Is Your Bank Trying to Keep You From Online Banking?

02.08.07 | Online Banking | 0 Comments | by junger

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Many brick and mortar banks don't want you to bank online, despite the many benefits available.

In fact, James Van Dyke, founder of Javelin Strategy & Research in Pleasanton, Calif., says that if banks "got their act together," online banking would become more widely used.

In a story on why online banking is safer than the paper route, Liz Pulliam Weston breaks down Van Dyke's reasoning.

* Most financial institutions don't offer a paperless option. Institutions like Bank of America, Citibank and Wells Fargo encourage customers to bank exclusively o line, but they're in the minority. Only 44% of the large banks Javelin surveys offered a no-paper option for checking and savings accounts; that dropped to 33% when retail banks issuing credit cards were surveyed. This, frankly, is nuts. Eliminating paper saves the banks money, but "most banks are pretty conservative," says Van Dyke.

* Few that do offer the option are really pushing it. Few financial institutions offer any kind of financial incentive to forgo paper. Given how much paper statements cost to create (75 cents to $2 a pop), you think banks could be a little more generous.

* Many that do offer the option don't offer enough support services. Having 24/7 technical service is a good idea, Van Dyke said, but not an option all financial institutions offer. Most institutions also won't alert you by e-mail if a suspicious transaction occurs in your account, and all limit the number of prior statements you can access online. (Since banks are required to keep statements for seven years, it would be nice to have instant access to those rather than having to make a request for archived copies to be mailed.)

Does it make sense? Yes and no.

It doesn't make sense because banks would save money if more customers banked online. Less paper. Fewer branch employees.

It does make sense because once a customer starts banking online, they realize that the local branch is not the only option available and, most likely, there are online accounts with better returns and fewer strangleholds.

Is your bank trying to keep you from online banking?

(Read the arguments against online banking.)

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