Online Banking

1. Online Banking MBA 620 - Personal Finance September 24, 2002 Michael Williams Justin Hinman David Bird

2. Overview • Industry Overview • Advantages • Disadvantages • Choosing an Online Bank • Questions

3. Industry Overview • Percent of population with a personal computer who use online banking • 2002 -- 32% • 2001 -- 22% • 2000 -- 18% • Reflects natural progression among consumers • Profile of Early Adopters • Age: 18-34 • Income: $75,000 + • Geographic Area: West

4. Advantages • Convenience • Don’t have to follow bankers hours (available 24 hours a day) • E-mail Notification for low balance, account transfers, checks clearing, etc. • Bill Payment Services • Operate almost paper-free

5. Advantages (cont) • Functionality • Instant Account Transfers • Downloadable to Quicken and MS Money • Bill Payment Services • Customizable Reports

6. Advantages (cont) • Savings • Institution Cost Savings Passed on to Account Holder in Higher Rates • Email Notification Can Save NSF Charges • Bill Payment Services Saves on Postage, Checks, etc.

7. Disadvantages • Security • Identity Theft- • Name and social security number • 66% of surveyed listed as a major concern • Privacy • Banks may share personal information • “Avalanche of solicitation” • Privacy policies hidden behind “legalese” • 60% of surveyed listed as a major concern

8. Disadvantages (cont) • Industry / Technology Uncertainty • Industry trends of merging/failing banks • One study: 5 of 20 banks profiled merged or failed • Could take hours to set up account if you don’t have an account with “bricks and mortar” parent • Takes weeks to receive checks and ATM cards

9. Disadvantages (cont) • Extra fees • Online bill payment • Per-check charges after specified limit • Inconvenience of no physical branch • Mail in deposits • Pure online banks do not own ATM machines, forcing extra fees to use another bank’s

10. Choosing an Online Bank • Identify own needs and finances • Evaluate current bank • Evaluate competitors services • Demo choice before moving account

11. Bank exists solely online except for one branch in Virginia, but 10,000 ATMs available to customers. Deposits must be sent via U.S. mail. All $1000 $10.00 None ♦♦♦♦ ♦♦♦♦ ♦♦♦ ♦♦♦♦♦ All $1500 $7.50 None ♦♦♦♦ ♦♦♦ ♦♦♦ ♦♦♦♦ Can send statements via e-mail Bank exists solely online except for one branch in Georgia. Deposits must be sent via U.S. mail or can be made at 18,000 ATMs after account open 120 days. All None None None ♦♦♦♦ ♦♦♦♦ ♦♦♦ ♦♦♦♦ All $3000 $9.50 None ♦♦♦ ♦♦♦ ♦♦♦ ♦♦♦♦ Bank requires consumers to wait three to five days before conducting transactions. Opting out of marketing solicitations requires customers to phone a toll-free number. All $500 $5.00 $6.45 ♦♦♦♦♦ ♦♦♦♦ ♦♦♦ ♦♦♦ All $500 $6.00 $5.95 ♦♦♦♦♦ ♦♦♦♦ ♦♦♦ ♦♦♦♦ Bill paying free to customers with more than $5,000 on deposit. All None $3.00 $4.50 ♦♦♦♦ ♦♦♦ ♦♦♦♦ ♦♦♦♦ Easy to use and navigate. Guarantees all payments to arrive within five business days or bank will pay late fees and finance charges All None None $4.95 ♦♦♦♦ ♦♦♦ ♦♦♦ ♦♦♦ All None None $5.00 ♦♦♦ ♦♦♦ ♦♦♦ ♦♦♦♦ You must print a form and mail it to avoid sharing personal information. All None None $6.95 ♦♦♦ ♦♦♦ ♦♦♦♦ ♦♦♦♦ One of the easiest sites to navigate Unsatisfactory privacy policy. Account history is limited to last 180 transactions. All None None $4.95 ♦♦ ♦♦♦ ♦♦♦♦ ♦♦♦ Overall Ratings Account Setup States Available Minimum Balance Monthly Fee Cost for Bill Pay Site Navigation Company Privacy Content Comments Etrade etrade.com 800-382-2651 Citibank citibank.com 800-374-9700 NetBank netbank.com 888-256-6932 JPMorgan Chase chase.com 800-242-7324 Bank One bankone.com 800-482-3675 Bank of America bankofamerica.com 800-933-6262 Fleet Bank fleet.com 800-225-5353 Key Bank keybank.com 800-539-2968 Washington Mutual wamu.com 800-756-8000 Wells Fargo wellsfargo.com 800-956-4442 US Bank usbank.com 612-872-2657

12. Questions?