Banking Online Essay, Research Paper

Banking Online

Picture a bank without any branches, tellers, rows of desks, racks of brochures, no automated teller machines outside. Picture, in fact, a virtual bank, one that for the customer exists only in his or her office or home, as images on a computer screen. US financial institutions are moving towards “virtual banking.” This strategy is about making bank products and services available to customers any time and any place they want them. As virtual banking becomes more popular, it is very likely that more customer service will be seen while the number of traditional teller-staffed branches will decline. Bank customers will move away from traditional banking and will become more dependent on electronic transactions using ATMs or PCs.

Thanks to the revolution, financial institutions are using software programs, online services, and even the Internet to allow customers to check balances, pay bills, and transfer funds among accounts. Bankers promise that, in the near future, we will also be able to more easily buy certificates of deposit, mutual funds, and other investments, and even apply for loans electronically. For most people, today’s best option may be plug into their bank through one of three leading home-budgeting software programs: Intuit’s Quicken, Microsoft Money, and Managing Your Money.

By charging $5 to $20 a month for such services, banks are sure to cash in on the high-tech superhighway. For customers, the job is made easy. All that is required is a personal computer, software and a modem. On-screen instructions, laden with colorful graphics and pictures, explain how to select and work on various tasks. The system automatically calculates and updates account balances and keeps records of bills.

Banks have already set up home pages on the Internet to provide information to their existing and potential customers about upcoming services. They started their transactions. Internet banking differs from the traditional PC banking model in several ways. In most homes banking ventures, the bank sends an application software program to the customer, which runs on the customer’s PC. The customer then dials into the bank with their modem, downloads data, and runs the programs that are resident on their computer, perhaps sending back a batch of requests such as transfers between accounts. It demands more and more space and speed from the customer’s computer.

With Internet banking, on the other hand, there are potential customers, who already have all the software they need to do there banking, since all they need is a browser. The actual banking software resides on the bank’s server in the form of their home page. This software can be updated at any moment with new information, such as new prices or products, without having to send anything to the customer; it can also continue to expand and become more sophisticated without becoming cumbersome for the customer to operate. Banking with a browser, on the other hand, involves a continuous, interactive session, initiated by a local telephone call to a local access provider or online service.

In conclusion, a home page in the Internet is not only a customized product tailored specifically for that bank’s customers, but an advertisement for the bank as well.

Early entrants in the Internet banking market will benefit on multiple fronts. These banks will appeal to a vast new potential market that represents an attractive demographic segment: educated, professional, affluent. These new customers will save banks money because they will visit branches less frequently and will switch from paper to electronic transactions. More importantly, by developing internal expertise today, banks can position themselves to react quickly to competitive moves and consumer trends as the financial services industry evolves. These banks will see the benefits of early players and they will enjoy the public relations boost that comes from being a market leader.