ELECTRONIC BANKING
IS IN
EVERYONE’S FUTURE
UNDERSTANDING THE BASICS

By: Arnold J. Haake, Royal Palm Bank
Reprinted with permission from Florida World Magazine 1/2002
   

Europeans and especially Americans are convenience seekers. As the personal computer and the Internet developed, the banks that helped us manage much of our money figured out that making banking more convenient could mean more customers and possibly less costs for them. For the better part of the last decade, most banks in Europe and America have offered at least limited options when it came to accessing account information and conducting transactions online.

In most cases, customers could choose between interacting face-to-face, on phone with bank employees, or using a touchtone telephone to conduct business through an automated system. However the Internet has truly redefined convenience -- making routine banking something that can be done from practically any computer day or night in any time zone in the world. Face-to-face and telephone transactions still have their place but the speed, ease and flexibility of Internet banking make it difficult to resist.

Features more commonly offered by banks online are:

ELECTRONIC BILL PAYMENT AND PRESENTMENT

Many banks and financial service providers now offer customers the ability to pay bills online with the click of a button using online bill payment. You decide which bills to pay and when to pay them. The bank then safely and quickly issues a check or transfers the correct amount of money from your account to the payee. No envelopes, stamps, labels or pens are necessary. However these cost savings may be offset if your bank charges a fee for its electronic bill payment service.

Many companies, financial service providers and public utilities not only have the ability to receive electronic payments from your financial institution, but also can send an electronic bill directly to your bank—rather than your mailbox. This allows you to view new bills each month online, deciding which ones to pay and when.

PERSONAL FINANCIAL SOFTWARE

Popular software programs like Quicken® and Microsoft Money® may be linked directly to your bank account if your bank offers online banking services. At your command, your account information can be transferred into the software program on your home computer.

ELECTRONIC FUNDS TRANSFER (EFT)

The same technology that makes online bill payment and presentment possible also enable consumers to link their bank accounts with other bank and investment accounts, and transfer money between them almost effortlessly. This usually requires you to complete an agreement on paper, giving your bank permission to send and receive funds electronically. The US Government and many employers now allow their citizens and employees to use EFT to automatically direct their monthly checks into bank or investment accounts.

ONLINE STATEMENTS AND ACCOUNT HISTORY

Many financial institutions now allow customers to receive statements and access archived account histories to include imaged checks on line. 

ONLINE APPLICATIONS, ORDERING AND CUSTOMER SERVICE

These features allow you to complete applications for loans, order checks and make account inquiries online 24 hours a day, 7 days a week in your time zone. With the coming widespread use of e-signatures—enabling consumers to click a button that says, “I agree,” instead of having to sign a document—the online application and ordering process will be even faster.

Online your transactions are protected by advanced encryption technology that transmits data securely between computers and makes gaining unauthorized access to your financial transactions very difficult. Nearly all banks use what is known as a firewall—a security barrier that protects the banks’ computer from unauthorized entry. In addition to firewall and encryption, your account information online is protected by a personal password, which acts like a third layer of security.

The number of people who understand how safe and convenient electronic banking is continues to grow steadily. The Internet has revolutionized the way people do many things including managing their money.