The old adage reads, There is no "I" in "team." But there is an "I" in banking now, and it stands both for interactive and Internet-only. While many banks have offered online services as an adjunct to their traditional teller windows and ATMs, there is a new move afoot to take the bank out of banking and to replace it with a virtual equivalent... Welcome to the world of Internet banking.
Traditional banks with online access offer two methods for connecting and doing business: First, you can use personal finance software on your computer, such as Quicken or MS Money, and use those already-familiar packages to connect to the bank’s Web site over the Internet. Second, you can connect to the bank’s Web site using your Internet service provider and take advantage of the bank’s own interface.
Internet-only banks usually provide both of these options for free, and this is one of the advantages of Internet-only banking.
- Much better rates
- Online bill-paying (often free)
- Reimbursed ATM fees for any bank’s ATM
- 24/7 access, including holidays
- Cannot walk into a branch
- Cannot make cash deposits
- Cannot issue cashier’s checks, traveler’s checks, or special orders
- Often difficult or "scary" for the technology-challenged
Bigger Sometimes Is Better
NetBank (www.netbank.com) is a perfect example of the Internet banking guidelines mentioned above. Brooke Schultz, a company spokesperson, says, "To recap some of the benefits to consumers, NetBank offers higher-than-average interest rates, since our low overhead allows Internet-only banks to pass along savings directly to their customers. We also offer 24-hour service and customer support, and 24-hour banking and customer service via phone or the Internet, as well as electronic and automatic bill paying—customers no longer have to worry if bills are paid on time."
Schultz also mentioned that NetBank’s account aggregation service—where clients check all account information across all institutions on one secure site—is very popular. Lastly, he noted that the bank provides wireless services for PDAs, so customers can keep tabs on their accounts while they’re on the go.
Internet banking is becoming more cutthroat now that technology and services are becoming more accessible. Schultz notes that the company’s primary competition is with WingspanBank.com (www.wingspanbank.com), another Internet bank operating under the umbrella of Bank One. He also notes, "We used to compete with CompuBank until we purchased its deposit accounts about a month ago." The acquisition makes NetBank the largest Internet-only bank, and puts it on a footing to compete with traditional banks that have online components, like Citibank and Chase.
But it’s customers who make up any bank, and some of NetBank’s customers are very happy with the way technology has simplified their lives and made banking more profitable. Here are a few examples:
Salil Gangal of Beaverton, Oregon, says, "I like the price of banking with [NetBank], which is zero, and the yields it offers, which are on the higher side of the spectrum."
Dan Foster of Suwanee, Georgia, says, "I selected NetBank for all of the technological innovation it offers to customers at an unbelievable price. I use its wireless service with my Palm VII, and it’s working great. I like the convenience of having my information so readily available."
Don’t believe them? Brooke Schultz says that a handy way to compare traditional checking rates with online bank rates can be found by logging onto Bankrate.com (www.bankrate.com).
Born on the Fourth of July
Symbolism can sometimes help a new enterprise get a foothold in the marketplace. Tying its founding to the birthday of the United States certainly hasn’t hurt San Diego-based Bank of Internet USA, a.k.a. BofI (www.bofi.com, 888-546-BOFI [2634]). The company, founded on July 4, 2000, recently reported having grown to $100 million in assets and 2,700 accounts in its first eight months of operation.
BofI’s motto is "Save Time—Save Money and Make Money." The I-bank is an FDIC-insured, full-service banking and lending institution that combines the efficiency and immediacy of the Internet with friendly customer service. State-of-the-art technology delivered via the World Wide Web offers customers 24-hour account access, up-to-the-minute accuracy, and worldwide ATM availability.
According to Gary Lewis Evans, president and CEO of BofI, the new online-only bank is showing record-breaking growth and wide acceptance as the Internet banking alternative to the traditional brick-and-mortar bank. He notes, "Even consumers who are new to the Internet are quickly adapting to our easy-to-use Internet banking and Internet-based bill payment system." He further states, "Seniors are particularly happy with our certificate of deposit rates and 4-percent APY, no-fee senior checking account."
Company officials have noted that the regulatory process required to get up and running took about three times longer than if BofI had been a traditional bank, and required "much more rigid privacy conditions." The institution received its Federal Deposit Insurance Corporation (FDIC) approval in June 2000.
Recognizing that not everyone is an Internet wizard, BofI also touts a highly trained customer service department that is available to assist Internet novices in their transition to Internet banking.
Worldwide Acceptance
The United States is not alone in posting new Internet-only offerings. In the U.K., The Cooperative Bank also created an online subsidiary called Smile last year. In Japan, a consortium including Sakura Bank Ltd., Sumitomo Bank Ltd., Fujitsu, Nippon Life Insurance, Tokyo Electric Power, Mitsui & Co., and NTT Mobile Communications Network Inc. is developing a similar operation: The Japan Net Bank. Before long, even your Aunt Minnie living in the Australian outback will be able to dial up her account using her PC and a satellite hookup.
So next time you walk into your traditional brick-and-mortar bank, gauge the teller’s reaction by uttering the this simple phrase: "Got baud?"