11 Online Banking Features You Want to Have

Online banking, though it’s becoming a fixture in many homes, is still relatively young.

It’s not a big surprise, then, that we want our banks and online financial applications to do more and add more.

Yodlee, which makes online banking software for financial institutions, sponsored a white paper from the Aite Group called Next-Generation Online Banking and Bill Pay: A Concept-Testing Study Among Banks and Consumers, which looked at how online banks can improve.

Most of the white paper deals with how banks can differentiate themselves from the competition, but there are some interesting statistics about features we online bankers want to have.

Source: Aite Group, September 2006 survey of 1,204 consumers of age 21 and older with equal gender distribution who were demographically balanced to the U.S. Census

The feature topping the list, E-mail or text message alerts for large transactions that may indicate identity theft, is a great idea. Because many people are still worried about online banking security, giving them the ability to tackle problems quickly should they arise is key.

Here’s the conclusion from the white paper:

Banks typically don’t feel like they suffer from a huge functionality gap, largely because they enjoy a relatively high level of satisfaction among their online banking users. While this is comforting news, the flip side is that banks are finding it increasingly difficult to differentiate. While their online offering may be good enough to retain existing customers, over time, it will not be differentiated enough to help stay ahead of the competition and achieve their goal of expanding the channel’s role as a customer-acquisition and sales-engine vehicle.

While this white paper is sponsored by Yodlee (read: biased), the information is still useful and gives us a great idea of what online banking will look like in the future.…

Online Banking the Leading Internet Activity That Makes Your Life Easier

According to a new survey from Harris Interactive (and commissioned by Symantec, makers of Norton AntiVirus), online banking is the leading Internet activity that makes your life easier.

According to the Harris poll, 86 percent noted that online banking saves them as much as five hours weekly and more than one-fifth (21 percent) of respondents say online banking has made it unnecessary for them to ever visit a bank in person.

As a hardcore online banker, I rarely have to go to the brick and mortar. In fact, I get slightly annoyed when I have to go to deposit a rebate check or get cash out of the ATM.

“Consumers are using the Internet to make each day of their lives easier and this research demonstrates that online banking — more than any other activity — makes a significant impact,” said Vince Steckler, senior vice president, worldwide consumer sales, Symantec.

Online banking also allows me to keep track of my purchases for reporting in my budget — it’s an invaluable resource.

Even though this report was commissioned for the purpose of promoting Norton Internet Security 2007 and their partnership with Bank of America, I’m slightly surprised that online shopping didn’t top the list.

Online banking is an amazing tool, but it’s still growing. Many consumers are still weary of making financial transactions online, even if it is totally safe.…

Should Online Banking Be Inconvenient?

We’ve talked a bit about being smart and secure when banking online, but at least one “financial analyst” thinks that online banking needs to be difficult to use in order to keep you safe.

Although customers should expect convenience from an online account, they should be wary of an Internet bank that makes it too easy for someone to set one up, said Avivah Litan, a consumer-finance analyst for Gartner Group, a business-research firm in Stamford, Conn.

In this age of electronic identity theft, financial companies should make it as difficult as possible for an ID thief to obtain and misuse your personal information, she said. Internet banks should have multiple layers of security to verify that online customers requesting access to accounts are who they say they are, she said.

“It sounds counterintuitive,” Litan said, “but you want to have some inconvenience when it comes to setting up these accounts.”

I don’t think most online banks are listening to Litan. In my experience, most online savings accounts are very easy and straightforward to open.

In terms of security, the newest trend for online banking seems to be the “security image” or “sitekey” they use to confirm to you that you are actually on the bank’s site. It seems kind of silly, and apparently many online bankers don’t even notice them.

Users of online banking sites tend to bypass critical clues that the integrity of those sites may have been compromised, according to the working draft of a study released on Sunday by researchers at Harvard University and MIT.

The study, which will be formally released in May at the IEEE Symposium on Security and Privacy in Oakland, Calif., underscores how new technologies and warnings can’t completely protect Internet users from scams such as phishing.

It also throws doubt on the effectiveness of site-authentication images, which have been implemented by financial institutions such as Bank of America Corp., Vanguard Group Inc. and ING Bank FSB. The images, selected by the customers, are shown when a bank customer logs in from a different computer than is normally used.

Of all the online banks I use, HSBC’s “Security Key” is the most annoying. It’s a “virtual keyboard” that can only be used by clicking on the buttons — you can’t actually use your keyboard. And in addition to clicking out your security key, you also need to put in your password.…

How Brick and Mortar Banks ARE Robbing You

During the Super Bowl last night, E-Trade ran a commercial depicting a bank robbery.

The robbers had masks, bags (no dollar signs though) and all the standard jargon (“Lady, don’t be a hero.”).

Except that the robbers weren’t who you would expect. It was the tellers, manager and even the security guard.

Brick and mortar banks are robbing you.

They’re giving you horrible rates of return in their savings account — no where near what an online savings account can offer.

They’re charging you to have an account, even though they’re using your money to make them more money.

They’re charging you more and more fees for things that should (and used to) be free.

They’re requiring you to have a minimum balance to keep your account open.

So why do nearly all of us still use them?

(View the commercial here. Click 3rd Quarter and then E-Trade).…