Banks invest in online banking services to keep up with demand

It's hassle-free banking without the annoyance of waiting in line.

It's flexible. It's easy and it's safe.

The rapid growth of online banking is causing local banks to update their services for their tech-savvy customers or risk losing their business all together.

Meeting these demands is the reason the Foothills Bank added online banking this fall, said Shirley Merrill, branch mana- ger.

"We felt that it would be an advantage for our bank. It's another way to compete with other banks, and customers would have the benefits of banking from home," she said.

Even though the exact number of users wasn't available, it isn't slowing down, Merrill said.

"More and more people are doing it every day," she said. "The ones that have been using it have been really happy. Once they get used to it, they love it."

Banking with a PC started in 1990 when California-based Wells Fargo introduced the world's first online banking services. Since then, experts estimate that nearly 50 percent of banks will offer it in 2004.

Nationally, the number of people logging on has been increasing at an attractive rate, especially in the last 12 months.

For example, Bank of America announced in December that it had 7 million subscribers using its free online banking. The bank compared that number with 4.7 million people logging on to its site in spring 2003.

Locally, Wells Fargo had 3,522 people sign up for the service in 2003, said Mike Higgins, market president. Nationally, the bank averaged about 100,000 people a month starting the service.

Five years ago, online banking was a technology adventure for financial institutions. Today, it is a standard, said Jeff Byrd, business development officer at Yuma Community Bank. He estimated that 5 percent of bank users take advantage of it.

"But it's growing all the time," Byrd said. "As we advertise it, we get more people. A lot of people don't know about it."

Diane Hansberger, vice president of National Bank of Arizona, hasn't written a check for her bills in two years.

"It's wonderful," she said. "You can bank any time, anywhere, as long as there is a computer. Once you try it, you won't go back."

Convenience is the No. 1 reason customers are trying it.

"In today's society, everyone's schedules are different. Some people work nights, some people work from home and when they have time to do their banking, the bank isn't necessarily open," Byrd said. "With this, they can check their balance any time."

The amount of features available depends on the individual bank. The National Bank of Arizona site allows people to set up alerts informing them if their check cleared and the amount of money in their account.

"For example, you can set it up that when your balance drops below a certain amount, let's say $100, then it sends you an alert letting you know," Hansberger said.

The information is constantly updated, so there isn't a delay, she explained.

Through the years, the banking industry has worked to develop services that customers will trust and use. With more and more people aware of the dangers of computer-aided crimes, such as identity theft, fraud is always a concern.

"In today's society, there is not anything that is 100 percent secure," Byrd said.

However, Byrd said, Yuma Community Bank hasn't had any problems with thieves hacking into its system. "It's just as safe as using an ATM."

In several cases, online banking is safer than traditional banking and most people aren't aware of this, Hansberger said. For example, when a person pays their bills online, the bank sends out a check that doesn't have the individual's account number attached to it.

"And with fraud today, you don't want that account number out there on everything," Hansberger said.

Education is the key to people trusting electronic banking, Higgins said.

"There still are people out there that want to feel the paper, feel the money," he said. "We have to get them to accept the security aspects because online banking is probably safer than paper banking. You can't copy checks with online banking."

Electronic banking isn't only for the younger, computer-educated generation. Senior citizens are also giving it a try, Byrd said.

"More and more seniors are exposed to the Internet," he said. "Either their grandchildren are e-mailing them or their kids are sending them photos. It's not such a foreign object as it once was. Today, it's an everyday tool."

Maintaining online services does add a new expense to the bank. But banks won't be cutting it anytime soon "because of the convenience to customers," Hansberger said.

Hansberger predicted that online banking will become more sophisticated, with users being able to look at checking accounts, investments and credit card balances at the same Web site.

But electronic banking will never replace the need for face-to-face exchanges with a teller. As some bank patrons demand online banking, others will want to visit the building filled with tellers and financial consultants, Byrd said.

"They will complement each other," he said. "There will always be those people that want that personal contact. You will always want to have that human element."

Michelle Kann can be reached at mkann@yumasun.com or 539-6855.

PROS AND CONS TO ONLINE BANKING

ADVANTAGES

CONVENIENCE: ONLINE BANKING SITES NEVER CLOSE. THEY'RE GENERALLY OPEN 24 HOURS A DAY, SEVEN DAYS A WEEK.

LOCATION: IF YOU ARE OUT OF STATE OR EVEN THE COUNTRY WHEN A MONEY PROBLEM ARISES, A FEW MOUSE CLICKS CAN SOLVE THE PROBLEM.

TRANSACTION SPEED: ONLINE BANK SITES GENERALLY EXECUTE AND CONFIRM TRANSACTIONS FASTER THAN ATM PROCESSING.

EFFICIENCY: YOU CAN ACCESS AND MANAGE ALL YOUR BANK ACCOUNTS, INCLUDING IRAs AND CDs, FROM ONE SECURE SITE.

EFFECTIVENESS: MANY ONLINE BANKING SITES OFFER TOOLS, INCLUDING STOCK QUOTES, RATE ALERTS AND PORTFOLIO MANAGING PROGRAMS, TO HELP YOU MANAGE ALL OF YOUR ASSETS. MOST ARE ALSO COMPATIBLE WITH MONEY MANAGING PROGRAMS.

DISADVANTAGES

START-UP: TO REGISTER FOR YOUR BANK'S ONLINE PROGRAM, YOU WILL PROBABLY HAVE TO PROVIDE IDENTIFICATION AND SIGN A FORM AT A BANK BRANCH.

LEARNING CURVE: BANKING SITES CAN BE DIFFICULT TO NAVIGATE AT FIRST. READ THE TUTORIALSAND ASK IF A BANK REPRESENTATIVE WILL WALK YOU THROUGH THE SITE THE FIRST TIME YOU LOG ON.

TRUST: FOR MANY PEOPLE, THE CHALLENGE IS LEARNING TO TRUST IT. BEST BET: ALWAYS PRINT THE TRANSITION RECEIPT AND KEEP IT UNTIL IT SHOWS UP ON YOUR BANK STATEMENT.