Online banking: are you ready? Taking the leap is as easy as point, click, and save

Black Enterprise, July, 2005 by Krissah Williams

WHEN VANESSA AND CYRIL BRIGHT married last year, they merged their banking styles. For the newly weds, it was a matter of old meeting new. Vanessa is s self-described online banking whiz Her hubby prefers to pay his bills in person and in cash.

For Vanessa, the convenience of managing money and paying bills using the Internet makes it all worth it. It means not having to lick envelopes and buy stamps because everything is done online. Cyril doesn't trust electronic banking with his hard-earned money and often drives to the store where he bought an item to pay the bill in person and walk out with a receipt.

Vanessa, 38, says she is savvy enough to recognize fake e-mails from scammers trying to trick her into divulging personal and financial information. Cyril, 41, had his identity stolen years ago and thinks putting his account information on a computer is a risky move.

The Brights, who live outside of Washington, D.C. in suburban Maryland illustrate the divide that exists in the black community when it comes to banking via the Internet Larry Irving is an expert on the digital divide. He's president of Irving Information Group in Washington, D.C., and former senior adviser to President Clinton on telecommunications and Internet initiatives. He says African Americans like Vanessa make up a small percentage of the 53 million Americans who bank online.

African Americans who are fearful of mixing their finances with the World Wide Web are being left behind by those who have embraced the technology and convenience of online banking. Those enjoying the opportunity to check their account balances 24-hours a day, view their account activity and history no matter where they are, transfer money instantly, reorder checks electronically, and perform other banking functions from home without picking up the telephone, say there's no reason to continue sitting on the fence.

On a typical day, 13 million Americans are banking online, an increase of 58% from 2002, according to a study released this year by the Pew Internet & American Life Project. Irving suspects that only a small segment of that number are African Americans. "We, historically, have been less trusting, particularly with our finances as it relates to electronics. Generally speaking, people of color have wanted to see their money and hold their money. And they've been less trusting that they won't get ripped off," says Irving. "A lot of times, we don't want people to have that much information about us. We don't want to be caught in the databases of institutions that we, historically, haven't trusted and that have not always done right by us."

It's not surprising that African Americans are more wary of banking electronically than other consumers. We are the group least likely to buy online, according to a study by Cambridge, Massachusetts-based Forrester Research. In addition, according to research conducted by Pew Internet & American Life Project, people with higher incomes who have been using the Internet for six years or more and who have broadband Internet connections are more likely to bank online.

"We are later getting broadband, and we are less likely to use the Net for e-commerce. And we are underbanked as it compares to non-minorities," says Irving. "Major factors are race and class. Increasingly, [online banking and e-commerce] are occurring during working hours and in the office where many people have daytime access to the Net. We are still disproportionately in jobs where, during the day, we may not have access to the Internet."

Irving acknowledges that not all African Americans are behind the curve when it comes to reaping the benefits of online banking. "A lot of black folks are whizzing through this, particularly these who are college educated and have medium to high incomes."

Vanessa has been using computers since college and is not intimidated by new technology. She loves having the power to check her account balance at her fingertips and having the ability to identify and report fraudulent charges to her financial institution before her monthly bank statement arrives in the mail. Online banking can also cut down on late fees because you can pay bills almost instantly.

Ultimately, Vanessa won in the money management disagreement with her husband: they've agreed to let her take over the bill paying. Cyril says he trusts Vanessa, though online banking isn't his forte: "I'll never feel comfortable online. Maybe I'm just old fashioned. She says she knows what she's doing."

Vanessa checks their online bank account regularly. Every two weeks, she spends about 15 minutes paying the bills. Doing it the old way--with pen, checkbook, envelopes, and stamps--often took 45 minutes or more. Now she pays all their monthly bills through an account she set up with Baltimore-based M&T Bank. She even pays one-time bills, such as a medical invoice, online. "It's fast and efficient," Vanessa says. "I don't have the fear some people have."

For most people, that fear is of identity theft. According to a study released last year by Forrester Research, 71% of online shoppers who don't bank online cite security and privacy concerns as the reason for their resistance. Other fears, habits, and misconceptions cited in the study include the following: