Is this a CKFR bank? If not who is doing their bill pay?
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Date: Tuesday, June 16, 1998
Source: The Indianapolis Star and News
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The Indianapolis Star and News via Knight-Ridder/Tribune via NewsEdge Corporation : By Chris O'Malley, The Indianapolis Star and News Knight Ridder/Tribune Business News
Jun. 15--As a Bank One customer last year, Scott Miller got an itch to do his banking on his computer.
But the giant bank told him that the online banking service he wanted wasn't available at that time. He and his wife waved bye-bye to Bank One.
"One of the reasons we switched to Jet Credit Union is because they had it," said the Brownsburg resident.
As more computer users get a whiff of the intoxicating convenience of online banking, the quality and availability of the service will play a bigger part in their selection of financial institutions.
Lately, big banks have been riding the online wave and spending millions of dollars in advertising to pull you aboard.
But, like Miller, you might want to also take a look at smaller banks, thrifts and credit unions. Advancements in technology have made some of these little players feisty and capable competitors.
For a little more than the price of an ATM machine, or about $30,000, financial institutions can buy software that allows them to offer banking via the Internet.
For years, online banking basically meant that a customer's modem had to dial a dedicated telephone line of the bank.
Big banks could afford the data centers, phone lines and staff needed to support these. They also could pay for the software customers needed to use the system.
Not the little guys.
"We're small. We don't have computer experts on staff," said Beverly Jinkins, executive vice president of $40 million-asset Jet Credit Union in Indianapolis.
About 1,000 of Jet's 10,000 members are using online banking. About 300 of them pay bills online.
By using the Internet, Jet doesn't need a special bank of phone lines or corresponding data center. It charges members only 30 cents per bill paid online. "It's still less than the cost of a stamp," said Jinkins.
Jet bought the software needed to offer online banking from Indianapolis-based Virtual Financial Services Inc. The Northeastside company, which developed the FiNet software, has put at least three Indiana credit unions into the Internet banking business.
The others are Double 11 Credit Union in Indianapolis, Tech Federal Credit Union in Crown Point, and WGE Federal Credit Union in Muncie.
In total, Virtual Financial has sold to, and hosted Web sites for, about 30 financial institutions nationwide under $2 billion in assets. Among its most prominent clients are the Digital Employees Federal Credit Union in Maynard, Mass., and Anheuser-Busch Employees Credit Union in St. Louis.
Virtual Financial, which declines to disclose sales and earnings, claims its FiNet platform is available to over 600,000 consumers.
The company also gave smaller financial institutions another weapon against big banks earlier this year, with an upgrade that allows bankers using FiNet to deploy "push" marketing.
Most Internet banking services have advertisements. But, often, they're sent shotgun to all online customers.
The FiNet module allows the institution to send ads and offers to particular customers, based on their credit history and financial profiles. This can range from special loan rates to credit card offers.
Smaller institutions can't match big rivals in number of brick-and-mortar branches, but online banking provides customers another branch, in effect.
It offers just about everything but the lollipop for the kids. You can check balances, transfer money between accounts, check rates, fill out a loan application, calculate loan payments, and pay bills without ever writing a check (the bank either pays by electronic fund transfer or by cutting and mailing out a check).
Short of being able to conduct a real-life, long-term trial, a walkthrough of Virtual Financial's FiNet demo (www.vifi.com) appeared straightforward, with functions listed in a column along the side of the screen.
Some may find it easier than other online banking software such as Microsoft Money, whose various functions are categorized in a rather convoluted manner.
Miller said he likes the convenience of Jet's system. He uses the FiNet-based system to check account balances and transfer money between accounts. He also pays bills online.
But, as with any online banking, all is not perfect. Although one of the goals of online banking is to increase the use of electronic funds transfer (it costs financial institutions money to move checks), some payees don't accept money electronically.
In that case, the finanical institution will cut a check and mail it to the party the online banking customer is trying to pay. That means some payees might get confused about receiving a check from the customer's bank.
That situation caused Miller to have a couple of late payments, problems Jet worked out. Still, like many online banking customers, there's at least one bill he won't pay using online banking. In that case, he hauls out the old checkbook.
"It's not for everybody," Miller says, adding that his wife so far won't use online banking.
Not everybody indeed. Only about 3 percent of U.S. households bank online. But that could rise to 15 percent in three years, according to OnLine Banking Report, a Seattle newsletter.
One reason for online banking growth, at least as far as the number of institutions offering it, is its ability to make the meekest in the banking kingdom appear as impressive as the big banks.
"It has this great leveling-off effect when you go out on the Internet," said Peter Barnard, vice president of business development at Virtual Financial.
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