The ABCs of banking online: how to use your computer to manage your finance: with a personal computer and a modem, you can turn your home into a bank branch

Black Enterprise, March, 1996 by Donald J. Kron

You're lying on the beach in the Bahamas when suddenly you realize that you forgot to make your mortgage payment. By the time you return, your payment will be overdue and you'll incur a hefty penalty as well as damage your credit rating.

So what do you do? Relax and enjoy the day. Later, in your hotel room, you plug in your laptop and make the payment long distance. No late charges, no credit hassles and, as they say in Jamaica, "No problem, mon."

Such scenarios are no longer fantasies. "After some false starts, online banking is becoming a reality," says Clifford Kurtzman, president of the Tenagra Corp., an Internet marketing and public relations firm in Houston. With a personal computer and a modem, you can turn your home into a bank branch.

PROS AND CONS

Banking by computer, though, involves cons as well as pros. The positive factors:

* Convenience. You can bank from anywhere, at any time. Bills can be paid with a few keystrokes, so you save the time of writing checks, addressing and stamping envelopes and dropping them in the mail. Money can be transferred from one account to another.

"You always know what your balance is of whether a deposit has cleared," says Kim Humphreys, director of public relations at Security First Network Bank in Pineville, Ky.

* Financial planning capability. Online banking can give you fingertip access to all areas of personal money management, such as budgeting and forecasting.

* Low cost. Many banks offer free software and charge minimal amounts for this service. "Expect to pay $5 or $6 per month for writing up to 20 checks," says Kevin Curtis, an analyst with the Yankee Group, a consulting firm in Boston. Others, such as New York-based Citibank, do not charge for electronic banking.

What are the negatives?

* Security. "If a bank doesn't have an encryption program or a way to authenticate your account, confidential information may be exposed to the world," says Joel Maloff, an Internet business consultant in Dexter, Mich.

* Computer overload. After several hours of peering into a computer terminal at work, the last thing you may want to do is go home and pay bills by PC. Also, if the system goes down, you have to fall back on traditional banking methods.

* Growing pains. Some online banking services are coming to market before they're ready. Stories have surfaced about nonworking PIN numbers or incompatible modems. "It took 20 years for ATM use to become widespread," says Steven Eskenazi, a managing director at Alex. Brown & Sons, a brokerage firm based in Baltimore.

* Service limits. You cannot make deposits online, unless the people who pay you are banking electronically. And you can't get cash from a PC.

If the pros outweigh the cons for you, shop carefully. Many banks offer online access, or will soon. Moreover, services such as America Online will introduce banking to subscribers. Some online banks have proprietary programs, while others use Microsoft Money or Intuit's Quicken.

Find out what equipment you need, an IBM-compatible or Mac, for example, or a modem with a minimum baud speed. Examine the price structure to see if you must keep a minimum balance at the bank to qualify for bargain rates.

"Determine whether you'll be dealing with one service rep for all your banking questions related to online and traditional services," says Stephanie Fierman, a vice president with Chase Manhattan Bank. "You don't want to be bounced around." The right online service should put you, the customer, in charge of your banking business.