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Online Banking MBA 620 - Personal Finance September 24, 2002 Michael Williams Justin Hinman David Bird Overview Industry Overview Advantages Disadvantages Choosing an Online Bank Questions Industry Overview Percent of population with a personal computer who use online banking

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online banking

Online Banking

MBA 620 - Personal Finance

September 24, 2002

Michael Williams

Justin Hinman

David Bird

overview
Overview
  • Industry Overview
  • Advantages
  • Disadvantages
  • Choosing an Online Bank
  • Questions
industry overview
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
advantages
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
advantages cont
Advantages (cont)
  • Functionality
    • Instant Account Transfers
    • Downloadable to Quicken and MS Money
    • Bill Payment Services
    • Customizable Reports
advantages cont6
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.
disadvantages
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
disadvantages cont
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
disadvantages cont9
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
choosing an online bank
Choosing an Online Bank
  • Identify own needs and finances
  • Evaluate current bank
  • Evaluate competitors services
  • Demo choice before moving account
slide11

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

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All

$1500

$7.50

None

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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

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All

$3000

$9.50

None

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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

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All

$500

$6.00

$5.95

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Bill paying free to customers with more than $5,000 on deposit.

All

None

$3.00

$4.50

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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

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All

None

None

$5.00

♦♦♦

♦♦♦

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You must print a form and mail it to avoid sharing personal information.

All

None

None

$6.95

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One of the easiest sites to navigate

Unsatisfactory privacy policy. Account history is limited to last 180 transactions.

All

None

None

$4.95

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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