will encourage users to bank via the Internet. The company predicts profitability within three years.

Unfortunately, like so many other over-anxious e-commerce companies, Sony was evidently not quite up to the task, since an unexplained glitch at the outset caused the service to be either inaccessible to most users or extremely slow. Still, in its first hour, the bank had more than 13,000 hits and gained 340 new customers.

Milk and Mortgages

Meanwhile, venerable convenience store chain 7-Eleven expanded its own financial services with the installation of NCR-equipped kiosks that enable users to buy money orders, transfer funds, pay bills, cash checks and conduct routine ATM transactions.

7-Eleven appears to be gearing up to be the general store of the new world, with plans to eventually enable the kiosks to send telegrams, purchase travel tickets, register vehicles, obtain credit reports, apply for loans, buy insurance and even get directions.

But it is the banking aspect that industry observers have their eye on. Will America make its house payment when it runs to the 7-Eleven for Pampers? Stay tuned.

Change Comes Slowly

If there is one thing e-commerce proponents have learned, it is “slow and steady wins the race.” Although technology evolves at breakneck speed, humans do not. We need some hand-holding and some heavy convincing.

Still, last year, the online banking industry was worth $1.5 trillion, according to Jupiter Media Metrix. This year, that figure should grow to just over $2 trillion, and by 2005 to $5.4 trillion. By that time, Jupiter predicts 59 percent of all households with online connections will use Internet banking.

Until then, however, banks would be wise to go into their heaviest marketing mode, with an effort to convince customers their money is just as safe when managed online, and that they are perfectly capable of using Internet banking services.

The best place to convince skeptics? In their pocketbooks. Garnet Financial Services reports a teller transaction in the U.S. generally costs $1 to $1.50, while an Internet transaction costs less than five cents.

What do you think? Let’s talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


  • When working as VP of Marketing for a company that wrote software for Internet Bill Presentment and Payment, I asked this question and similar questions about paying bills online.

    If banks, telecom service providers (phone, DSL, ISP, Wireless), and utilities remember that online is just one service, they have the right attitude.

    Consumers don’t like to be required to use a service, especially American consumers. But, if the bank or service provider promotes the service correctly, customer adoption increases and it starts the snowball rolling.

    We created a marketing program and materials for our customers (who are the service providers) to use in getting customers to adopt. And, just like any other service or product you promote, you need to give the customer reasons for using it, or an incentive that gets them into the habit.

    So, will we ever bank online? Yeah – more likely the generation of customers who grew up using computers instead of standing in lines. And for the rest of us, only if it saves us time, money or both.

    • Working as an expat, online banking is a godsend. I use it for all my banking transactions with the exception of depositing cheques. It gives me 24-hour access to my accounts wherever I AM in the world. It enables me to check my transactions and balances for all my accounts including my credit card – pay bills, transfer money between accounts and to third parties, buy and sell shares and receive written answers to my banking questions.

      Online banking provides a greater level of customer service and satisfaction than I ever received from a traditional banking service.

  • Online banking is fine in theory. Try to obtain funds from your line-of-credit or make a payment to your line-of-credit at your bank. Bet you have a problem. Even though I AM authorized to conduct online transactions, I can not pay or access my loan line-of-credit. I have to call (a different call center than my normal bank customer service center) to transact [and it actually takes two or more days for them to credit or debit my checking account]. Ironic Huh! Also some of us need the physical record of payment (the check) to prove transactions – a service I pay extra for.

    Also, if you live paycheck to paycheck, like the majority of Americans, you can not rely on online banking nor lose the “float” of mailing your bills to meet the “deadlines” of creditors. The banks do not guarantee a certain payment date but tell you to allow for five days for the payment to hit your creditor. That’s a lifetime when you need the payment made on a specific day or are waiting on your payroll check to hit the account.

    Who is going to be the first bank to charge all of their customers a transaction fee for the privilege of banking at their establishment and I say they will be out-of-business quickly. If they can not make money on the loan side of the house then they probably should not be in business. It’s classic military stats, 8 people behind one frontline soldier, i.e., bank teller or loan/customer service representative. Get rid of the fat, start taking care of your customers, and you might be AM azed.

    Once we have daily debits, credits, access to all banking accounts and instant bill payments, America will embrace online banking. Until then, where’s my checkbook?

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