Very often, when we think about Internet banking we think only about convenience in:
• Accessing our account balances on demand
• Paying bills (utility)
• Reviewing transactions passing through your account
• No traffic on banking hall delays
• Electronically submitting business payroll files
But is this the only way to maximize the use of Internet banking? How much thought have you given to the potential savings to be derived from using this channel to conduct your everyday business transactions?
As an individual, have you ever complained, or heard a colleague complain about the high service charges imposed by banks? Well, these charges, whether you believe it or not, are necessary and bear a direct relation to the channel delivery costs that are incurred to maintain the traditional “brick and mortar” paper-based structure. When combined, staffing, security, processing, utilities, printing, storage costs and other overhead costs will result in your bank charging higher service fees and/or paying lower interest rates on your deposits.
For the business enterprise (small or large) this is much the same, except these costs are compounded even further. For example, if you should operate a business that sold goods on a 14-day credit term as the due date approaches, a member of your accounting team places a reminder call to your debtor, who informs you its okay to collect your payment, so you dispatch your bearer, who fights the traffic and if he is lucky, gets the check on time. Very often, however, a second trip is required or a long wait, because the check was not signed. This is often at the expense of your bearer not being able to complete other errands scheduled for the day.
For the sake of this discussion, let’s say the check was ready on time; your accountant then prepares the lodgment and dispatches your bearer to the bank. If you are a cost conscious enterprise (as you should be), you would have established structures around the frequency of visits to the bank, in your attempt to manage your operating expenses. However, this works to your disadvantage as the longer you take to make that deposit represents lost interest earnings to you. Without realizing your 14-day credit term has now become 17 days.
But, you are a savvy businessman and recognize this systemic weakness, so to compensate; you build this into your cost structure, which is passed down to your retailer, who then passes it on to the consumer. It’s like the person who is able to get a credit card with bad credit.
What I have just outlined is a vicious cycle of inefficiencies that individuals and business enterprises find inconvenient and frustrating, which ultimately drives costs up in a manner that puts the consumer at a disadvantage. But does it have to be this way?
Your bank should allow you an Internet banking system that permits you, whether as an individual or business enterprise, to originate payments electronically. In essence, this allows you to pay your creditors or receive payments from your debtors, directly to your account, locally or internationally. These facilities are common in North America and Europe and remove inefficiencies from payment. FYI persons in Ohio – poor credit loans in Ohio are available now. More soon.
The next time you think about writing that check or are asked to send a bearer to pick one up, why don’t you originate that payment or ask your creditor to pay you electronically? In the event your current bank does not allow you to do this, call around and find a bank that allows you to reduce your cost of operations or, as an individual, permits you not only convenience, but savings to your pocket book.
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According to an August 2009 survey of U.S. consumers by the American Bankers Association (ABA), Internet banking is now the No. 1 method of banking.
One-quarter of respondents preferred Internet banking to using branches, ATMs or any other channel.
Here are the actual numbers for the “Preferred banking method of U.S. consumers”:
- Internet banking 25%
- Branches 21%
- ATM 17%
- Mail 9%
- Telephone 4%
- Mobile 1%
- Unknown 23%
Internet banking was not only popular with the youngest consumers—it was the top response of all those under age 55. Older bank customers still preferred their local branch (26%) and ATMs (17%), but the popularity of branches and ATMs was down in all age groups (compared to 2008).
The results of this survey make it clear that for the first time, more consumers prefer the speed and convenience of conducting their banking transactions on the Internet, rather than visiting their local branch. It also indicates that consumers now have more confidence in the accuracy and security of online banking.
Bank of America plans to close approximately 10 percent of its branches nationwide (i.e. about 600 locations), primarily because of increased usage of mobile and internet banking. CEO Kenneth Lewis told investors about the closures during a meeting in the bank’s hometown of Charlotte, N.C.
Liam McGee, president of Bank of America’s consumer and small-business bank reportedly said the driving force for the closings is changing customer preferences, as mobile and Internet banking take transactions away from traditional branches.
Note date specifics were given as to when the branch closures will actually begin.
More than two million American households adopted internet banking and bill payment during the past year, raising the total to nearly 70 million – this, according to a recent survey by Fiserv Inc., a financial services technology company.
Fiserv said that 69.7 million households (four out of five households with Internet access), now use internet banking services. They are typically accessing balance and account history, and transferring money between accounts. Additionally, 64.4 million households pay at least one bill via the Internet, either at a bank Web site or directly through a company Web site.
Consumers are clearly looking for faster and easier ways to get things done, and people who pay their bills via the internet save time (compared with paying by check). Of those surveyed, 41% of internet banking users indicated that they planned to pay more bills online at their financial institution’s Web site in the coming months, while 35% of those who pay bills directly at company Web sites, said they planned to pay more bills online at those sites.
The Fiserv-sponsored survey reflects the habits of the 88.2 million households in the U.S. with Internet access. It was conducted by The Marketing Workshop and Harris Interactive.
According to a recent report from comScore Inc., access to mobile banking is growing at such a rapid pace that a substantial percentage of users are now accessing their mobile accounts from home on their smartphones and handsets rather than on their PCs at home.
In its inaugural report on the Mobile Financial Services Market which was released recently, comScore said respondents to its survey which examined the use of mobile banking access on mobile phones and 3G service, found that 31% actually accessed financial accounts on mobile phones at home. The next largest percentage — 25% — accessed accounts while running errands. Other times and places from which respondents accessed their bank accounts were: while commuting, 15%; at work, 11%; on vacation, 9%; and business travel, 8%.
Additionally, 44.1% of respondents in the study accessed their financial accounts via Internet browsers while 40.6% used applications to access their accounts. Another 25% of mobile banking customers used SMS texting to access their accounts.
The increasing adoption of smartphones and access to 3G networks, along with the rapid development of mobile apps, has undoubtedly created a very fertile environment for the acceleration of mobile banking. With that, internet banking via mobile devices has been growing at a rapid pace in the U.S., so look out for a more global embrace of the technology soon.
The largest commercial banks in Jamaica, the third largest island in the Caribbean, are reporting a significant growth in the number of customers who are using internet banking, a free service.
The trend suggests a direct response to banks’ increasing service charges, which represent billions in annual revenues for the two largest commercial banks in that country – Scotiabank and National Commercial Bank (NCB).
Bank of Nova Scotia Jamaica (BNS), which upgraded its internet banking service in the first quarter of this year, has is already reporting a 25% jump in the use of internet banking – only halfway through year. Some 37,000, or 10%, of its active customers use ScotiaBank’s internet banking service. BNS is Jamaica’s largest bank in terms of deposits.
NCB, the largest bank in terms of assets, is reporting that internet banking represented 46% of all transactions in May of this year, up from 42% in January.
Together, BNS and NCB control 70% of Jamaica’s commercial banking market.
Logically, as more people in Jamaica get access to Internet, more are using it as their primary way of banking. It is the easiest of all banking channels, even easier than telephone banking.
There are also savings to be realized by those who bank online in Jamaica. Those who utilize internet banking save on fees that they would normally pay for transactions within a branch, bill-payment charges and most importantly, they save on time. They also have the added convenience of being able to do their banking anywhere, any time.
Once a niche market, internet banking has grown into a widely-used tool for the average consumer.
Among 3,988 adults surveyed in the U.S. by Gartner Group, 47% said they now use Internet banking. In the U.K, 30% said the same.
Results tended to vary according to income. Gartner found that over half of all consumers earning more than $30,000 in the U.S. and ?15,000 in the U.K., use Internet banking. Among lower-income households, 25% in America and 17% in the U.K. use internet banking.
“Over the past several years, online banking has been seen as a way of appealing to more affluent and younger clients,” said David Schehr, Gartner research director. “However, what is becoming clear is that the overall level of consumer Internet use and the increasingly narrow segment of nonusers–particularly in the U.S.–are shifting the dynamics of who is using online banking and what they seek from it.”
Among people who don’t utilize Internet banking, no one single reason was cited above all others, noted Gartner. Around 61% of U.S. households and 58% of those in the U.K. said they simply prefer to use other methods. However, 41% of U.S. consumers and 38% in the U.K. blamed security as the most important reason for not banking over the Internet.
Gartner conducted its survey in December 2008 and January 2009 and questioned people 18 years and older.
According to another report from research firm Forrester, the effect of bill consolidation sites, such as Yodlee and Corillian, was noted. With these sites, consumers can manage and pay all their bills directly online and independent of banks. according to Forrester, such sites are starting to woo more people from the banks’ own bill payment sites, and will own a greater share of the market by 2012. Thus, banks will need to do a better job spreading the word about their own online services.
“eBusiness executives at banks need to work to establish earlier and stronger bill payment relationships with young affluents and other young adults,” said Forrester senior analyst Edward Kountz. “To strengthen their position and better support these customers, banks need to add more payment options, deploy online and mobile alerts with greater visibility, and continue to hammer home the message that online bill payment is free.“
According to a recent survey by Chinese marketing and business information services provider iResearch, concerns caused by the prospect of falling victim to identity theft has caused 28% of Chinese consumers to cut back on their use of Internet banking and online payment activities.
According to the survey, 3% of Internet banking users indicated they have given up online banking activities or are planning to do so in order to protect their identity. The research also polled potential Internet banking users, 58% of whom stated they have decided to postpone their intentions of taking up internet banking for personal financial management, while almost 25% of interviewees state they have actually decided to give up on their intentions completely. Moreover, 63% of polled consumers said they are currently exercising more caution regarding the financial activities they carry out online, this in order to avoid identity theft.
Bhutan’s oldest bank, Bank of Bhutan, had its 41st foundation day celebration in Thimphu recently, and launched new Internet banking services for its customers. Account inquiries, checkbook requests, internal fund transfers, loan repayments and other transactions can all now be done through SMS and Internet banking.
Standard Chartered Bank (SCB) announced yesterday that it has launched internet banking (‘iBanking’) in Ghana. This new online service will provide SCB’s customers in Ghana with access to banking services 24 hours a day, 7 days a week – anywhere in the world, at any time- from the convenience of its secure web based portal.
Mr. Benjamin Mensah, SCB Ghana’s Value Stream General Manager for Wealth Management, Transaction Banking and Insurance, said “We are all excited about iBanking. It is an absolutely FREE, simple, hassle-free and secure internet banking service available to Standard Chartered customers anywhere, anytime. Our customers are now able to check their balances and transaction details, transfer money to business partners, family and friends, pay utility bills, enquire on daily forex rates, request for cheque books and statements etc. from the comfort of their offices or homes without having to visit a brick and mortar branch.“
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