The Future of Online Banking

By now, most of us are used to accomplishing at least a part of our banking business without handing slips of paper across a counter to a teller. Automatic teller machines (ATMs) are becoming convenient electronic alternatives to getting out of the car and running into the bank for every simple financial transaction.

As nice as it would be, you can't have an ATM in your living room. But personal computers—in tandem with cooperative ventures between banks, software companies, and online information services—are offering a convenient electronic way to pay bills, balance your statement, and handle many other tasks previously accomplished via paper, pen, and postage stamps. Online banking, though still in early experimental stages, is meeting with approval from bankers and consumers alike.

Unique Services

MECA (Micro Education Corporation of America) offers a unique home banking service through Chase Manhattan bank. The system, called Spectrum, permits Chase customers who own a personal computer and a copy of Managing Your Money to check their balances, transfer funds, pay bills, and check loans and rates. The program can also obtain securities quotes, financial account advice, budget and tax preparation assistance, loan and mortgage services, and automatic reconciliations.

The advantages to a system like this, says MECA president Jerry Rubin, are twofold. First, it's convenient. You can initiate the payment of all of your bills using Managing Your Money. As long as you've set up that procedure with the software, all of the information will go over the wires and Chase will write the check or submit the funds electronically. It's not merely that you save money or time, but in one step you've paid the bill and entered it into your personal budget and tax records. Also, you can ask for an electronic statement at any time so you can monitor your account balance.

Through a program called Direct Access, Citicorp offers its customers a personal computer banking service, which includes an online IRA account as well as an online link to a discount brokerage service. For a ten-dollar monthly fee, subscribers can access account information, pay bills, transfer money, or call on customer services through electronic mail 24 hours a day. Direct Access also enables customers to set up advance and recurring payments for bills; stop a check, payment, or transfer; get information on interest rates; and receive financial bulletins from Citibank. A helpful record-keeping feature lets customers download their account activity into popular spreadsheets and financial management packages, making budgeting and tax preparation easier.

Through the online IRA feature, customers can see summary balances of all their retirement accounts, monitor opening and maturity dates for each account, and make online contributions to accounts by transferring money from a checking or savings account. The online brokerage feature allows subscribers to review their portfolio information; place realtime buy/ sell orders for stocks, bonds, and options; cancel orders not yet executed; and retrieve information about orders.

The Early Stages

Several other joint ventures between banks and home computer owners, operated through special software or online telecommunications services, are currently in the experimental stages. It's still a fairly limited application, though—only about 50,000 people nationwide currently participate in online banking.

Many in the banking and home computer industries are optimistic about the future of online banking. Once everything is in place—assuming consumers accept this method of banking, and various hardware and software problems are addressed—banks could save a lot of time and money.

And though the cost may still be prohibitive for many consumers, there are advantages even at this early stage. For example, if you prefer to wait until the last minute to pay bills so you can maximize interest on your account, paying bills electronically means you don't have to calculate how many days it will take your check to get through the mail and then clear. Also, you don't have to wait for your monthly statement to get a report on your account. And if you're already using your computer to track your finances, online banking takes you one step closer to the electronic home of the future, where, many futurists predict, the lion's share of our educational, entertainment, and home-maintenance needs will be merged in one centralized electronic network.