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January 2002
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Online Banking: Hit or Miss

By Anthony Paonita

"WHY doesn't this work!" I heard my next-door office mate exasperatingly scream, to no one in particular.

(She probably was talking to her G4 desktop Mac.)

"I'll try this one," she fumed, logging on to her IBM laptop.

After a few minutes, I heard several not-mild expletives, and she stormed into my office, waving a credit card bill with a payment due within hours.

"Try it on yours?" she asked, or should I say, demanded, in obvious frustration.

"Sure." She pulled up a chair, and off we went to MBNA's site and followed the prompts.

Success! In a few minutes -- about the time it takes to write a check and seal an envelope -- we paid her bill. She later told me she was so obsessed about paying on the Web because MBNA charges $14.95 for the privilege of paying by phone--and MBNA's own phone rep advised her to do so.

And I swear I did not memorize her P.I.N. code.

Karma or Dumb Luck?

Possessing geek tendencies, we both were curious as to why it worked on one machine but not on two others. We ruled out network firewall prohibitions against pop-up boxes, which the site required (and was the spot at which she got derailed.)

I tried to attribute my Mac's success to superior karma, but the only difference we could come up with was the fact that all three computers were running different operating systems. I was on Mac OS X, her Mac is running "classic" OS 9.1, and she had just upgraded her IBM ThinkPad 600E to Microsoft Corp.'s latest, XP.

But a week later, another bill in hand, she was in my office again. But this time, our efforts to pay a second credit card bill (but to the same company, MBNA) failed on my machine too. (On this occasion, we blame MBNA's site, because she couldn't access the site on any machine, home or office, until a few days later, when she got in from a New Orleans hotel room on her IBM.) Go figure.

I don't think there's anything cosmic about all of this. But if nothing else, it sums up the state of online banking today. Sometimes it works, sometimes not. And when it comes down to it, does it save you much time? Well, maybe.

Change of Habits

For busy folks like us, just not having to go to the post office to buy stamps can make our day. And in these dark, grim winter days, who wants to schlep to the ATM to check on a balance, or transfer funds to cover that last check?

After Sept. 11, my office mate says she no longer trusts mail deliveries outside of New York City. And she lives on airplanes, so keeping track of due-dates can be a real pain.

By the way, pay-by-phone can be an equal headache. Once you get past the inevitable on-hold muzak, and the 53 options before they offer "pay-by-phone," you then often sit for 15 minutes punching in your social security number, mother's maiden name, zip code, bank transit number, check number, social security number, last known deposit, social security number, home phone number, social security number, etc. etc. etc. And don't forget those extra charges--my mortgage holder, Chase, will add $10 to the payment.

At least with e-mail, you can reach a real person. You also can check balances, to avoid embarrassment when you magnanimously pick up the lunch check with your debit card. You get the idea.

As a lure, banks are starting to offer frills that most ATMs don't offer. Most online systems have real-time access, meaning that your current balance really is your current balance, no matter what your check register might say. And using it can be easy: With many of the sites, once you type in your payment information, it's there for good, and you can do "one click" payments.

Plus, you can take the information the bank supplies and import it into your personal finance software, such as Intuit's Quicken or Microsoft's Money. Think of all the nice charts to show you how much you don't have.

Here's my favorite: You can schedule recurring payments, such as your mortgage or car lease. And then check to make sure they've been made.

Never Underestimate Inertia

So if it's so great, why doesn't everyone do it?

Never underestimate inertia. For many people, even techie types, having to sit at a computer and type out check routing and account numbers, addresses and other personal information is enough of a turn-off.

And speaking of personal information, a lot of people are still--and understandably--leery of entrusting computer networks with sensitive financial information.

Perhaps foolishly, I don't get too paranoid about it. Think of the many "meat space" transactions we do that involve the exchange of credit card numbers. Most of us don't think twice of giving our cards to a waiter, or to that friendly salesperson on the phone at The Sharper Image. So if you're in it part of the way, well...

That said, use common sense and check your statements. Vigilance was never a bad idea in the days of ink-and-paper ledgers, and it's not yet out of fashion.

Where to Start

Where do you start? I can't imagine a bank not having a Web site. If you don't know the exact address of yours, use a search engine like Google to find it.

You'll have to enroll, which can either involve some typing and a few clicks, or in my local bank's case, typing, clicks and waiting "a few days," or so I was told after filling in all my info. (Others give you instant access.)

Much as banks would like you to think they're special and offers wonderful services no one else does, they're pretty much alike in their offerings. I'm looking right now at Cyberinvest.com's guide to online banking. Most banks offer some form of online banking. Access is typically free and through a Web browser--make sure you have the latest version with 128-bit encryption!--and most allow access to credit card info. Bill paying services are typically around $5 a month. But think of how much you spend in stamps, not to mention walking or driving to a mailbox.

One recent creature is the Internet bank, which has no offices with scowling tellers. No offices open to the public, anyway. A couple of examples are the E*TradeBank and the First Internet Bank. If you spot a new one, ask it a few questions, the same you'd ask of any bank: How long have they been around? How many customers? Are deposits insured?

Like anything new, online banking that takes awhile to get used to. And getting set up is tedious, but it can pay off later in convenience.

The only thing now is for my bank to shoot cash through my CD-ROM slot.

Anthony Paonita is a senior editor at The American Lawyer and Corporate Counsel magazines, and a contributing editor to Law Technology News.

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