Getting comfortable
with online banking By Laura
Bruce • Bankrate.com
Online banking has come a long
way since that day in 1995 when Wells Fargo became the first bank
to let customers see their checking account statements online.
Now customers can transfer money between accounts,
view check images and pay bills -- a world of services beyond simply
reconciling balances.
But while technology gallops ahead, a sizeable chunk
of the human part of the equation can be counted on to lag behind
when it comes to pointing and clicking on their bank accounts.
"The biggest thing holding back any new financial
service is people's comfort. Is this a smart thing to do with my
money? Is it secure? All these things go through your head when
it has something to do with your money," says Jim Bruene, founder
and senior analyst at the Seattle-based Online Banking Report.
Bruene says it usually takes three to five years for
something such as online banking to gain acceptance with the general
population. Just as millions of Americans have shed their fear of
using credit cards online to buy from Amazon.com and a host of other
retailers, millions are migrating to the convenience of online banking.
Bruene estimates that 600,000 American households
ventured online to do their banking in 1995; by 2003 that number
had ballooned to 33 million. That's nearly one-third of the nation's
households. Sure, there's a long way to go before online banking
is the mode of choice, but it seems clear that financial technophobes
of all ages are becoming less squeamish about logging on to do their
banking.
"Online banking isn't mature yet -- not to the
point of ATM and debit cards," says Sarah Hartman, vice president
of electronic banking at Cleveland-headquartered National City.
"It's definitely more mainstream than in 1998, the first year
we rolled it out when we had 25,000 customers after a year.
"Now you open an account and a lot of customers,
especially younger ones, expect online banking and a debit card.
There's a pretty significant portion of the population that would
not do business with a bank that didn't have online banking."
What's holding back the people who don't do online
banking? Some are no doubt concerned about security, but industry
analysts say inertia plays a big role.
"They just haven't gotten around to it,"
according to Christopher Musto, vice president of research at Watchfire's
Gomez Pro Benchmarking and Web site Assessment Services.
"Inertia is a big force in financial management.
People get in habits in how they manage their finances and pay their
bills. Even when shown how they can manage their finances more efficiently,
they still haven't gotten around to it.
"Also, there are some people who don't use the
Internet enough that it would be convenient to do online banking.
If you just want to check your balance, why start your computer?
It's easier to call."
The most important aspect in getting customers to
try online banking -- and getting them to stay with it -- is making
the site easy to use. That's something a lot of banks haven't mastered,
says Steve Ellis, founder of Change Sciences Inc., which analyzed
10 major online banking sites.
Ellis and his colleagues evaluated areas such as logging
into and out of the site, checking recent transactions, adding a
payee, making a one-time payment, making a recurring payment and
checking on the status of a payment.
"The bank calls it online banking, the consumer
thinks he's doing online banking because he's on the bank's Web
site. The bank is asking the consumer to click on something called
"online banking" and he's saying, 'Why click? I'm already
in online banking, aren't I?'
"Some sites assume too much knowledge. A classic
design error that developers and banks make is assuming consumers
know the meaning of financial terms such as 'payee.' Let's make
it clear what adding a payee is. Am I the payee or the payor? It's
not like on a check where it says something intuitive like 'pay
to the order of.'"
Ellis says consumers shouldn't feel dumb if they have
trouble navigating a site.
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