The advent of the Internet has revolutionized the way the financial services industry conducts business, empowering organizations with new business models and new ways to offer 24x7 accessibility to their customers.
If you’re like most people, you’ve heard a lot about online banking, but probably haven’t tried it yourself. You still pay your bills by mail and deposit checks at your bank branch, much the same way your parents did. You might shop online for a loan, life insurance or a home mortgage, but when it comes time to commit, you feel more comfortable working with your banker you know and trust.
Holly Boullion, SVP Banking Technology Manager of Resource Bank, says, “Community Banks in general still provide a high level of service that represents old school banking by knowing your customer, but now you can have access to online bill pay or transfer money online. We have the ability to provide that combination of service. Community banks like ours tend to be ahead of the curve in providing technology faster than some of the bigger national banks in rolling out technology. For example, with “Commercial Capture” and Health Savings Accounts, we were one of the first banks on the northshore to provide this technology. When we are aware of new technologies, it takes less time to make those decisions and push it down to our customers more quickly.”
Jeff Ehlinger, VP, Corporate Banking Team Leader with Hancock Bank, says, “One of the new products we have rolled out is remote deposit capture. We provide our customers with a scanner that can scan checks for deposit and interact online without ever having to go to the bank. This product allows our business customers who have a high volume of payments that need to be deposited daily.”
Hollie Duet, AVP of Deposit Operations at Statewide Bank, said, “ For our business customers, we have two products online. We have a small business option that is similar to personal banking and we have a cash management product that has the ability to do wire transfers, ACH and payroll. With our new core banking or operating system, we are planning to roll out several new online banking products like remote deposit capture and cash management.”
The ability to offer financial transactions online has also created new players in the financial services industry, such as online banks, online brokers and wealth managers who offer personalized services, although such players still account for a tiny percentage of the industry.
If you haven’t started taking advantage of your bank’s online services, you should! Online banking has many advantages over traditional banking and such features include the ability to download banking and credit card transactions, to make online bill payments, to manage all of your bank accounts and download financial data into money managing programs like Quickbooks or Quicken. Many banks make it easier to manage your checking account by allowing you to set up e-mail or text alerts so you can be notified when checks clear or when your balance falls below a certain level. There is also a detailed listing of your cancelled checks.
Boullion said, “Resource Bank’s internet product, which is free with our free Internet banking and bill payment product, offers the ability to download transactional information into Quicken, Quickbooks or Microsoft Money. It also has a built in tool, called an electronic register that allows the customer to categorize every transaction that posts to their account. This feature allows users to assign income and expense categories to each transaction to help keep track of their finances for budgeting purposes. This is particularly useful for tax purposes.”
Ehlinger says, “Online banking has been driven by customer demand and the convenience of doing business without having to go into the bank. Internet banking has allowed us to service our customers in multiple markets without having to have the brick and mortar capital outlay.” At Hancock, especially on the commercial side, we try not to allow geography to be a boundary. Some of our customers may be 50 miles away from the closest Hancock Bank, but yet, they still have the ability to conduct their financial business online.”
The newest banking technology is the ability to bank from your mobile phone. Mobile devices, especially smart phones, are the most promising way to reach the masses and allow current banking customers the ability to provide services anytime and, more importantly, anywhere. Over the last few years, the mobile and wireless market has become one of the fastest growing markets in the world and is still growing at a rapid pace.
According to a study by financial consultancy Celent, 35% of online banking households will be using mobile banking by 2010, up from less than one percent today. Upwards of 70% of bank center call volume is projected to come from mobile phones. Mobile banking will eventually allow users to make payments at the physical point of sale. Mobile contactless payments will make up 10% of the contactless market by 2010.
SMS banking services are operated using both push and pull messages. Push messages are those that the bank chooses to send out to a customer’s mobile phone, without the customer initiating a request for the information. Typically push messages could be either mobile marketing messages or messages alerting an event which happens in the customer’s bank account, such as a large withdrawal of funds from the ATM or a large payment using the customer’s credit card. Pull messages are those that are initiated by the customer, using a mobile phone, for obtaining information or performing a transaction in the bank account. Examples of pull messages for information include an account balance inquiry, or requests for current information like currency exchange rates and deposit interest rates.
“The Mobile banking field doesn’t have the saturation yet, although there is an overwhelming majority of people who have mobile phones regardless of age or income level. People want to do more business on their mobile phones. The demand is only going to increase, but statistics show there is still a low usage today. However, it will increase exponentially over the next year or two,” said Boullion. “Many companies are coming out with mobile apps and SMS texting. We are interested in the solution that provides texting because that will extend to more customers. More people have the ability to text rather than having data plans because of the cost associated with those plans. But as data plans become more prevalent, we are evaluating the possibility of providing these types of mobile banking solutions as a part of our online banking platform.”
Ehlinger says, “People are looking for convenience and technology has allowed them to become more efficient. The younger generation is just not going to wait in a teller line to make a deposit. The banks are reaching out to all generations, but the younger generation is completely online. They are shopping online and want to bank online. The firewalls and security are there.”
Karen Sharp, VP of Sales and Service at Statewide Bank, said, “The younger generation is more likely to use these types of services. We have just recently converted to a new core banking system at Statewide that allows us the capability to offer these types of products to our customers. Mobile banking is on our list to roll out to our customers but is in the planning stage right now.”
“Some of the things to look for in the future of online banking is virtual routing numbers. All banks have a routing number to track debits and credits to an account, but there is functional routing numbers where individual clients can get separate routing numbers, which is like a shadow number for security reasons. Then the next day they get a different routing number. The sharing of information, the speed, technology and convenience is driving down walls where traditional banking is changing,” said Ehlinger.
“Truly, I think, to bank with a community bank like Resource Bank, we can still offer you this new technology where it makes sense. The customer’s banking security is paramount. All of our products are thoroughly vetted. We are still on the front end of offering new services to our customers and if there is something you want, it will get to the highest levels of management to be considered for implementation,” said Boullion.