Online banking gains interest as a convenient consumer service

New Orleans CityBusiness, Apr 27, 2007 by Stephanie Boswell

Holly Bullion has been banking online ever since the service became available eight years ago. "I was drawn naturally to Internet banking. It worked with my lifestyle," says Boullion, information technology manager for Resource Bank.

Although she's a bank employee, Boullion is among the growing number of consumers who use online banking. According to Pew Internet and American Life Project, a leading Internet research group, 44 percent of all Internet users - about 53 million Americans - use some form of Internet banking service.

Pew's research shows online banking is the fastest-growing online activity, even more popular than buying or making travel reservations online, which comes in second.

"Most of our customers, more and more every year, are getting into Internet banking, for convenience and for other reasons," says Boullion. "In the last 12 months we have seen a 36 percent increase. That's pretty significant.

"We're not actively trying to convince our customers to use Internet banking but we offer it to all of our customers," she says.

Hurricane Katrina drastically changed the way people bank, Boullion says. "People who were receiving their paychecks electronically had money in the bank after Katrina."

But many bank customers who were receiving a paper paycheck and hadn't been using direct deposit ran into problems receiving their checks.

"Many of those who didn't use direct deposit before (Hurricane Katrina) are now using this service because of that experience," Boullion says.

Besides direct deposit, other popular Internet banking services include the ability to pay bills online, electronic money transfers from one personal account to another and the ability to pay employees online.

"We have clients who use online banking for every aspect of their life," says Boullion, who says these customers are typically in their 40s or younger. "We definitely see where writing a check is going to be almost obsolete."

While online banking is designed to be a convenience, some bank customers are still apprehensive about it. Before taking the leap into cyberspace, they want to make sure their money and their information is protected.

"Safety and security are normal concerns for customers," says Greg Miles, senior vice president of e-banking for the merging Regions and AmSouth banks.

To ease these concerns, the bank uses all of the latest technology, such as encryption and digital certificates, to ensure safety and security, Miles says.

The bank's servers are also "physically secured and monitored 24 hours a day" and protected by Internet firewalls. Last year the bank added "intelligent authentication," a service that reviews characteristics specific to each customer's home or work computer as they log in to their account online.

"It's like an electronic fingerprint," Miles says.

"Phishing" schemes are considered one of the biggest concerns for online bankers. These are schemes in which someone not associated with your financial institution sends you a fraudulent e-mail asking for your personal information, claiming to be updating their records.

"That's not the way banks do business," says Dick Mitchell, president of the Better Business Bureau of Greater New Orleans. The BBB recommends deleting any e-mail claiming to be from a financial institution, even if the e-mail looks legitimate and comes with a convincing company logo.

If there's any doubt, Mitchell suggests that consumers, before opening the e-mail, call their bank and ask if they're trying to contact you. If the e-mail is from a bank or other financial institution you are not associated with, "the safest thing is to dump it," Mitchell says. Otherwise you risk allowing a destructive virus to enter your personal computer, he says.

Boullion says online banking is safe and regulated but stresses Internet users should always take precautions when doing any type of business online.

Miles says consumers don't know what they're missing until they try online banking. Once they begin using it, he says they usually ask, "How did I ever manage without this?"