Life on the Web: Internet Banking

1. Maryrose Raab IDT 590 July 20, 2005 Life on the Web:Internet Banking

2. What is Internet Banking? “An opportunity to manage your finances more quickly and efficiently by bypassing the paper based aspects of traditional banking.” ~bankrate.com Performing financial transactions over the internet through a bank’s secure website. There is no special hardware or software needed. A web browser is typically utilized and any normal internet connection is appropriate. Banking transactions can be performed wherever and whenever you want, from any PC with internet access.

3. What is Internet Banking? Internet banking can also be defined and described by the types of transactions that can be performed online. They include: Checking: View your daily balance, view what checks have been cleared and what deposits have been made, receive statements online. Online Bill Pay: Point and click to pay bills anytime out of an account that can be accessed online 24/7. Savings: Sign up for savings accounts that can be managed online such as money market accounts, CD’s and IRA’s. Loans: Apply for loans (car, boat, home equity) and get approved online. Insurance: Obtain policies online for cars, homeowners, health. Planning & Investment: Access to online financial planners and investing services.

4. Advantages of Internet Banking It is extremely convenient for consumers. It saves time – no more waiting in teller lines. A feeling of greater control over one’s finances. There is more privacy since no human interaction is necessary. More banking information is available online at your fingertips. Can save money through special incentives, higher interest rates and lower or no fees for certain online banking activities. There are more bank services online allowing consumers to access and manage all of their accounts from one secure site.

5. Disadvantages of Internet Banking Moving one’s financial life online will require some start up time. There is a learning curve in becoming familiar with the site’s navigation system, reviewing tutorials and developing a comfort with the site. Over time, the bank may add new features and make upgrades to the site requiring consumers to re-familiarize themselves with the site. Resistance to trusting the security of the site and it’s ability to process transactions.

6. Customer Statistics Online banking is the fastest growing major internet activity 53 million people or 44% of internet users bank online This is an increase of 47% since late 2002 13 million people perform a banking chore online on a typical day This is an increase of 58% since late 2002 Data provided by the Pew Internet & American Life Project/February 2005 Report

7. Key Characteristics of Internet Bankers (1 of 2) They have broadband connections 63% with broadband vs. 32% with dial up They are experienced web users 51% with 6+ years internet experience vs. 27% with 3- years internet experience They are members of Generation X 60% Gen X (age 28-39) vs. 38% Gen Y (age 18-27) Data provided by the Pew Internet & American Life Project/February 2005 Report

8. Key Characteristics of Internet Bankers (2 of 2) More are male 49% of wired men vs. 30% of wired women They are affluent 55% of homes earning $75,000+ vs. 32% of homes earning $30,000 – They are college graduates 52% of college graduates vs. 42% of high school graduates Data provided by the Pew Internet & American Life Project/February 2005 Report

9. Internet Banking Trends As internet users gain more experience online, they are more likely to perform online activities that involve money, leading to a rise in internet banking. Banks themselves have become more aggressive in offering free online banking as an option to their current customers. Banks know that online customers are more profitable than offline customers – they make fewer customer services calls and are less likely to switch banks. This aggressiveness contributes to the rise in online banking. Data provided by the Pew Internet & American Life Project/February 2005 Report

10. Personal Banking Online • Three online banking providers were researched for this project - NetBank, Watchovia, HSBC. • There were no major differences between the basic services offered. • Have chosen to focus on HSBC for this project because they offer a local branch allowing for offline banking if necessary in the future.

11. Personal Internet BankingStep 1: Learn how to sign Up The first step in becoming an online banking customer is to sign up. Once you click on the “sign up” link, the process is clearly outlined: you need an account with HSBC, a PC, an internet browser and your SS #. In addition, if you sign up using a current HSBC credit or debit card with the PIN, you will gain immediate online banking access.

12. Personal Internet BankingStep 2A: Sign Up To sign up, enter your social security number and follow the directions to create a customer ID.

13. Personal Internet BankingStep 2B: Sign Up (con’t) Continue the sign up process by entering your current HSBC account information, creating a password and entering your e-mail address.

14. Personal Internet BankingStep 3: Log in Now that you’ve signed up, you can log in as an internet banking customer using the ID and password that you just created. Customer service is available by phone if you experience any problems.

15. Personal Internet BankingStep 4: View Your Accounts Now you can immediately view your account, along with your balance on that particular date. You can click on the link for “interest checking,” and it takes you to your account details.

16. Personal Internet BankingStep 5: View Account Details This screens shows your 10 most recent transactions: checks that were cashed, recent deposits, online payments, ATM withdrawals. Click on “more” if you want to see the previous 10. Click on the check or deposit image to see the paper document that was processed.

17. Online Bill Paying Service In an article in Bank Systems & Technology entitled “Creating Virtual Value”, comScore Networks, a Reston, Va. based consulting firm that analyzes consumer behavior indicates that 4.6 million consumers, or 20% of the online banking population used online bill payment services offered by the top 10 banks. They believe that electronic bill payments are a big driver that pushes consumers to use online services. The typical online banker logs on 9-10 times/month. The typical online bill payer logs on 14 times/month.

18. Online Bill Paying Service Before signing up for the online bill pay service, it is recommended that you view a 5 minute demo of the service on the HSBC web site.

19. Online Bill Paying Service To activate the online bill pay service, you must first create a security key which is an extra level of protection. Once it is created, you must enter it each time you want to enter the “Pay Bills” page.

20. Pay A Bill (One-Time)Step 1: Add A Payee First you must enter the information below to add a payee. You will do this for every bill you want to pay online.

21. Pay A Bill (One-Time)Step 2: Select A Payee Next, you click on the “One-Time Payment” link and select your payee from the pull down menu of accounts that you have set up.

22. Pay A Bill (One-Time)Step 3: Select Payment Date/Amount Next, you type in the date you would like the bill processed by and the dollar amount. HSBC suggests that you select a process date that is at least 5 days prior to the due date to allow for processing time. Click “Enter.”

23. Pay A Bill (One-Time)Step 4A: Confirm the Payment Now you must confirm the payment by clicking “OK”. If you notice incorrect information, you can cancel the payment at this time.

24. Pay A Bill (One-Time)Step 4B: Confirm the Payment After you click “OK”, you come to this screen where the bank confirms the scheduled payment.

25. Pay A Bill (One-Time)Step 5A: Search for a Payment You can track pending and historical payments by clicking on the “Payment Search” link, and you can select your payee and click on the type of payment search you want.

26. Pay A Bill (One-Time)Step 5B: Search for a Payment Here are the results of a payment search for historical payments to Dr. Michael Fanelli. You can see that a payment was processed and completed on July 20th.

27. Converting to Online Banking Converting to online banking was an easy process which took about 20 minutes to activate. The bill pay service was also easy to set up and is proving to be very convenient.

28. References Amato-McCoy, Deena M. "Creating Virtual Value." Bank Systems & Technology 42 (2005): 22-26. ProQuest. ProQuest. Peter J. Cayan Library, NY. 15 June 2005 <http://www.proquest.com>. HSBC: The World's Local Bank. 2005. HSBC. Day: July 2005 <http://www.hsbc.com>. NetBank: Connect With Your Money. 2005. NetBank. Day: July 2005 <http://www.netbank.com>. “Online Banking.” Pew Internet and American Life Project. 2005. Pew Research Center. 15 June 2005 <http://www.pewinternet.org>.

29. References Strasburg, Jenny. "Online Banking Grows." San Francisco Chronicle 28 May 2005: C1. ProQuest. ProQuest. Peter J. Cayan Library, NY. 15 June 2005 <http://www.proquest.com>. “The State of Online Banking.” Pew Internet and American Life Project. 2005. Pew Research Center. 15 June 2005 <http://www.pewinternet.org>. Wachovia. 2005. Wachovia. Day: July 2005 <http://www.wachovia.com>. "What is online banking?" Bankrate.com. 2005. Bankrate, Inc.. 11 July 2005 <http://bankrate.com>. "Wikipedia: The Free Encyclopedia." Wikipedia. 2005. Wikimedia. 15 June 2005 <http://http://en.wikipedia.org/wiki/Main_Page>.