BANK and BANKING E-Banking Managing Your Money and Transactions Online

Teach Yourself
Today
e-Banking
Teach Yourself
Today
e-Banking
Managing your money and
transactions online
Mary Dixon
Brian Nixon
201 West 103rd Street, Indianapolis, Indiana 46290

Sams Teach Yourself e-Banking Acquisitions
Editor
Today Jeff Schultz
Copyright ©2000 by Sams Publishing Development
All rights reserved. No part of this book shall be reproduced, stored Editor
in a retrieval system, or transmitted by any means, electronic, Alice Martina Smith
mechanical, photocopying, recording, or otherwise, without written
Managing Editor
permission from the publisher. No patent liability is assumed with Charlotte Clapp
respect to the use of the information contained herein. Although
every precaution has been taken in the preparation of this book, the Project Editor
publisher and author assume no responsibility for errors or omis- Andy Beaster
sions. Nor is any liability assumed for damages resulting from the Copy Editor
use of the information contained herein. Patricia Kinyon
International Standard Book Number: 0-672-31882-2 Indexer
Library of Congress Catalog Card Number: 99-69443 Greg Pearson
Printed in the United States of America Proofreader
First Printing: February, 2000 Candice Hightower
03 02 01 00 Team Coordinator
4 3 2 1 Amy Patton
Interior Designer
Trademarks Gary Adair
All terms mentioned in this book that are known to be trademarks Cover Designer
or service marks have been appropriately capitalized. Sams cannot Jay Corpus
attest to the accuracy of this information. Use of a term in this book
Copywriter
should not be regarded as affecting the validity of any trademark or
Eric Borgert
service mark.
Editorial Assistant
Angela Boley
Warning and Disclaimer
Every effort has been made to make this book as complete and as
accurate as possible, but no warranty or fitness is implied. The
information provided is on an “as is” basis. The authors and the
publisher shall have neither liability nor responsibility to any per-
son or entity with respect to any loss or damages arising from the
information contained in this book.
Dedication
For Arthur Dixon and Arthur Nixon, our great dads.

Table of Contents
Introduction 1
Part I Getting Started
1 The Revolution Is Upon Us 7
2 What Online Banking Means to You 19
3 What You’ll Need for Online Banking 35
4 Choosing Your Bank 47
5 Ready, Set, Stop: Do Your Due Diligence 59
Part II Using Online Banking Products and Services
6 Begin with the Basics: Opening an Account and

More 71
7 No Postage Necessary: Paying Bills Online 85
8 Beyond the Basics: Cool Add-On Products and

Services 97
9 Shortcuts to the Best Deals 111
10 Attention All Small Business Owners 121
Part III The Facts About Security and Privacy
11 Trust Is More Than a Word 135
12 The Dark Arts: Cryptography and Encryption 147
13 Privacy Please! How to Protect Your Privacy

and Who Else Cares About It 159
14 Your Privacy and Security Checklist 173

Part IV The Banking Revolution Is Just Beginning
15 What Customers Like Best About Their Online

Banks 183
16 The Bottom Line on Sanity and Banking Online 193
17 Welcome to the Future: What’s Next for Online

Banking? 205
Part V Appendixes
A Banking Sites in This Book 215
Glossary 225
Index 235
Acknowledgments
A book of this scope is not written and produced in a vacuum by two

authors huddled over their keyboards night after night. We want to thank
the many sources who contributed their views and shared their expertise on
online banking as it currently stands and where it is headed in the future.
We also wish to thank the members of the Macmillan publishing team for
conceiving of this project and working diligently and efficiently to help us
bring it to completion. The Macmillan team contributed to the format and
style of this book, which we hope you’ll find both useful and helpful. We
would also like to note that any sins of omission are ours alone and not
those of the excellent Macmillan staff.
INTRODUCTION
Ever get a tour inside your bank? That’s what we bring to you in
this book. No, not a look at your bank’s vault of cash or at the
safe deposit box area, but at something valuable nonetheless.
We’re going to take you inside the world of online banking.
We’re able to provide this perspective because we have worked
together producing a banking magazine, Community Banker,
which is published by America’s Community Bankers, the
Washington, D.C. trade association for community banks. We
write about banking all the time. We talk to bankers and their
consultants on a daily basis.
Our lives revolve around the interests of our readers who are
community bankers across the nation. They compete with mega-
institutions such as Citibank and Chase Manhattan. These com-
munity banks have been racing to keep up in the technology
game, including placing their products and services online.
Throughout 1999, banks have geared up for the year 2000 date
change. Regulators were on them to make sure that their systems
wouldn’t crash on New Year’s Day. They spent millions of dollars
preparing and preparing. In doing so, many upgraded their com-
puter systems and began gearing up for their next technological
challenge—transforming themselves into online banks accessible
to their customers from anywhere, at anytime, with a click and
the Internet.
As banks move online, there’s a definite feeling of “dot-com mad- Note:
ness” in the industry. You can’t go to a banking industry confer- James Pushnill, an
analyst for Forrester
ence without experiencing a heavy emphasis on e-banking. Banks Research Inc., a con-
are speeding ahead to create their online sites for one big rea- sulting firm follow-
ing the progress of
son—they want your business. Many bankers face a definite e-commerce, told us:
“Any bank that
learning curve about the technology and promise of the Internet,
hasn’t moved yet
but they are fearful that if they don’t get online, their customers into Internet bank-
ing is still stuck in
will be snatched away by other online banks. They also fear non- first gear.”
2 SAMS TEACH YOURSELF E-BANKING TODAY
banks, such MSN.com and Charles Schwab, who are gradually

getting into the banking business.
Online Presence What does this mean for you? It’s a great time to start banking
but No Meat:
online. The industry has progressed enough to offer you some
When we went to
press, the Federal dynamite, user-friendly sites—and the fees at most of the banks
Deposit Insurance are low. We think it’s smart to shop around for a bank that doesn’t
Corporation was
reporting that 30 charge for this service, but then again, your priority might be
percent of all banks
banking at a site that navigates well. To some of us who are
and thrifts had a
Web presence. But pressed for time, that’s just as important as money.
only 7 percent had
transactional We got hooked on e-banking after we began the practice our-
Internet sites where
selves. It’s convenient, fast, and empowering. The first time you
you can actually per-
form banking func- log on to view your account history or to transfer funds, you feel
tions and not just
read marketing
like you won’t ever have to stand in another teller line again. And
materials about an many other functions are available as well, including paying bills,
institution.
buying checks, getting a loan, or even just checking out the loca-
tion of the closest branch. You never have to get stuck in tele-
phone darkness again—”Press 1 if…press 2 if…press 3
if…”—where you’re left wondering what button to press to speak
to a real, human person.
Banks as Starting When you bank online, you can perform most banking functions
Point:
without having to rely on a banker. Many sites are easy to navi-
Bill O’Connell, vice
president of market- gate or surf, and they require very little information or keying in
ing for Home of information. You can bank at midnight, in your pajamas, while
Account (an Internet
provider for banks), watching television. You can bank from anywhere in the world, as
told us that banks
need to think of
long as you have an Internet connection.
their sites as “finan- During our research on the book, we surfed more than 100 bank-
cial service hubs—
basically a financial ing sites. We quickly learned what the best institutions have,
service portal site.”
including 24-hour personal service over the telephone. Yes, the
sites are easy to navigate, but you will undoubtedly have a ques-
tion now and then. We say: Insist that your bank provide this 24-
hour service.
As you read this book, remember that we have taken a strong
consumer angle. We wanted to bring our industry knowledge to
the table so that you will be a customer that is not intimidated by
any of the growing array of financial services providers, online or
offline.
INTRODUCTION 3
Inexpensive and Worth It

David Becker, chief executive officer of First Internet Bank of Indiana
(www.firstib), is convinced that Internet banking is here to stay. He says
40 million Americans will bank online by the end of 2000. As a banker,
he likes the fact that it costs an institution $2 for each transaction in a
teller line compared to a penny for each online transaction. (In just
three months, Becker spent $800,000 marketing his online bank!)
In this book, you will learn the basics—how to chose a bank and
how to get started. We will take you through all the prime func-
tions. We venture onto actual Internet bank sites and take you
step-by-step through such features as viewing your account, trans-
ferring funds, paying bills, and acquiring a loan or credit card. We
also show you that not all bank sites are equal. We point out what
we like and don’t like. You won’t need to be online as you read
this book—we have captured many screens from the banks’ sites
so that you can see the result of each click as we describe it.
We spend a lot of time explaining privacy and security issues.
Both are a top concern to you and your banker. As we begin to
perform much more of our commerce and financial services func-
tions online, it’s imperative to understand these issues and to take
steps to help ensure the safety of your information and money as
it travels across the expansive Internet world.
In addition, we have included throughout the book our special
insights into the banking industry. Many of the terms we use and
the tips we provide will help you as you bank online or offline.
We’ll leave you with one question as you start reading this book:
Which bank site, Figure 1 or Figure 2, is more convenient,
empowering, and will make you feel a part of the new century?
Figure 1: You can

walk or drive
through the city
streets and stand
in a teller line for
a long time.
Figure 2: You can

go onto your
bank site, check
out your accounts,
and pay a few
bills. (Citibank
estimates this will
take you 10 min-
utes.) And, yes,
you can do this
anytime, any-
where.
So, how will you bank? In the real world with real-world hassles?
Or online in your underwear?
Mary Dixon Brian Nixon
New York, N.Y. Washington, D.C.
PART I
Getting Started
CHAPTER 1
The Revolution Is
Upon Us
The way we banked growing up in the 1960s is long forgotten What You’ll Learn
today. We would go to banks where our parents opened accounts in This Chapter:
. How technology
for us, give our passbooks to a teller, and hand to her $5 in hand-
is changing
wrapped dimes. She would stamp our books with a date and write banking.
in our deposit for the day. We would leave very happy with a . The first banks
sucker in one hand, our passbooks in the other, and hopes of on the Internet.
. Who is banking
going to college with the money we would save spinning in our
online.
heads. . Why you should,
The authors have both gone to college now, eaten a few too many too.
suckers, and instead of keeping track of our money with ink and
paper, we do it with clicks of a mouse and digital transmissions.
We bank online. We think you should, too.
The financial institutions where we learned the practice of bank-
ing online are Citibank (www.citibank.com) and Wachovia
(www.wachovia.com).
8 CHAPTER 1
We don’t think
these sites are
perfect, but they
are the banks
where we got our
start in online
banking.
Citibank’s Direct
Access service and
Wachovia’s
redesigned site
show some of the
best aspects of an
online bank.
Our Best Tip at Mary has been banking online with Citibank since 1999, and
Tip-Off
Brian has been with Wachovia since 1998. That doesn’t seem like
After you find a
bank online, how do a long time, but in the circle of e-bank customers, we are consid-
you know if the site ered old timers. Take another look at the Wachovia screen. This
will be user-friendly?
The answer lies in North Caroline-based institution redesigned its site in 1999 to
the bank’s online
become more user friendly. Just think how far this bank has come
“demo.” We encour-
age you to click into since it was founded in 1879.
a bank’s demo so
that you can test
drive the site before Technology Changes Everything
signing up. These
We’re not using beads, eggs, feathers, or oxen as money anymore.
demos allow you to
learn how to view We’ve come a long way since pigs and vodka were used as cur-
funds, transfer funds
between accounts,
rency. Today, you can be the richest person in your neighborhood
pay bills, and much and never even touch money. We live in the e-age where wealth is
more.
recorded, stored, and transferred around the world in seconds
using electrons. Technology is revolutionizing banking, like most
everything else, at a rapid pace that’s hard to fathom.
THE REVOLUTION IS UPON US 9
What technology is changing the way we bank?

The three technological realities allowing for the development of
online banking are the computer, the Internet, and encryption and
firewalls (the development of secure transmitting systems over the
expansive, wide-open world of the Internet).
High-tech applications are not new to the banking industry, which
has long relied on computers to process checks, run ATMs, store
data, transfer funds, process loans, and measure risks. This move
into electronic banking is a natural fit for the financial services
industry. But experts in the field agree that the move to the
Internet is marking a time during which the industry has seen the
biggest and most rapid changes in history, driven by new and
even more powerful technologies.
The Online Requirement

Does a bank have to offer e-banking to compete in the new century?
Here’s what Lynn Busing, executive vice president of CheckFree
Corporation, a major player in financial electronic commerce, told us:
“Historically, banking has been an industry based on customer service.
Banks that failed to provide superior service simply vanished. In today’s
browser-based marketplace, banks need to leverage this customer ser-
vice philosophy with Web-empowered features for attracting and keep-
ing customers.”
Everyone Needs a PC
According to The Community Banker’s Guide to the Internet and
Home Banking, a how-to book for bankers published by
America’s Community Bankers, U.S. consumers began buying
more PCs than television sets in 1994. By 1995, 35 million
Americans had computers in their homes.
Forrester, an e-commerce consulting firm, reports that 12.7 per-
cent of U.S. households had computers in 1995. In 1999 alone,
Forrester predicted that 13.2 million home computers would be
sold in the United States and nearly 4.5 million households would
purchase their first computers. Because we all need access to
home computers before we can access online banks, this
10 CHAPTER 1
The History of development was vital. We’ve come a long way since the first
How the PC
Developed: home computer, the Altair, was developed in 1974. The Altair
Apple Computer 8800 was sold unassembled by Micro Instrumentation and
Incorporated jump-
Telemetry Systems Incorporated. It proved to be popular only
started our love of
personal computers with the computer whizzes who had the time and brains to assem-
in the 1970s with its
Apple II and offered
ble these machines.
us its updated ver-
sion of the PC in the
1980s with the
The Development of the Internet
Macintosh. The Internet dates back to the 1960s. The builders and inventors
In 1981, IBM intro- of the electronic highway were originally trying to create a sys-
duced its first per-
sonal computer. In a tem for researchers and the military. As the system grew larger,
year and a half, the organizations that wanted to bring standards to the Internet began
company sold
136,000 units. Also to develop, including the InterNetworking Group (INWG). The
in 1981, Adam
“Father of the Internet,” Vinton Cerf, was the first chairman of the
Osborne introduced
the first portable INWG in 1972. Twenty-five years later, in 1997, when the
computer, the
Osborne 1.
Internet became a common form of communication for many of
In 1982, Time maga- us, President Clinton awarded Cerf and Robert E. Kahn, the U.S.
zine named the PC National Medal of Technology for founding this remarkable vir-
its “Man of the
Year.” tual world.
The 1980s ushered in several years of rapid development of the
Internet. The common language for the system (TCP/IP) was cre-
ated, and corporations began to use it as a way to talk to their cus-
tomers. This communication can be seen as the dawn of
e-commerce. In 1994, Pizza Hut was one of the first corporations
to begin selling its products online by accepting orders through
cyberspace.
Encryption and Firewalls Mean Security

Throughout the 1990s, the Internet has become more secure
because of the development of better encryption. Encryption
allows users to send messages to specified recipients without oth-
ers being able to read them. Encryption relies on special instruc-
tions that scramble a message so that no one except the intended
recipient can read it. Encryption works only if hackers or other
electronic thieves haven’t gained access to the decoding software.
The military started using encryption first, but now businesses—

including banks—use this technology to increase the security of
their systems. When a site is encrypted, you, the user, don’t have
to do anything special with the data coming or going from your
computer; the scrambling and descrambling occurs in the
background of your computing. Only authorized users are pre-
sented with the unscrambled data.
In addition to encryption, banks have developed more sophisti-
cated firewalls to prevent unauthorized access to their systems.
Firewalls are hardware and software placed between two net-
works through which all traffic must pass. Firewalls prevent hack-
ers from gaining access through a “back door.” For example,
firewalls ensure that unauthorized users can’t access your banking
account over the Internet. Only you, who knows the password to
your account, will be granted access to your records.
Banks Jump Online

Banks were soon to follow the pizza maker into the world of e-
commerce. As early as the 1980s, banks were offering their cus-
tomers access to their accounts with their computers—but not
over the Internet. Instead, the first computer home banking sys-
tems were direct-dial. A customer’s computer would connect
directly with the bank through a telephone line. For customers to
make this connection, they needed their financial institution’s pro-
prietary software—which was especially designed to communi-
cate only with that bank’s system.
In May 1995, Wells Fargo became the first bank in the world
(according to the Online Banking Report) to begin offering cus-
tomers access to their accounts over the Internet. However, this
early system only allowed customers to see, not access, their
accounts. Wells Fargo has a come a long way since the days when
it transmitted or delivered money in a stage coach. Today, it is a
leader in electronic banking.
12 CHAPTER 1
This is Wells
Fargo, first estab-
lished in 1852, a
long, long time
ago. In its early
days, the com-
pany was known Wells Fargo (www.wellsfargo.com) no longer moves at the speed
for its stage
coaches carrying of horses. But rather at the speed of electrons.
mail and cash
across the United
States. During the
Gold Rush, Wells
Fargo was the
first bank to initi-
ate an electronic
transaction by
telegraph in 1864.
This is Wells Fargo

today. It offers an
online banking
site that gets a lot
of accolades.
Following the May 1995 Wells Fargo milestone on the Internet,

Security First Network Bank unveiled a fully-transactional
Internet banking site on October 18, 1995. Fully-transactional
meant that customers could view their accounts, access them, and
move money around. Security First Network Bank also holds the
honor of being the first FDIC-supervised bank online.
Security First Network Bank, whose home page is shown in the
following figure, consistently ranks high in surveys of sites. In
1999, the company began to offer 6 percent interest on checking
accounts. It’s that type of strategy—offering great deals—that
online banks hope to use to take customers away from the old-
fashioned brick-and-mortar institutions.
Security First is a
tough competitor
in the online
banking world.
In 1999, Net.B@nk became the first profitable Internet-only bank.

At that time, the bank claimed more than 54,000 accounts
throughout the United States and in 20 foreign countries. Its
attractions include free online account access, free unlimited bill
payment, free checks, and free unlimited ATM use. Net.B@nk’s
home page is shown in the following figure.
Net.B@nk is the
first Internet-only
bank that has
proved to be
profitable. With
all the free good-
ies it offers its
customers, it’s no
wonder the site
works.
By 1999, more than 5,100 federally-insured depository institu-

tions were online in some way. That’s about 24 percent of all
banks, savings associations, and credit unions. This number is
expected to grow rapidly.
There are basically two reasons why banks are going online: They
want to keep up with other banks that are going online, and they
want to save money by reducing their expenses of supporting
14 CHAPTER 1
brick-and-mortar branches and employees. According to Booz,

Allen & Hamilton, a consulting firm, it costs a bank about $1 to
deliver a manual transaction at a branch; by contrast, an ATM
transaction costs 25 cents and an online transaction costs a whop-
ping 1 cent.
First Come the Banks, Then Come the Customers

As the number of online banks increases, so do the number of
online banking customers. One estimate from International Data
Corporation is that households conducting online banking would
increase from 6.6 million in 1998 to 32 million by 2003. Jupiter
Communications, an e-commerce analyst, has predicted that the
number of online banking households will grow from 3.8 million
in 1998 to more than 26 million by 2003. Jupiter estimates that
will be about 25 percent of all U.S. banking households in that
year. Jupiter forecasts that by 2003, 18 million U.S. households
will be receiving their bills online.
One demographic that online bank customers have in common is
that they are dealing with a nice-size income. Jupiter estimates
that 69 percent of online banking households make over $50,000.
The firm predicts this will decrease by 2003, when only 59 per-
cent of the online banking households will make more than
$50,000. More and more of us are expected to own home comput-
ers, understand how e-banking works, and trust the security
systems.
Why You Should Join the Online Crowd

Although there are many reasons to bank online, we’ve narrowed
the number down to 10. If you can relate to any of these, go
ahead: Begin banking online today.
1. You never will have to wait in a teller line again—You sim-

ply log on from home or anywhere in the world and access
your accounts directly over the Internet. No one is ever ahead
of you, slowing you down.
2. Your bank is never closed—ATM machines brought us this

24-hour concept, but with Internet banking, you don’t even
have to leave your home. Yes, although an ATM allows us to
get cash at any time, it definitely isn’t the best tool to conduct
other banking transactions 24 hours a day. With e-banking,

you don’t ever have to put yourself at risk of a crime by
going to an ATM late at night. When you e-bank from home,
you can view your accounts, pay bills, transfer funds, and
conduct a long list of other functions at anytime, day or
night.
3. You have direct access to your accounts—It’s a hassle to go

to your bank and ask for a printout of your statement in the
middle of the month. You don’t have to worry about that any-
more. You can pull up your balances and view transactions at
any time. You can see whether a check has cleared or whether
a direct deposit has been placed into your account.
4. If you have children away at college, you can better manage

their school accounts and spending—Suppose that your son
calls one day to say that he just spent his last dollar on school
books and is out of money. With e-banking, you can act on
this request with more information than your son is willing to
give. You go online to view his account, an account to which
you also have access, and you see that the ATM debit card
was last used in a bar and that the transaction before that was
at a record shop. It’s not nice to spy, but you can talk to your
child and be better informed by having access to the history
of how he is spending his money. You can also log on to his
account, see that his balance is declining, and transfer funds
from your personal checking or savings account into his
account if that seems appropriate.
5. You can bank from anywhere in the world as long as you

have access to a computer and the Internet—If you are a
traveler, this comes in handy when you are away from home
and need to pay a bill. You simply go to your bank’s site, and
the bank will either electronically pay the bill or cut a check.
Many do this for free.
6. It won’t matter if you run out of checks or stamps—You find

yourself having to pay a few bills one night, but you don’t
have any checks or stamps (or both). Again, simply pay these
bills online. Some banks allow you to pay an unlimited
16 CHAPTER 1
number of bills each month with no charge. Think about the

money you can save in postage!
7. You can bank conveniently even if you are disabled, sick, or

elderly—If, for some reason, you can’t drive to the bank one
day, there’s no need to worry. You can still do your banking.
Simply log on.
8. You can bank at home even if you’re in the military

overseas—If you are stationed away from home for several
months, Internet banking allows you to maintain your bank
accounts on the home front. Not to mention you can check to
make sure that the Army or Navy is depositing your pay
every month into your account.
9. You can get more options and perhaps better deals—Online

banks are competing against each other and the traditional
banks for your dollars and business. Internet banking has
intensified the competition between banks because geograph-
ical barriers have disappeared. You can live in New York and
bank with an institution in Atlanta with no trouble. Because
customers can shop around now, banks are offering better
deals—including higher interest accounts, great rates on cer-
tificates of deposits, and no-fee ATM transactions.
10. You can naturally embrace new technologies—If you give

online banking a try, you will get hooked. It’s a kick to view
your account balances for the first time without having to
visit a bank or an ATM. It’s especially thrilling to move your
money around in your accounts with a simple click.
Get Your Bank Online

What can you do if you want your bank to offer e-banking services or
offer better online features?
Tripp Rackley, chairman and chief executive officer of nFront, a provider
of Internet banking systems, told us this: “Consumers can have the most
influence when consumers actively use their bank’s Internet site for all of
the services the bank offers, including bill pay and transactions, and not
use the site for simply checking balances. Consumers can also exert sig-
nificant influence on those banks that are not yet online, first by vocaliz-
ing their desire to have access to Internet banking, and if that doesn’t
work, by voting with their feet and taking their business elsewhere.”
What You Should Know Now

After reading this chapter, you should have learned the following:
• Technology has advanced enough to make banking online

safe.
• Banking online remains a relatively new adventure for the

industry and the consumer, with Wells Fargo leading the way
in 1995.
• Online banking is great for the traveler, the student, the par-
ent with children away at school, anyone based overseas, and
anyone looking for convenience and a way to bank while sit-
ting at home.
In short, online banking is great for anyone looking for more con-
trol of his or her bank accounts.
CHAPTER 2
What Online Banking
Means to You
Banks are facing competition from all types of businesses. What You’ll Learn
in This Chapter:
Department stores, insurance companies, investment firms, and
. What banks
credit card companies are all competing to manage our dollars. offer at their
Nordstrom, T. Rowe Price, American Express, Aetna, and sites.
MSN.com are a few examples of the newest players offering . A complete
review of prod-
banking services.
ucts and services.
Aetna (www.aetnafinancial.com) has developed a comprehensive . A few things
financial services center online. The site features educational banks don’t
want you to
materials for planning for the future and offers retirement funds know.
such as IRAs.
MSN.com’s MoneyCentral (http://moneycentral.msn.com/
home.asp) offers an abundance of advice on financial services,
and it also features a bill payment function.
Basically, banking is far from what it used to be. More and more
companies, even those not traditionally offering financial services,
are vying for your money and savings.
In addition to the new businesses entering the market, your com-
munity or regional bank has to compete nationally because insti-
tutions of all sizes are offering products and services to customers
who live just about anywhere in the world and have access to the
Internet. Online banking has kicked competition up a notch in the
financial services world.
With this intense competition, banks are going online and trying
to outdo each other with the services they offer and by mitigating
any of the accompanying costs. Banks see their competition com-
ing at them from all directions, so some of the services they are
beginning to offer may surprise you.
20 CHAPTER 2
Take for instance, the Exchange Bank of Perry, a small bank in

Oklahoma. It not only offers you access to your checking account
online, but this bank, established in 1896, also tells you what your
children will be eating at school for the week. Banks will provide
this type of community information to keep you coming back to
their sites. In fact, The Exchange Bank of Perry is more than just
an online banking site, it serves as an Internet service provider
(ISP) to the residents of Perry. That means that the bank itself is
the provider of the on-ramp to the information superhighway.
Before the bank offered this service, residents of Perry had to dial
long-distance to get on the Web.
Most banks think

they’ve done you
a service by telling
you their interest
rates. This small
bank in Perry,
Oklahoma, goes a
step farther and
reports that its
customers’ chil-
dren will be eat-
ing hamburgers,
tater tots, ranch
beans, and
peaches this
week.
In addition to teaching you about the services you should expect

from your online bank, we will give you an insider’s view of
some of the nuances in online banking that bankers don’t exactly
highlight for you. We don’t think any of these points should stop
you from banking online, but we do think that understanding
them will make you a better informed consumer.
All Bank Sites Are Not Alike

Not all banks are on the Internet, but if they are, they will provide
basically two types of sites. Some have sites that merely tell you
what products and services they are offering in their brick-and-
mortar branches. Such basic Web sites don’t allow you to view
WHAT ONLINE BANKING MEANS TO YOU 21
your accounts or transact any business. These are called informa-

tional sites or static Web pages. If your bank is merely offering
this type of site, you may want to ask your banker to take the next
step to transactional Web banking, which allows you to do every-
thing that is offered in the institution’s branches and more
because you have direct control of your accounts.
The First Federal

Savings Bank of
Florida gives out
some handy infor-
mation about
their services
here, but you
can’t bank online.
Many sites mark the next generation. You can perform a long list
of banking functions at these transactional types of sites. They
come in all sizes; some even operate only online, meaning that
they have no real, offline branches.
One example of a small local bank going fully online with a
transactional site is United Bank in Atmore, Alabama. You can
view your accounts, transfer funds, order checks, and manage a
few other tasks. When we went to press, the bank didn’t yet offer
its customers a way to pay bills online—but that feature is com-
ing soon.
United Bank’s site has one of the best services we found during
our tour of online banks. The bank has a Web page that tells and
shows you who is in charge of its Internet operation. It also gives
you a phone number, so you can call Amy, and an email address,
so that you can write to her. If you encounter any problems or
have any questions when banking online, this type of information
is invaluable.
22 CHAPTER 2
After viewing
hundreds of bank-
ing sites while
writing this book,
we had to show
you this screen
from United
Bank’s Web site.
It’s a prime exam-
ple of real-world
customer service
at a virtual bank
branch.
Telebank.com is one of the hottest competitors in the online bank-

ing world. It offers a complete set of services. This bank has been
specializing in alternative delivery since 1989, when it began
offering its products and services over the telephone and through
the mail. Now it’s an Internet player, and its home page is shown
in the next figure.
Telebank.com,
which made a
name as a tele-
phone banking
service, is trying
to do the same
with Internet
delivery. Notice
how it promotes
its competitive
rates on its front
page. Many
Internet banks are
hoping that their
better rates will
convince you to
do your business
with them.
What to Expect at Fully Transactional Sites
The best advice we can give as you get started as an online bank-
ing customer is to take it one click at a time. That way, you won’t
get overwhelmed and will learn to take advantage of all your
bank’s offerings. Each bank is different, but we’ve surfed
hundreds of sites taking note of what is available. The following A Love/Hate

Relationship:
sections include some of the more popular products and services
According to a sur-
offered by online banks. vey conducted for
eFunds, a provider
of Internet products
Account Viewing for banks, 80 per-
Account viewing features allow you to log on to a site and see cent of U.S. con-
sumers rate their
your account balances or see your recent transactions. For exam- online banking
experience higher
ple, you can see what ATM withdrawals or deposits you’ve made
than their tradi-
or see what checks have cleared. This is a basic but extremely tional brick-and-
mortar banking
helpful feature of online banking. After you have registered as a ones. The same sur-
customer, you can immediately begin taking advantage of this vey shows that only
13 percent of the
service and others. To open an online account, some banks make online bank con-
you go to a physical branch to fill out the paperwork, but others sumers do all their
banking online.
let you do this directly online. At many sites, you can open sav-
ings and checking accounts on the spot. Banks will request that
you transfer the funds with a credit card or that you mail in your
first deposit. So this isn’t an instant process, unless you already
have funds deposited in the bank.
To see how easy and fun account viewing can be, let’s take a tour
.
Try It Yourself
of Crestar Bank (www.crestar.com). Account viewing at most of
the bank sites is pretty similar.
1. Log on to the Crestar Bank at www.crestar.com. When the

home page opens, click the Bank Online link to open that
page in the site.
2. Crestar offers a demonstration account that you can play with

to determine how easy it is to view and manipulate accounts.
From the Bank Online home page, click the Demo link.
3. Here is where you sign on. Notice that it’s not that difficult.
The bank only wants to know your bank card number and
PIN. On this page, you click Sign In to go directly to a page
where you can view your account balances.
4. To view a history of the recent transactions in an account,
just click the account number (in the first column) that you
want to investigate. A new page opens, showing the most
recent transactions for that account.
24 CHAPTER 2
5. In the initial account viewing page, Crestar allows you to see

all the activity in the account since your last statement. Then
you can indicate that you want to see other activity. For
example, you can get a glimpse at today’s transactions or the
activity from a prior statement. If you have a question about
any of the transactions, you can click an envelope icon next
to the notation in question to send an email to the bank with
.
your question.
At the Crestar
Bank site, you can
view a demonstra-
tion account that
lets you see how
easy it is to log on
and view your
account balances.
If you click one of
the accounts, you
can review the
recent activity in
that account.
Transferring Funds
The capability of transferring funds from one account to another
is simple; when you can do it online, you will feel the power in
your click. The bank site will allow you to transfer funds between
your accounts. It’s important to know, however, whether the
transfer is made in real-time. Some banks, such as CitiBank
(www.citibank.com), for example, will let you move money from
your checking account to your savings account, and the bank’s
system will record that transaction instantly. Other banks will let
you see that you have moved the funds, but the transaction won’t
be official until later that day or into the next morning.
Paying Bills
If you thought transferring funds made you feel powerful, wait
until you pay your bills online. Some banks offer this service for
free, and others will charge you for this feature. Charges vary
from bank to bank, but many offer this service free of charge for
unlimited bill payment. It’s good to know, too, that banks will
electronically transfer the funds to some of your billers and sim-
ply cut a check to others. They will also allow you to program
your site to pay certain bills each month automatically. You just
have to check out the bank’s policy regarding paying bills online
when you pick your online bank.
One bank that has made bill paying online simple is Wingspan
Bank (www.wingspan.com). If you have a Wingspan checking
account, certificate of deposit, installment loan, credit card, or if
you are an investment account customer, this service is free.
We’ve found that

banks love to
offer a bill-paying
service, and have
made it pretty
simple. As you can
see with this
demonstration
page from
Wingspan Bank at
www.wingspan.
com, bill paying is
simple and can
save you postage.
Personalization or Customization
A lot of banks will personalize or customize a Web page for you
as part of their strategy to keep you coming to their site. For
example, when you first sign on to Key Bank (www.key.com), you
are asked a series of questions. After you become a customer and
you log on to the site again, the bank uses the information you
provided to market other products specifically to you based on
your profile. What’s good about this questionnaire is that the bank
even tells you why it needs certain information.
26 CHAPTER 2
There are many

different ways a
bank will person-
alize a page for
you; here is how
Key Bank accom-
plishes that
mission.
Marketplaces and Shopping Galore

Most of us aren’t used to our banks selling us non-financial prod-
ucts. But online banks are making it easy for you to buy every-
thing from flowers to books. Key Bank offers its customers hot
links to a host of merchants. Although these links may not interest
you, banks hope you will view them as your connection to e-
commerce. Some banks will also offer you discounts for using
affiliated merchants.
Check out this

shopping center
that’s offered by
Key Bank.
Interest-Paying Checking Accounts

Interest-paying checking accounts are a hot item for many of the
pure-play Internet banks. A pure-play Internet bank operates in
the virtual world and has no brick-and-mortar branches. The rates

for these accounts vary from bank to bank, so shop around. Other
checking account functions you may find offered by online banks
include a calculator to reconcile your account, the ability to view
canceled checks, and a way to order new checks. Who needs a
teller anymore?
ATM Rebates
Offering rebates for ATM fees is fast becoming a popular item Beware:
with Internet bank sites. Because some of the pure-players don’t Some banks are plac-
ing limits on how
have their own ATM machines, they will offer you a rebate for many ATM refunds
charges you incur at ATMs run by other banks. This is definitely a they will offer. Some
will only offer five
money-saver for the customer. each month. Read
the fine print in
Terms and
Options to Purchase Certificates of Deposit Conditions at the
There’s a lot of competition between banks vying for your certifi- site or check out the
frequently asked
cates of deposit investments. Some banks will even offer better question section to
see how many
CD rates to their online customers than to those who walk into
rebates your bank
their branch offices. will pay.
On the night (yes, we like to do our online banking after-hours)

we checked out a few rates, we found the following:
The national average for a three-month certificate was 4.31 per-
cent interest rate. Wingspan was offering a three-month certificate
for 5.20 percent. Not bad. But Wingspan was facing stiffer com-
petition on other certificates. For example, Wingspan’s 12-month
rate was 5.85 percent to Telebank’s 6.46 percent. CompuBank
came in last in this three-way heat with a 5.25 percent rate for 12
months. It’s definitely wise to shop around.
Mortgage Applications
After you fill out a mortgage application, some bank sites will tell
you in less than a minute whether your loan is approved. You can
get a new mortgage or refinance your current one at most of the
sites that offer loans. Some banks will allow you to shop around
and compare rates from mortgage lenders around the country.
Bank of America (www.bankofamerica.com) has an extensive
amount of mortgage information online. When you are at the first
28 CHAPTER 2
page of the site, click Personal Finance until you can highlight
and click Mortgage. From that page, you can click Mortgage
again to go to extensive information about buying or refinancing a
home. You can also begin filling out an application for a loan. You
cannot complete the process online, but after you submit this ini-
tial information, a representative from the bank will call you to
discuss your mortgage options.
One of the best reasons to at least start finding a home loan online
is the amount of educational materials these bank sites give you
about the process. Washington Mutual Savings Bank
(www.wamu.com), is a good example of just how helpful these
online bank mortgage sites can be. At www.wamumortgage.com,
you can learn about your loan choices, use an online calculator to
see how much you can afford, and you can learn whether you
should refinance. The site even offers a step-by-step explanation
about how to buy a home.
Credit Card Applications

This is definitely a product you should price around. The interest
rates you’ll find on cards offered online are usually the same or
close to what you can get from those credit card applications
mailed to you.
But as you surf from site to site looking at the different rates, you
will learn that not all credit card deals are alike. On the evening
we were surfing, Wachovia (www.wachovia.com) was offering a
card at 8.25 percent with an $88 fee. First Internet Bank of
Indiana (www.firstib.com) was offering a standard card at 12 per-
cent with no fee. It’s important to remember that there is more to
a “good deal” than just the interest rate. Watch out for those fees!
The Internet is a convenient way to obtain a new card and to shop
around for rates. You should also be able to review your credit
card balances and recent purchases at the site from which you
obtain the card.
Financial Planning Services

As the financial world gets ever more complicated and all your
neighbors become wealthy day traders, financial planning
services, offered by some online banks, can help you get a grip on
your money matters.
Wingspan Bank
offers calculators
for almost any
financial transac-
tion you want to
make. Not all
banks offer these
features at their
sites.
Each bank offers a different amount of financial advice online,

but Wingspan Bank (www.wingspan.com) goes a step further with
comprehensive financial planning. This bank’s site offers you a
lot of information about the financial tools available and provides
several calculators so that you can see which investment is best
for you. You can use an automatic loan calculator to determine
how much your monthly payments will be based on your down
payment, interest rate, and other factors.
Insurance Sales Options

Some sites will allow you to shop around for the best deals on all
types of insurance. This sure beats word-of-mouth research.
Telebank (www.telebank.com) has a complete Insurance Center.
At this site, you get quotes from more than 60 insurance compa-
nies. You can compare rates for auto, home, life, annuities, and
other special coverage needs. There’s also a 24/7 hotline available
so you can discuss the options with an expert.
More and more banks will be offering insurance products as con-
vergence of financial services continues. You’ll learn more about
banks and their online insurance options later in this book.
30 CHAPTER 2
Brokerage Services
If you haven’t ever purchased stock online, a bank site may be a
good place to go to start. Some Internet banks offer research tools
and a place to actually buy and sell your stocks.
Each stock trans-

action at
Wingspan Bank
costs $19.95, but
the online bank
certainly makes
these transactions
easy.
Ability to Interface with Your Existing Software

Some online banks can recognize and interface with the money
management tools or software on your computer. If you already
have this kind of software to manage your money, some bank
sites will interact with Intuit’s Quicken or Microsoft’s Money. For
example, you can download account information to balance your
checkbook, manage your personal budget, and do long-range
financial planning.
Twenty-Four-Hour Telephone Access to a Real

Banker
As we surfed banking sites and as we do our own online banking,
we have found that access to a 24-hour honest-to-goodness real
banker to be an invaluable service. Although this service may
cost the bank more money, good customer service will definitely
attract and keep customers. Fees and costs are important, but this
service allows one online bank a great advantage over another. If
your bank doesn’t have its customer service number prominently
displayed, call or email the bank and tell it that it should.
Internet Access
A few banks are Internet service providers that can offer their
customers access to the World Wide Web. Some do this so that
they can offer discounted prices to their customers or because
they are located in a rural area where there isn’t a local number to
dial up a national ISP.
Bay-Vanguard Federal Savings Bank, located in Baltimore,
Maryland (www.bayvanguard.com), serves as an Internet Service
Provider to its customers. This bank took this extra step to help its
customers afford getting online.
Your bank wants you to go online for financial services; as a
result, providing Internet access is a natural fit for a bank.
However, the latest twist is for a bank to partner with ISPs as a
way to provide their customers access to the World Wide Web.
Helpful Information for Tax Purposes

Some banks will show you the interest you have earned on certain
accounts to help make preparing your taxes more convenient and
accurate. CompuBank is an all-around winner in the services it
offers, including interest information for tax purposes. You can
learn about the interest you’ve earned from all banks in monthly
statements, but CompuBank doesn’t make you hunt around for
the information, and it will provide that data on a daily basis.
Here is a person-
alized page that
CompuBank will
provide for you
showing the inter-
est you have
earned on your
accounts.
32 CHAPTER 2
Privacy and Security

Guarantees of privacy and security aren’t really a product or a
service. They should represent a basic reality of any online bank-
ing site. We explain all the privacy and security matters that you
need to know about in Part III, “The Facts About Security and
Privacy,” of this book. We briefly mention them here because
these matters should always be at the top of your concerns.
A Few Words of Caution: There Are Some

Risks
We are big fans of online banking, but we would be remiss if we
didn’t share a few insider concerns about Internet banking. Don’t
let these observations stop you from banking online, but use them
to be a smarter consumer.
Although banks are taking steps every day to make their sites safe
and secure from hackers, e-thieves are at work also, always
inventing ways to crack systems thought to be secure. So there is
some risk in banking online. The Office of the Comptroller of the
Currency, which is the regulator of national banks, notes the fol-
lowing risks:
• Informational-only sites could have their advertising mes-

sages altered by hackers.
• Electronic mail containing confidential information could be

sent in error to the wrong recipient.
• Some banks have their systems connected to other busi-

nesses, a setup that can offer an opportunity to thieves who
want to access sensitive information.
The Comptroller also lists natural disasters as a possible risk to

your bank’s system. Because the Internet spans the world, an
interruption caused by a natural disaster such as an earthquake or
tornado could bring the system down.
One concern banks have isn’t solely focused on online banking; it
also includes their brick-and-mortar operations. This concern is
illegal access to their customers’ files by dishonest employees.
The risk of a system broach is not always from outside the bank,
sometimes it comes from the inside.
The U.S. General Accounting Office, which investigates a host of

government matters, released a report last year saying that
Internet banking world was not all up to speed. The GAO con-
ducted an investigation to evaluate the effectiveness of the bank
regulators’ examinations of Internet banking operations. “First,
we found that Internet banking heightens various types of tradi-
tional banking risks and our review of 81 examinations showed
that roughly 44 percent of the depository institutions examined
had not completely implemented risk-management steps that reg-
ulators said are needed to limit online banking risks,” the GAO
stated. Some of the shortcomings noted a lack of approval of a
strategic plan by boards of directors and a lack of policies and
procedures for Internet banking operations. The GAO added to its
report that its observations couldn’t be extended throughout the
industry because not enough bank examinations had been con-
ducted as of May 1999. One reason for this was because bank
regulators were having to spend an extra amount of time handling
century date change matters.
Take heed of these concerns from the government, but don’t let
them stop you from entering the new age in banking anywhere,
anytime.

After reading through this chapter, you should now possess the
following information:
• There are information-only and transactional online bank

sites. Because you have a choice, you want the transactional
site so that you can take control of your accounts.
• Click the demonstration or “demo” links at different banking

sites to learn which one fits you best.
• Shop around. Banks are offering a long list of services,

including traditional financial services and shopping.
• There’s no need to worry that your information isn’t safe on

the Internet. However, you should keep informed of the
goings-on in e-banking and know that nothing is risk-free in
real life or on the World Wide Web.
CHAPTER 3
What You’ll Need for
Online Banking
In Chapter 2, “What Online Banking Means for You,” we dis- What You’ll Learn
in This Chapter:
cussed the online banking trend and what it means for you as a
. In the begin-
tool for more active financial management. Now let’s get down to ning, there was
business by looking at what tools you need to do your direct dial.
banking online. . The three types
of online bank-
You’re thinking you’ve got a personal computer and a pipeline to ing.
the information highway in the form of an Internet service . How your com-
provider. What else do you need? Surprisingly, not much. But puter connects
to the bank.
there are several things that you should consider as you begin
. What a financial
your online banking experience, including whether you will want suite is and how
to consolidate all your personal finances under one roof (a grow- it works with
your bank’s sys-
ing trend) or use a personal financial management software prod- tem.
uct, also known as a financial suite.
A History Lesson: Proprietary Evolves into

Open Systems
Just a few years ago, Microsoft Chairman Bill Gates proclaimed
that “banks are dinosaurs,” a comment that sent shudders through
oak-paneled bank boardrooms from Manhattan to San Francisco.
However, comments like his and the slow recognition of the pop-
ularity of personal financial management software encouraged
banks to become bolder in developing and providing online bank-
ing services. We’ll leave the dinosaur debate to the futurists, but
we feel safe in saying that virtually every bank in the country is at
least considering online banking as a way of better serving and
retaining their customers (that’s you).
36 CHAPTER 3
The Way It Used to Be

Fun Fact: Online banking, in its initial phase less than a decade ago, was
The first Internet-
once the province of mostly larger banks that could afford to
only bank, Security
First Network Bank make huge technology investments in “proprietary” systems.
at www.sfnb.com,
received its charter
Banks offering online services typically developed their own soft-
(permission to oper- ware, which they distributed to their customers. The software
ate as a legitimate
bank) in 1995. enabled customers to communicate directly with their banks by
using their personal computers and a modem connection.
Although these early initiatives were a good start to what we’re
seeing today in online financial services, they were not without
flaws. Aside from limited functionality, the early proprietary
online systems were hindered by a severe lack of demand. The
number of household PCs was relatively small, a fact that gave
banks limited justification to continue refining and improving
their proprietary online offerings.
Grandma Wouldn’t Recognize Today’s Online Banking

In its earliest form, personal computer-based home banking meant using
proprietary software from your bank. Your institution would send you a
disk containing this software, which you then had to load onto your
computer.
The proprietary software would enable you to dial up your bank’s com-
puter system using a modem; after you were connected, you could con-
duct limited banking functions.
As you may be guessing, this system never became very popular. The
proprietary software didn’t always run properly because there was a big
lack of standardization among PCs, software, and communications pro-
tocols. Also, because the bank’s software was proprietary—only for use
in connecting and communicating with a particular bank—customers
were limited in their options.
Yet another problem with widespread use of proprietary home banking
software was that—believe it or not—some banks charged for
the service.
Today, the Internet, faster, more standardized computer products and
software, and quicker modems have broken down these earlier online
banking hurdles. If you’ve got a newer PC, a modem, and an Internet
service provider, you can be banking online on short notice. Plus, you’re
not locked into any particular bank’s proprietary software system.
WHAT YOU’LL NEED FOR ONLINE BANKING 37
The New Way to Bank

The development and acceptance of household PCs and the
Internet has changed the earlier paradigm. With the connectivity
capabilities of the Internet, banks have worked with a variety of
third-party software providers. They have also worked together in
cooperative ventures to develop the necessary interfaces to seam-
lessly bridge the distance between your home computer and your
bank’s information-processing system.
Banks are increasingly emphasizing having “open,” browser-
based online banking systems instead of “proprietary” setups.
This means portability for you because you’re not locked into a
particular bank’s exclusive software. It also means ease of use. If
you can use a Web browser, such as Internet Explorer or Netscape
Navigator, you can bank online (well, at least you can after you
finish reading this book).
At this point, you might be asking yourself why some banks
invested money in online banking systems that never got off the
ground. When they did so, the Internet was a nascent concept, so
the only option available for banks to ensure security and provide
connectivity for their online customers was the development of
proprietary software and interfaces to accounting information.
Although they were a little clumsy and basic, these early offerings
provided a learning experience for banks that has helped build a
foundation for the online financial services environment of
today—and tomorrow. Citibank, however, one of the major elec-
tronic banking leaders, continues to provide both direct-dial and
true Internet banking.
Direct-dial banking means that you use your computer and
modem to dial up your bank’s computer to transact business. In
such a system, an Internet connection is not necessary. The only
requirement is a modem and a telephone line. Internet banking,
which we’re referring to in this book as online banking, relies on
connecting to the Internet through your computer’s modem and
Web browser software.
38 CHAPTER 3
The Three Ways of Banking Online

Today, online banking generally takes place in one of three ways:
Netscape This, • Over the Internet—Using secure Web browser software such
Netscape That:
as Netscape Navigator or Internet Explorer. These browsers
Netscape
Communicator is a enable consumers to access their account information through
package of Web their online bank’s Web site. This route to banking online
software products
that includes requires the use of Internet browsers that support 128-bit
Netscape Navigator,
encryption, such as Netscape Communicator 4.06, Netscape
the popular Web
browser software. In Navigator 4.06, or Microsoft Internet Explorer (version 4.0 or
effect, Navigator is a
part of Netscape
later). Your Internet service provider or online bank can help
Communicator’s you obtain the correct version of these browser products. At
landscape.
many of these bank sites, you can actually download browser
software onto your hardware. The 128-bit level of encryption
of the latest Web browsers protects consumers by scrambling
all the personal information transmitted between a customer’s
home computer and the bank.
• Using personal financial management software products

(such as Quicken or Money)—These products have the capa-
bility to exchange information with your online bank, if your
bank supports such a connection. This approach represents a
combination of browser-based online banking with personal
financial management software that customers are operating
on their home computers.
• Using proprietary software from your online bank—This is

software provided by your bank that operates on your com-
puter. The software typically enables consumers to connect to
the bank over a telephone line. The features and functions
may range from basic transactions to more sophisticated ser-
vices, such as tracking investments. Some people in the e-
commerce world don’t consider this truly online banking
because you dial directly into the bank’s computer and your
data doesn’t flow through the Internet. This proprietary
approach to remote banking is also called PC banking.
There are three

Your Bank.com Enter Account ways to bank
True Internet Banking homepage information online. As you can
see, all three must
access your
Internet
account informa-
tion through your
Your account bank’s secure
Any Browser info
Product Your Bank’s Your Bank’s
server.
Internet Secure
Server Server
Personal Finance Software Access
Telephone
line
Your account
info
Q Commercial
u Software Your Bank’s
i Product Secure Server
c
k
e
n
Propriety Software Access
Telephone
line
Your account
info
Secure
Server
Propietary
Software product
1. Connect to the Internet and fire up your Web browser. Go to

.
Try It Yourself
the Bank of America home page at www.bankofamerica.com.
Click Learn More to learn more about online banking.
2. Click Online Banking under Personal Options. At the next

screen, select your state. Then click Demo to start the Bank
of America’s online banking demonstration.
Congratulations! You have ventured out on your own to learn

firsthand about online banking.
3. Now try something else: Return to the first screen in step 2

(the one that lists Personal Options). This time, instead of
clicking Online Banking, click PC Banking with Managing
Your Money. Read the information here and then click the
40 CHAPTER 3
Demo button. You’ll learn about how online banking works

with the Microsoft Money personal financial management
software. Note that Bank of America’s Money-compatible
online banking system relies on a direct-line dial-up connec-
.
tion between your PC and the bank.
Strike Up the Bandwidth

What does it take to get connected to an online bank? You need a
home computer, of course, equipped with Web browser software
such as Internet Explorer or Netscape Navigator.
You’re also going to need an Internet service provider (ISP) to
serve as your computer’s gateway to the World Wide Web.
Another important component is how you connect to your ISP,
such as through a telephone modem (we recommend as fast a
connection as you can get—a minimum of 56K) or a cable
modem.
Connecting with a Telephone Modem

Bits and Baud: A telephone modem adapts a terminal or computer to a telephone
The term baud is a line. It converts the computer’s digital pulses into audio frequen-
techie term that
comes from the days cies (analog). At the other end, the receiving modem converts the
of the Eniac com- analog frequencies back into digital pulses. The modem also dials
puter. It is used to
mean exactly the the line, answers the call, and controls transmission speed.
same thing as bits Although modems have come in speeds of 300; 1,200; 2,400;
per second. When
you talk about a 9,600; 14,400; 28,800 (28.8Kbps); 33,300 (33.3Kbps); and
56KB baud modem,
56,000 (56Kbps) bits per second, today higher speeds are typi-
and your friend talks
about a 56Kbps cally used in the latter only.
modem, you’re both
talking about the The software required to use a modem depends on what kind of
same thing.
service you want. A connection to an ISP requires a Web browser
and TCP/IP networking protocols, both of which are either pro-
vided by the ISP or are included with the operating system, such
as Windows 95/98 and NT. The online services (such as America
Online, CompuServe, and so on) generally provide the required
software and dial-up utilities.
All new modems have built-in error correction and data compres-
sion. For files that are already compressed, the hardware data
compression adds little value because it cannot make compressed
files smaller. Modems also have automatic feature negotiation,

which adjusts to the speed and hardware protocols of the modem
on the other end of the line.
Connecting with a Cable Modem

A cable modem is used to connect a computer to a cable televi-
sion service that provides Internet access. Cable modems can dra-
matically increase the bandwidth between a person’s home
computer and their ISP. Cable modems link to the computer with
Ethernet, which provides online service all the time. However,
Ethernet is a shared medium, and the connection speed varies
depending on how many customers on that cable segment are
using the Web at the same time.
There are specific requirements for hooking up to the Internet
with a cable modem. You’ll want to check with your local cable
access provider, but the following are some basic considerations:
• Depending on how your neighborhood is wired for cable, a

connection can be either one-way or two-way.
• A one-way connection means that you access the Internet

using your computer’s telephone modem. The benefit of the
higher-speed cable modem enters the picture when you
download Web pages to your PC.
• A two-way connection uses the cable modem for both

upstream (your computer to the Internet) and downstream
(the Internet to your PC) communications.
• The higher-speed benefits can be obtained in both the one-

way and two-way systems because, for most Internet users,
the majority of communications go from the Internet to
the PC.
Generally, your cable company will provide you with a list of

specifications. Some companies will install the necessary Ethernet
card and ensure that everything is optimal for your Internet con-
nection. The cost of cable modem access runs from $40 and up
per month.
42 CHAPTER 3
Fun Fact: If you’re currently using a dedicated telephone line for your
Cable television was Internet access, a cable modem set-up is in a similar price range.
invented on
Thanksgiving Day in A good site for more information about cable modem is
1948 by Ed Parsons. www.cablemodemhelp.com.
He gathered his fam-
ily around the televi- We can’t say enough about the speed of your connection to the
sion set in Astoria,
Oregon, to watch a Internet. With online banking, you’re receiving and sending a lot
broadcast from a of information through the pipeline (security measures also add to
UHF station based in
Seattle using an the amount of bits and bytes flowing). Thus, the bigger your
antenna amplifier he
pipeline is, the faster and more productive your online banking
had designed. Ed
Parsons thus became experience will become.
the first Cable Guy.
What Is Bandwidth, Anyway?

Bandwidth is the expression used to describe the transmission
capacity of an electronic line, such as a communications network.
The greater the bandwidth of a communications line, the higher
the carrying capacity that line has. Bandwidth is expressed in bits
per second, bytes per second, or in Hertz (cycles per second).
When expressed in Hertz, the frequency may be a greater number
than the actual bits per second because the bandwidth is the dif-
ference between the lowest and highest frequencies transmitted.
Bear in mind that bandwidth is an issue being addressed by virtu-
ally all the players involved in computer technology, the Internet,
and e-commerce. In this regard, we expect online banking sys-
tems to become faster and better in the future. In the meantime,
we suggest that you take steps now to make your connections to
the Internet and online banking as smooth and as fast as possible.
What’s the Function of Financial Suites?

The folks at Intuit Inc. (who developed the popular personal
financial management software product Quicken) and Microsoft
(which developed Microsoft Money, another leading personal
financial management software program) have helped push the
online banking envelope. Why? With the growing popularity of
personal financial management software, these two companies
could foresee the integration of their software with online banking

several years ago. This was before more than a handful of banks
were offering online banking.
Intuit and Microsoft both have Web sites designed to highlight Bank Where You
Surf:
their personal financial management software products and to
In this world where
serve as “portals” to the world of online financial services, similar everyone is trying to
to how Yahoo! and AOL are portals to the broader world of the offer you everything
on the Web, it’s
Internet. Intuit and Microsoft have worked hard to ensure that interesting to note
that both Yahoo!
their software is compatible with most online banking systems, so
and AOL feature
that information from an online bank—your statement balance “banking centers” at
their sites.
and cleared checks, for example—can be downloaded into your
personal financial management software.
The Quicken
home page
(www.quicken.
com) provides
access to all the
financial informa-
tion you need
when you’re
using the Intuit
Quicken personal
financial soft-
ware.
Both Intuit’s Quicken Web site and Microsoft’s Money Web site
provide the look and feel of financial portals, providing an array
of news and information, as well as links to their personal finan-
cial management software suites and to online banks.
44 CHAPTER 3
The Microsoft
MoneyCentral
home page
(http://money
central.msn.com/
home) provides
links to many
areas of financial
interest. If you use
Microsoft Money,
you’ll visit this site
often.
If you’re a devoted user of Quicken or Money—and there are

many—you’ll want to make sure that your online bank’s system
will operate in a manner that complements how you currently use
your personal financial management software.
More powerful versions of Quicken and Money software products
enable users to track their investments, manage their bank
accounts, and manage the books of their businesses. If you’re
planning to conduct online banking through one provider while
managing your investments with another, either of these personal
financial management software products can help you control and
manage all your financial activities.
In the meantime, both Intuit and Microsoft have sought partner-
ships with banks to promote both their software products and
online banking. Banks have developed strategic partnerships with
major Internet portals such as America Online and Yahoo!—as
have specialty financial services companies, such as Countrywide
Mortgage (a national mortgage lender) and discount brokerage
firms, such as Charles Schwab and e*Trade. If all this smacks of
convergence, you’re partly right, but it’s also indicative of new
markets and new services being explored, developed, and tested.
For banks and other financial services providers, the opportunities

and explorations into the world of the Internet and e-commerce
are part of ongoing research and development that will ultimately
benefit both the successful providers and their customers.
All these new initiatives, joint ventures, and strategic partnerships
can be confusing. A competitive, relatively low-cost service arena
like the Internet is an utterly confusing marketplace at times. Our
advice when it comes to online banking: Survey your options,
learn what’s new, and stay up to date. There is a constant stream
of innovation occurring, which is good for you as a consumer
(and good for us, as book authors).

In this chapter, we’ve examined some of the history of home-
based PC banking, which shows how far and how fast technology,
the Internet, and financial services providers have come in build-
ing an entirely new delivery channel for you to use to manage
your finances.
Let’s recap:
• In the beginning, there was a direct-dial connection between

a bank and a customer, typically through proprietary software
that came from the bank. This has changed for the better. The
Internet and computer hardware and software standardization
now make it possible to quickly and easily connect with an
online bank.
• There are three types of online banking: through the Internet;

through personal financial management software products,
such as Quicken and Money; and by dialing up your bank
directly using software provided by the bank. The latter
approach is becoming much less common as the Internet con-
tinues to expand.
• With Internet banking—which we call online banking—your

computer connects to your bank through Web browser soft-
ware, such as Internet Explorer or Netscape Navigator. You’ll
46 CHAPTER 3
want to make sure that you’re using the latest versions of

either of those products to ensure that you get the full bene-
fits of all the security that comes built into those products
(we’ll discuss these security features in detail later).
• The Quicken and Money financial suites are popular financial

management software tools that are often supported by online
banking services providers. If you’re a user of either of these
products, you’ll want to consider how you’ll continue to use
them after you’ve connected to your online bank.
CHAPTER 4
Choosing Your Bank
Shopping for an online bank may seem simple, but it can be a bit What You’ll Learn
in This Chapter:
daunting and bewildering. For one thing, there’s no lack of infor-
. How to shop for
mation on the topic when you log on to the Internet. online banking
Meanwhile, back in the dirt world (or back to our offline exis- services.
. Online banking
tence), you’re probably hearing about online banking on televi-
features you’ll
sion and radio and reading advertisements about Internet banking want and need.
in newspapers and magazines. The competition is fierce for your . One-stop shop-
business, and banks are spending big bucks to get you to bank ping Internet
portals.
with them in the cyber world.
First Internet Bank of Indiana, at www.firstib.com, spent $800,000
in just one four-month period to get your money into their
e-accounts. One of this institution’s slogans is “Bank Naked. Do
your banking at Firstib.com no matter what you are wearing. Or
not wearing.” This bank is even advertising overseas. It’s based in
America’s heartland, but it has customers from Florida to
California to military bases around world. David Becker, presi-
dent of the bank, told us that five percent of his customers live
outside the country or are travelers.
You may have even received a flyer or a brochure from your cur-
rent bank encouraging you to consider banking online. Remember
the discussion in Chapter 2, “What Online Banking Means to
You,” about why banks want us to go online? Online banking can
save banks money while providing consumers with faster, more
convenient service. When they keep you out of their teller lines,
they have fewer tellers to pay.
Selecting an online bank will require you to think about how you
currently use your financial institution, whether it’s a bank, credit
union, or savings and loan. How often in the past month have you
had reason to visit one of your bank’s offices in person? If you
48 CHAPTER 4
own a small business, you’ll need to consider the banking prod-

ucts and services you’re using in that regard, as well as how often
you need to personally visit your bank to deposit checks or con-
duct other types of business. We’ll look more closely at online
banking for small businesses in Chapter 10, “Online Banking for
Small Business Owners.”
Shopping for Online Banking Services

Type the phrase online banking into any major search engine
such as Yahoo!, Google, Alta Vista, Excite, Hotbot, or AskJeeves,
and you’ll get hundreds of references. Many of those references
will relate to banks offering online services. Others will be links
to companies that advise institutions how to get online or that
provide the systems for them to enter the electronic world. There
also will be several references to companies pointing out a few
good deals.
Making sense of it all is a challenge. We’re here to help.
The Big Net Approach

You have two options when you go shopping for an online bank.
You can throw out a big net by searching for a broad term, such
as online banking, and haul in thousands of matches, or you can
try a more focused approach. Because we like to go fishing, let’s
first see what happens when we keep the search broad.
1. Let’s try a search on Google.com (www.google.com). In the

.
Try It Yourself
search box, type the phrase online banking. When we did
this, the search engine gave us 21,358 entries plus a banner
ad teasing us about interest on a checking account at six
percent.
Google.com
returns thousands
of entries when
we typed the
phrase online
banking in the
search box.
CHOOSING YOUR BANK 49
2. If you’re as curious as we were, click the banner ad. We

found ourselves face to face with CaroLine, the online bank-
ing service of Carolina First Bank of Columbia, South
Carolina.
Clicking a banner
ad on the Google
results page took
us directly to
CaroLine, the
online banking
service of Carolina
First Bank of
Columbia, S.C.
3. In hot pursuit of that six percent yield on your hard-earned

dollars, click the Checking button. A page opens to tell you
that you can “earn up to 6 percent” annual percentage yield.
Clicking the
Checking button
took us to a page
explaining how
we could “earn
up to 6 percent”
annual percent-
age yield.
50 CHAPTER 4
4. Don’t think that the Internet is paved with gold just yet!
Scroll down the page to find that to get the high interest rate,
you’ll have to commit a minimum of 25,000 scoots for a
high-yielding CD checking account.
To get that attrac-

tive interest rate
will require a bal-
ance of $25,000 or
more.
5. It’s okay to feel a bit sorry for yourself when what appeared
to be a terrific offer doesn’t pan out. Now bid our anthropo-
.
morphic friend CaroLine adieu.
The Focused Search

Our brief foray into cyberspace shows how banks use teaser rates
and other enticements on the Internet to get consumers to visit
their online banking sites. Surprise. This differs little from the
physical world in which institutions use newspapers, radio, and
television to sell you their products and services.
We suggest that you take a more targeted approach in shopping
for online banking services.
Start with Your Current Bank

If you like the products and services you’re getting from your
current bank or credit union, we suggest you give them a serious
look as your online bank. By transitioning to online banking
through your current institution, you may be able to save some

money in fees, as well as save the time and costs associated with
switching banks. (These costs can include having new checks
printed and establishing new direct-deposit services for your pay-
checks.)
Begin with the bank or credit union that currently handles your
checking account. Does it offer online banking services? If so,
does the online banking system include features such as elec-
tronic bill payment? Will the bank’s system support a financial
management suite such as Quicken or Money?
You’ll want to ask questions. Check your bank’s Web site. Look
for a privacy policy and read it. Look at the fee structures.
Compare your current bank’s Web site with others in your local
market. Although it’s certainly not impossible to establish a rela-
tionship with an online bank virtually anywhere in the world, it
may be more convenient and comforting to know that you can
always visit a local, physical branch should problems arise.
You’ll also want to test drive your bank’s online system. Most
institutions provide online banking demos for consumers to con-
duct test transactions. The demos also provide a look at how an
account statement appears and how it can be used to track your
payments and deposits. We’re going to get more detailed on how
to do specific types of transactions in Chapter 7, “No Postage
Necessary: Paying Bills Online,” and Chapter 8, “Beyond the
Basics: Cool Add-On Products and Services.” For a look at what
a typical online banking demo opening page looks like, let’s go to
the site of Bay-Vanguard Federal Savings Bank at www.
bayvanguard.com. This bank is based in Baltimore, Maryland.
1. Open the home page of the Bay-Vanguard Federal Savings

.
Try It Yourself
Bank site at www.bayvanguard.com.
2. Under Internet Banking, click Learn More.
3. Access the online banking demo by clicking the Access

Accounts button. An account summary page opens, providing
details on two checking accounts, a certificate of deposit
account, a home equity loan, and a car loan.
52 CHAPTER 4
When you view

the account demo
at Bay-Vanguard’s
Web site, you can
see an account
summary page.
For details about
the transaction
history for an
account, click its
balance.
4. Click the highlighted balance of the Household Checking

account to see a detailed statement page showing deposits to
the account and checks written on the account.
The Bay-Vanguard
account demo
provides a
detailed state-
ment page show-
ing deposits to
the account and
checks written on
the account. You
can delve farther
by clicking the
various buttons or
transactions on
this page.
5. You can get more information about accounts and practice

making transactions by clicking the various buttons on the
.
detailed statement page.

No PC? No Problem!
What if you’re interested in Internet banking but you haven’t bought
that souped-up home computer just yet? Don’t worry—most financial
institutions offering online banking have PCs in their branch offices for
their customers to use to test the service.
The workstations in the branch office provide an excellent way for you
to become comfortable with cyber banking. You’ll also score valuable
face time, we hope, with a knowledgeable staff person. We’ve been
both disappointed and pleased with the bankers we’ve visited. We don’t
think you should be a rough and tough customer, but you should be a
smart one: Insist on talking to someone who knows the bank’s online
operation thoroughly.
Remember, banks want you to go online. This saves them time and
money while providing you with new convenience and capabilities.
You’ll want to ask questions of the bank’s staff during your demo. Ask
about security, privacy, the speed of the demo PC’s Internet connection,
and how your institution can get you up and running. Ask about fees,
too, as well as all the features and functions available.
If your bank offers the in-house demo, use it. It’s an excellent way to
gauge first-hand a bank’s commitment to online banking.
Shop Nationwide for an Online Bank

If your current bank or credit union doesn’t offer online banking,
you’ll need to shop around some more. Again, we encourage you
to first look locally and see what’s being offered and the fees
involved.
Start surfing. You may even notice that some online banking sites
look similar in terms of how account information is accessed and
displayed. This happens because several institutions are using the
same online banking software. This software becomes the basic
architecture of their sites—just as mass-produced homes can all
look alike, so do many banking sites.
Still looking for the right online banking fit? Let’s go shopping
nationwide.
1. For a list of online banks and credit unions, try

.
Try It Yourself
bankonline.com at www.bankonline.com. This site presents a
list of online banking providers around the world, sorted by
geographic region, country and state, or other governmental
jurisdiction.
54 CHAPTER 4
2. Individual listings in the directory are hot links. Click a listed

bank or credit union’s name to go to that particular provider’s
online banking Web site.
This directory, by the way, is growing each day.

BankoOnline.com encourages feedback from consumers
about new online banking sites.
3. Scroll through the list of banks to get an idea of just how

widespread this online banking movement is. Although we’re
not planning to move to New Zealand just yet, we’re happy
to know that we can locate a list of online banking providers
.
there should the need arise.
Online Banking Features You May Want

and Need
Basic online banking features include having the ability to view
your checking and savings accounts over the Internet and to per-
form transactions such as moving money from your savings
account to checking account and vice versa. Let’s look at some
additional features you might want to consider.
Following Your Money

Most browser-based online banking systems allow you to view
your accounts and recent transactions. This is a handy money
management tool and it beats going to a branch or an ATM to
have a statement of recent account activity printed out. By simply
going online, you can look at your checking account and find out
if your Aunt Essie cashed that birthday check you sent her or if
your payment to your local utility company has cleared.
Typically, when viewing a checking account or money market
account (a type of account that allows you a limited number of
check payments each month), you’ll have two options. You can
view the account statement, which is your online bank’s official
reckoning of your account and recent activity, or you can view
your account register, which is similar to the paper record of
deposits and checks that you keep with your checkbook. It’s not
unusual when comparing your online bank’s statement and your
register to find differences. Some payments or deposits listed in

your register may not have been cleared by your bank and, as a
result, may not be listed in your statement.
Paying Bills Online

Online bill payment allows you to pay bills over the Internet.
We’ll explore paying bills online in greater detail in Chapter 7.
Basically, through online bill payment, you are authorizing your
bank to pay someone a certain amount of money.
It’s very much like writing and mailing a check for your mortgage
or rent every month. However, instead of putting the check in an
envelope and paying for the postage to send it, your online bank
does it. Sometimes, if the company you are paying is big, the
bank sends your online bill payment electronically. In other cases,
your bank creates a physical check that it mails for you.
Some online banks charge a fee for this service, typically a set
amount per month for a given number of payments, such as $5.95
for 20 online bill payments. Others do not charge a fee for online
bill payment. This can be an important consideration. In most
cases, however, the monthly fee is typically lower than the equiv-
alent postage for the maximum number of items each month
($5.95 divided by 20 payments is roughly 30 cents, less than 20
33-cent stamps—not counting the cost of the checks).
Most banks that charge for online bill payment allow customers
to opt out and still enjoy other benefits of online banking.
Applying for Loans

Applying for a loan can certainly be faster and easier online.
Loan products, such as credit cards, overdraft lines of credit (used
only when and if you should overdraw a checking account), auto
loans, personal loans, educational loans, and even home equity
and mortgage loans can be applied for online. Still, you’ll want to
shop around and compare rates first.
Most online bank sites have loan calculators that can help you
determine how much your monthly payment would be under dif-
ferent loan terms (such as the length of time for repayment),
interest rates, and loan balances). This is a very helpful feature
that can you help you shop better for any type of a loan product.
56 CHAPTER 4
Other Features to Look For

Other features to look for in online banking include the ability to
open new accounts. Still more: How about tracking your mutual
fund or stock and bond investments along with your checking and
savings accounts and loans?
Although such all-in-one online banking sites are the exception
today rather than the rule, we expect online banks to enhance
their services to become more like one-stop personal financial
management providers.
Portals to Banking and Finance

In some respects, Internet portals such as America Online (AOL),
the Microsoft Network (MSN), and Yahoo! resemble all-in-one
shops for financial services. AOL’s banking center, for example,
features business news and investment information, as well as
providing help with shopping for a mortgage loan, insurance, and
online banking services.
Are the financial pages of portals such as AOL and Yahoo! banks?
No. As they’re currently constructed, think of them as a very busy
bazaar that you’re trying to shop quickly. As you make your way
through the links attempting to find what you’re looking for,
you’re forced to hear (actually, read) boisterous pitches from all
the bazaar’s many merchants.
At the MSN portal, you can’t miss the ads for NetBank.com. This
Internet-only bank cut a deal with MSN last year that will ensure
that its banners will be displayed prominently throughout the por-
tal. NetBank is hoping to attract some of MSN’s five million visi-
tors each month to its own products and services.
The portals do provide avenues to locating financial services
providers, including online banking sites. Bear in mind, however,
that the portals aren’t exactly disinterested third parties merely
providing links and information. Banks and other financial ser-
vices providers pay the portals to be listed on their sites, typically
at a rate that increases with prominence.
AOL’s banking
center features
news and infor-
mation as well as
shopping help in
finding financial
products and ser-
vices. Buyer
beware, however.
These banks have
paid AOL a fee to
be listed here.
Note that
Quicken.com is
credited for creat-
ing this portion of
AOL’s portal.
Yahoo’s banking
page features a
pitch for
Telebank, which is
becoming primar-
ily an online
bank, as well as
links to bank and
banking-related
providers and
information.
A Community Bank as an ISP

One of the more interesting facets of the banking industry’s transition
to online banking is the role of the Internet. Without it, there would be
no customers to serve in the online world.
With that said, people also need a way to get on to the Internet. This is
the role played by an Internet service provider, or ISP. AOL and
MindSpring, for example, are ISPs.
continues
58 CHAPTER 4
continued
Faced with an aging customer base, Bay-Vanguard Federal Savings Bank,

a small one-office Baltimore-based community bank, thought outside of
the box two years ago as its senior staff pondered the possibilities of
online banking.
Although the bank was committed to providing Internet banking ser-
vices—which appeals to younger customers—it faced a potentially
gigantic hurdle because of limited access among its customers to the
Internet. The bank surmised that traditional ISPs were too expensive for
its customers. Bay-Vanguard’s solution? Establish its own ISP.
Novel, yes. So novel that the institution’s primary regulator—the Office
of Thrift Supervision—had rarely if ever encountered such an application
for a new activity before. We’re happy to note that two years later, Bay-
Vanguard’s ISP is doing well, as is its online banking site.

This chapter covered the basics of shopping for online banking
services, as well as some of the features you’ll need as the chief
executive officer of You, Inc. The following is a summary of what
you should have learned:
• Shop locally. Ask what your current bank can do for you
online.
• Take advantage of in-person online banking demos at a local

bank or credit union and test demo features of online banking
systems on the Internet.
• Think about the features you’ll need and use in online bank-
ing and compare those features and fees from several online
banks.
CHAPTER 5
Ready, Set, Stop: Do Your
Due Diligence
Let’s say that you’ve found the perfect online bank. You followed What You’ll Learn
in This Chapter:
our shopping tips in Chapter 4, “Choosing Your Bank,” test drove
. The importance
several demos, and feel comfortable about beginning your online of the FDIC
banking experience for real in the virtual realm of cyberspace. label.
This chapter is about taking a breather and doing some due dili- . How deposit
insurance works.
gence on your online bank. While we’re not going to hit you on
. The consumer
the head and say “Stop what you’re doing,” we would like to give protection regu-
you some valuable tips about checking up on your online bank lations.
before getting down to business. (These tips will work for real
world banks, too. Trust us.)
Why? Because of the tremendous growth of the Internet over the
past decade, there have been a variety of online scams reported.
Among these have been con artists purporting to be online banks
or purporting to sell legitimate investment products.
Cons like these and others are designed to separate unwary people
from their money. Aside from the economic damage they do to
consumers, they also undermine confidence in online banking and
finance, and e-commerce in general.
It pays to be wary (you’ll sleep better, for one thing). Most
Internet and e-commerce participants, including online banks, are
wary, too. They want consumers to feel safe and secure about
transacting business online.
Banking regulators want consumers to feel safe and secure, too.
That’s why they periodically examine banks and credit unions to
make sure that nothing is amiss. Regulators also require quarterly
reports on the financial condition of an institution.
60 CHAPTER 5
An upside to the Internet: The bank and credit union regulatory

agencies all have Web sites that provide a wealth of consumer
information, financial calculators, shopping tips, and other fea-
tures. This is very much an example of the government working
for and on behalf of American consumers.
Look for the FDIC Label

Fun Fact: For consumers, one of the most important aspects of bank and
Congress created the credit union regulation is deposit insurance. The Federal Deposit
Federal Deposit
Insurance Insurance Corporation (FDIC) insures consumers’ deposit
Corporation in 1933
accounts up to $100,000. For credit unions, deposits—commonly
to restore public
confidence in the referred to as shares because depositors are member/owners of
nation’s banking sys-
tem. President
their respective credit unions—are insured for the same amount
Franklin D. Roosevelt by the National Credit Union Administration.
viewed this as a mis-
take because it cre- In the event of a federally insured bank or credit union failure,
ated a “moral
hazard” for banks.
depositors are protected up to $100,000, with some partial leeway
Roosevelt thought for accrued interest. In other words, accrued interest (money
deposit insurance
created an incentive you’re owed) through the date of a financial institution’s closing
for banks to take on or failure, is included when calculating insurance coverage. It’s
excessive risk.
also important to note that deposit insurance can be expanded,
depending on how you structure your accounts among individual
accounts and joint accounts.
This is a complex issue, but one you might want to familiarize
yourself with if your checking and savings accounts, including
certificates of deposit, would or could exceed $100,000. Even
though it may be unlikely now, your deposits could possibly
exceed $100,000 in the future if you should sell your house or an
investment property or receive a lump-sum retirement distribution
or life insurance settlement.
The FDIC has a feature at its Web site called EDIE, which can
help you calculate where you and your family stand regarding
deposit insurance. EDIE stands for the Electronic Deposit
Insurance Estimator. Through an interview format, the system
takes you through all types of possible account relationships and
nuances.
Understanding how deposit insurance coverage can work can be a
challenge. Even bank staff members sometimes have difficulty
READY, SET, STOP: DO YOUR DUE DILIGENCE 61
explaining it to consumers. The FDIC’s estimator goes a very

long way in helping consumers calculate their deposit insurance
coverage. (What’s this—a bank regulatory agency getting
friendly?) The FDIC’s home page at www.fdic.gov is shown in the
following figure.
Note EDIE, the

Electronic Deposit
Insurance
Estimator, smiling
and waving. She’s
there to help you
sort out your
deposit insurance
coverage.
Why Worry About Deposit Insurance?

When a bank fails, the regulatory agencies involved (see our
accompanying discussion) usually try to arrange for a resolution
called a purchase and assumption. In such a transaction, a healthy
bank assumes most of the deposits and loans of the failed bank.
As part of the transaction, the FDIC, as the insurer of deposits,
assumes the remaining portion of deposits and loans. Although it
sounds complex, this is meant to encourage a healthy bank to pur-
chase the majority of a failed bank’s assets (loans) and liabilities
(deposits).
When the FDIC becomes the receiver (the manager) of a failed
bank, depositors of more than $100,000 may face the prospect of
a “haircut,” meaning that they may not receive the full value of
their deposits in excess of the $100,000 coverage level.
62 CHAPTER 5
Fun Fact: Case in point: Consider the closure in September 1999 of First
The oldest federal National Bank of Keystone, West Virginia, by the Office of the
bank regulatory
agency is probably Comptroller of the Currency, which regulates national banks.
the least well According to the FDIC, the failed bank had local uninsured
known. The Office of
the Comptroller of deposits totaling approximately $15 million in 500 accounts
the Currency was
(an average of $30,000 per account).
established in 1863
as part of legislation These account holders with uninsured funds (in excess of the
creating a system of
national banks to $100,000 limit) join other creditors (parties owed money) of the
issue national cur-
failed institution and have no guarantee of getting their money
rency that would
help finance the Civil paid back in full.
War.
The bottom line: Bank failures can and do occur. They have, how-
ever, become relatively rare occurrences as the economy chugs
along. It’s wise, however, to at least periodically look at your
bank accounts and to understand your deposit insurance coverage
situation.
The $100,000 level of deposit insurance is generally applied per
person, but, because of the various ways accounts can be struc-
tured (single, joint, and more complex irrevocable trust accounts),
the FDIC’s EDIE is an enormously helpful tool for determining
insurance coverage.
Is Your Bank Insured?

Here’s a question many of us take for granted: Is my bank
insured?
It’s fairly simple to check this out when you go to a branch office
or the headquarters of a bank. The logo of the FDIC appears on
the door of the office and on those little placards at the teller
counter or the desktops in the lobby. It becomes trickier to verify
this in the online banking world.
What to do? Look at the online bank’s Internet home page. Many
will feature the FDIC logo or the words “Member FDIC.”
The home page of

1st Source Bank
of South Bend,
Indiana, features
the “Member
FDIC” message
prominently on
the left.
Still not assured that the online bank you’re looking at is FDIC
insured? The FDIC can help here, too.
1. Open the FDIC home page at www.fdic.gov. Note the second
.
Try It Yourself
item on the left under Deposit Insurance. Click the Is My
Bank Insured? question, which is actually a link to a form
page.
The FDIC’s home

page offers a link
to help you deter-
mine whether
your online bank-
ing institution is
insured.
64 CHAPTER 5
2. In the first text box on the form, type the name of the bank
about which you want information. We typed 1st Source,
which we scouted out earlier. If you know the bank’s home
location, type that information in the City and State text
boxes. As a challenge, we left these boxes blank. Then click
the Find My Institution button.
On the form pro-

vided by the FDIC,
type the name
and location of
the bank you
want to know
more about and
click Find My
Institution.
3. A confirmation (or denial) page appears, reassuring you that

your cyberbank is insured—or warning you that you should
look for another bank. In our search, we found that 1st
Source Bank is, indeed, FDIC insured.
The confirmation
was quick on the
next page. 1st
Source Bank is
FDIC insured.
4. You can click the links on the results page to look at addi-
.
tional information about the bank you are researching.
Is Your Credit Union Insured?

We could not find a similar deposit insurance research tool for
credit unions. The National Credit Union Administration, the
insurer of credit union members’ shares (basically equivalent to
deposits), provides basic information at its Web site on the topic
of share, or deposit, insurance.
This is significant because credit unions are in operations that are
not federally insured by the NCUA. Our advice is that you should
check out whether your credit union is insured. As you do for
banks and the FDIC logo, look for the NCUA logo when you’re
dealing with a credit union.
If you cannot confirm a credit union or a bank’s deposit insurance
status, contact the NCUA or the FDIC by email or telephone.
Confirming an online bank’s regulatory status is an important part
of determining its legitimacy as an online bank. Again, do your
due diligence.
A Regulatory Who’s Who

You might be surprised at how many federal regulatory agencies are
directly involved in the affairs of banks, savings associations, and credit
unions. There are five, not counting an interagency group. It’s good for
you as the consumer to know about these agencies because they are
good places for you to go with complaints if you think your bank isn’t
treating you fairly.
The following is a quick tour of the federal banking regulatory agencies
and the institutions they supervise:
• The FDIC insures deposits at the nation’s 10,000-plus banks and sav-
ings associations. It is the primary regulator of state-chartered banks
and savings associations that are not members of the Federal Reserve
System. Web address: www.fdic.gov.
• The Federal Reserve, the central bank of the United States, was estab-
lished by Congress in 1913. The Fed regulates bank holding companies
and banks that are members of the Federal Reserve System. Another
major responsibility that falls to the Federal Reserve is conducting
monetary policy (markets can move when Federal Reserve Board
Chairman Alan Greenspan speaks). Web address: www.bog.frb.fed.us.
• The Office of the Comptroller of the Currency, part of the U.S.
Treasury Department, supervises national banks. Web address:
www.occ.treas.gov.
continues
66 CHAPTER 5
continued
• The Office of Thrift Supervision, also part of the Treasury Department,

regulates federally chartered savings associations and savings banks.
Web address: www.ots.treas.gov.
• The National Credit Union Administration is the federal agency that
charters, supervises, and is the share (or deposit) insurer for federal
credit unions and most state-chartered credit unions. Web address:
www.ncua.gov.
• The Federal Financial Institutions Examination Council is an intera-
gency group made up of representatives of the five bank and credit
union regulatory agencies. It prescribes uniform principles, standards,
and report forms for the federal examination of financial institutions.
It also makes recommendations to promote uniformity among all the
federal bank and credit union regulatory agencies. Web address:
www.ffiec.gov.
Now let’s get even more complex. The Federal Trade Commission and
the Securities and Exchange Commission also have roles in financial insti-
tution regulation at the federal level. The FTC’s responsibilities regarding
banking focus on trade practices. The SEC, as you might have already
guessed, focuses on the sale by banks of securities, such as stocks and
corporate bonds. As financial institutions continue to develop into one-
stop financial services shops, these two agencies likely will have increas-
ing regulatory roles.
In addition, many states have departments of banking or finance that
regulate financial institutions chartered by a particular state. These
state-chartered banks, credit unions, savings banks, and other institu-
tions must comply with state regulations as well as with one or more
federal regulatory agencies.
A Look at Consumer Protection Regulations

In addition to its monetary policy role and the regulator of bank
holding companies and banks that are members of the Federal
Reserve System, the Federal Reserve has yet another important
responsibility: It develops and implements regulations for a num-
ber of consumer protections.
These consumer protection regulations include the following:
• Regulation B, equal credit opportunity

• Regulation E, electronic funds transfer
• Regulation M, consumer leasing
• Regulation Z, truth in lending

• Regulation CC, funds availability and collection of checks
• Regulation DD, truth in savings
All these regulations can pertain to online banking, but the two
most relevant to this discussion are Regulation E and Regulation
CC.
Regulation E governs electronic funds transfers, including auto-
mated teller machine transactions and online banking transac-
tions. Basically, the regulation limits a consumer’s liability for an
unauthorized transaction (say from a lost or stolen credit card)
to $50.
Regulation CC establishes a schedule for when deposited funds
should be credited to a consumer’s account. Before Regulation
CC was in effect, financial institutions had widely varying poli-
cies regarding “check hold” periods (the amount of time from
when a customer deposited a check to when those funds became
available). We’ll talk about this regulation further in the next
chapter.

We’ve covered the reasons for doing preliminary due diligence on
both online and real-world banks and credit unions before making
the opening deposit. To recap:
• Periodically review your deposit insurance coverage situation

and how it could change in the future. Talk to your banker to
get all your questions answered. This is one area where you
will come out much better if you know your exact coverage
and risks.
• Check your current or future bank or credit union’s federal

deposit insurance status.
• Understand the role of bank and credit regulators, including

the Federal Reserve, in developing consumer protection regu-
lations. Contact these agencies if your bank is not treating
you fairly.
PART II
Using Online Banking
Products and Services
CHAPTER 6
Begin with the Basics:
Opening an Account and
More
It’s time to get online and see first hand the look of online bank- What You’ll Learn
in This Chapter:
ing. If you aren’t logged on to the Internet, that’s OK. We plan to
. How to open an
walk you through the basics by visiting a few different banks’ account.
online sites. . About other fea-
tures you’ll want
Each bank site is different, but there are striking similarities. The
to try, such as
reason for this is simple. Banks are turning to other companies or viewing an
third parties to provide the technology necessary to securely bank account, trans-
ferring funds,
online. If your bank’s online system looks similar to others, that’s viewing canceled
OK. Many institutions use similar systems to connect their checks, ordering
checks, locating
account information and transaction systems to your computer
branches and
through the Internet. ATMs, down-
loading informa-
Although we show you demonstrations of the basics in this chap- tion to financial
ter, in the next two chapters you will learn some of the more management
advanced functions, such as bill payment and getting a loan. We software, and
communicating
call them advanced, but once you get into the thick of it, it all with email.
takes about the same effort: a few clicks of your mouse.
The Power of Internet Banking: Tracking Your Family’s Spending

Habits
A major benefit of online banking is the ability to view transactions as
quickly as they are posted to your account by your bank. You can keep
track of checks you’ve written or bills you’ve paid electronically, as well
as debit card transactions and purchases.
For families, such as couple with a joint checking account, the informa-
tion available online presents an entirely new dynamic. One of us (of
course, we won’t say whom) returned home one day to his home in
Virginia and was asked by his wife about a lunch tab earlier that day.
continues
72 CHAPTER 6
continued
She had been online and saw a transaction and didn’t recognize the
name of what she thought was a restaurant. The only problem: He had-
n’t made a purchase. It was her transaction, and the payee wasn’t even a
restaurant. The upside: They’re still married.
In the Beginning, You Opened an Account

The easiest route to take when you want to start banking online is
to stick with your current bank. This way, you don’t have to
worry about transferring funds into the accounts. The money will
already be recorded in the bank’s system.
When asking about whether your current bank is online, check to
see if it has launched a transactional banking site. Not all banks
have fully-functional transactional Web sites where you can actu-
ally do your banking. Some banks have sites that only provide
you with information. If this describes your current bank, you
may need to start shopping around. You should also tell your cur-
rent bank that you’re interested in online banking. You may find
that your bank is planning to provide a transaction Web site soon.
A quick note on shopping for online banking products and ser-
vices: In Chapter 9, “Shortcuts to the Best Deals,” we tell you
how to get the best deals, the lowest fees, and the best rates.
Three Tips to Finding an Online Bank

1. Call your current bank. See if it has a transactional Internet site.
2. Go to these bank consumer and consulting sites: Bankrate.com
(www.bankrate.com), a consumer financial mecca; and Gomez
Advisors (www.gomez.com), a consumer information site and consul-
tant to businesses.
3. Use a search engine such as Yahoo!, MSN, Google, AltaVista, or
AskJeeves to check out banks with which you’re familiar. In the search
bar, type in Internet bank or the name of a bank you already know
and see what you get. We don’t think this is the best route because
you will hit a lot of non-bank references.
After you’ve chosen a bank, it’s time to open an account. Some

banks will let you open your account online and others may still
require that you visit a branch to fill out some of the application
BEGIN WITH THE BASICS: OPENING AN ACCOUNT AND MORE 73
information. Obviously, it’s much more convenient to open your

account from your computer online.
Going Online with Your Current Bank

If you already bank offline with the institution, the process is sim- Real and
Electronic
ple and sometimes instant. Banks will provide you with a user Signatures:
agreement online, and you must click the Submit button to indi- As this book goes to
cate that you agree to all the terms and conditions. These docu- press, Congress con-
tinues to debate
ments are long and have a lot of legalese, but they are important whether electronic
signatures carry the
to read. They list fees and rates and the bank’s guarantee, if the
same weight as real
institution has a bill payment function. By indicating that you signatures.
agree to the terms, you are in essence providing an electronic sig-
nature.
Going Online with a New Bank

If you don’t already have an account with the bank, getting online
isn’t that quick.
Citibank (www.citibank.com) lists the types of accounts it offers
at its site. You then must complete a pretty simple application that
includes your name, address, whether you rent or own, how long
you’ve lived in that location, phone number, birth date, mother’s
maiden name, first school attended, social security number,
employment information, driver’s license, credit card number, and
passport number.
It’s not that difficult, but you might need to collect a few docu-
ments beforehand. After you submit the application electronically,
you may have to wait a few days to get signature cards in the
mail. You mail them back to the bank with a deposit. Then, in two
to seven days, your account will be opened and you will receive a
Citibank Card. You must have this card number to sign in, along
with your personal information number.
Typically, your PIN is sent to you through the mail, although
some online banks provide online account access more quickly.
Make sure that you understand how your bank will inform you
about your PIN or other access features, such as passwords.
WingspanBank (www.wingspan.com) has a quick system for
opening new accounts. You only have to fill out one application to
74 CHAPTER 6
apply for a checking account, brokerage account, credit card, and

bill paying features. You get instant approval, but you can’t use it
without money. So, you still need to get money into the bank. At
WingspanBank there are four ways to get funds into your
account:
• You can make your initial deposit by mail (seven to 10

days—faster if you send it by priority delivery).
• You can provide for a direct deposit to the new

Wingspan.com account from your employer (or some other
source).
• You can arrange a wire transfer of funds (which might

involve a fee of $15 to $25 from the other bank).
• You can arrange an ACH collection. In this case,

WingspanBank asks the other bank to have the funds trans-
ferred through the automated clearinghouse network where it
will become available to WingspanBank so it can put the
funds in your account. The process takes about two business
days.
A Word About the ACH System

If you have your paychecks direct-deposited to an account, your bank is
likely receiving the deposit through the automated clearinghouse, or
ACH, system. This is also the case if you’re a recipient of Social Security
checks.
The ACH system provides a fast and efficient means for payments to be
made. Some online banks enable customers opening an account to
authorize the transfer funds from an account they may have with
another bank to the new online bank. This typically is handled through
the ACH system. Your online bank will ask for your other bank’s routing
and transit number, which appears on your paper checks if you have a
checking account.
Now for the Meat of Online Banking

After opening an online account, it’s time to perform one of the
more addictive functions: seeing how much money you have in
the bank (we liken it to Scrooge McDuck opening his vault).
Let’s look at an online account statement with CompuBank
(www.compubank.com).
Here is a typical
online account
report (this one is
from CompuBank
at http://www.
compubank.com/
bankdemo/
accounts/set_
accounts.html). It
has all the basics,
including when
you originally
opened the
account, the bal-
ance, and the
account number.
We found that CompuBank has created a very user-friendly site.

For example, while you view your balances, you can click the Tax
Information button on the right side and find out how much inter-
est you’ve earned on that account.
Not all banks

provide the
interest-earned
information as
easily as
CompuBank’s
account system
does.
View Account Transactions

After reviewing balances, you may want to see account transac-
tions. At many sites, you just need to click the particular account.
For example, at the CompuBank site, if you want to see what’s
been happening in your checking account, click the account.
76 CHAPTER 6
CompuBank gives
you a clear list of
recent transac-
tions for a specific
account. Here you
can see activities,
such as which
checks have
cleared and a
recent deposit.
The next feature we’ll try at the CompuBank site is pretty spe-
cial—it isn’t offered by all of the banks. It’s seeing images of
your cleared checks. This function is very helpful. As you can
imagine, if your bank only tells you the number of the check that
cleared, you have to guess who you sent it to or check with your
offline records. With CompuBank’s system, you just click the
check number to see both sides of the cancelled check.
CompuBank offers
this very helpful
feature: Click the
check number of a
check that has
cleared, and you
can view the front
and back sides of
the actual check.
Transfer Funds
Now, to feel the power, let’s transfer funds from a checking
account to a savings account. To do this at CompuBank, go to the
top of the account summary page and click Transfers. On the
resulting screen, we want to transfer $100. To do that, we selected
the From account and the To account from drop-down list boxes,
typed in the amount of the transfer, and clicked the Submit
button.
To transfer funds
at the
CompuBank site,
we typed the
amount of money
we wanted to
move and then
clicked the Submit
button. This trans-
action, like many
online transac-
tions, takes very
little typing or
input.
After we clicked the Submit button, we could see that the bank
had processed the transaction.
We like the way

CompuBank deals
with online trans-
fers: at the top of
the screen, the
bank tells you
exactly how it will
process the trans-
fer. The transfer is
immediate, but if
you made the
transfer after 6
p.m. Central, it
will be recorded
as a activity on
the next business
day.
78 CHAPTER 6
Ready, Set, Go: Real-Time versus Batch Processing

So how long does an There are basically two ways banks operate when it comes to account
online transaction information. They either operate in real-time or they practice batch pro-
take you to per- cessing. In real-time processing, you can use your computer to transfer
form? After you’re a $100 into your checking account and immediately see that transfer if
pro, that answer
you go to an ATM right away.
varies based on your
computer setup, but In batch processing, you transfer the funds into your checking account at
Citibank estimates your computer, but when you go to your ATM later that same day, the
that a typical trans- checking account balance doesn’t reflect the change. This can cause con-
action on its site fusion about how much you actually have in your account. Deposits and
takes about 10 min- checks in a batch processing environment typically are updated to your
utes. That “typical
account at the end of a bank’s business day.
transaction” includes
signing in, perform- You should also take note that deposited checks are cleared by your
ing a balance bank and credited to your account based on the type of the check
inquiry, paying six (whether it’s written on a local institution and the amount). Your bank
bills, and then sign- can provide you more information about how deposited checks are
ing off. processed.
If this is a concern, ask your bank if it processes your transactions in real-
time or batch.
Download Account Information

Now that you have reviewed the account information and trans-
ferred funds, you might want to download your account informa-
tion into a personal financial management software product, such
as Microsoft Money or Quicken. Again, this process is not too
complicated with the CompuBank system (or those like it). After
reviewing a list of account transactions, you scroll to the bottom
of the page where you will find how to download the information.
For some general information about downloading account infor-
mation from a bank site for use in a personal financial software
product such as Quicken or Microsoft Money, refer to
Appendix B.
As you can see, to

download
account informa-
tion from the
online banking
site, you don’t
have to plug in
too much infor-
mation, just what
software you have
and the dates you
want to pull off
the site.
Before banking online using Intuit’s Quicken product, you must
.
Try It Yourself
first make sure that your bank supports online banking with this
product. Here’s how to find out if your bank supports Quicken:
1. Go to the Quicken Web site at www.quicken.com.
2. Scroll down the page. On the left side, under the heading
Quicken Solutions, click Quicken 2000 (this is the latest ver-
sion of Quicken available).
3. Click the Take Me to Quicken 2000 for Windows button

(click the other button if you’re a Macintosh user).
4. Scroll down the page and click the Frequently Asked

Questions link at the bottom of the page.
5. Scroll down the next page to the question, “Which banks or

brokerages do you connect with for online financial ser-
vices…?” and then click the hot link for Participating
Financial Institutions.
6. On the next page, you can either search for participating

financial institutions alphabetically or by typing in your
financial institution’s name in the dialog box. If your bank is
listed here, you know that you can use your Quicken soft-
.
ware to simplify your online banking efforts.

80 CHAPTER 6
Other Information You Can Obtain Online

We’ve now shown you some of the basic banking functions, but
there are many other added services, such as ordering checks or
determining where ATMs or branches are located.
Get Maps of Branch Locations

If you want to learn more about your bank’s service area, it may
show you a map of its branches. We checked out what Rocky
Mountain Bank (www.rmbank.com) might show us. When we
clicked the About button on the site’s home page, we got a map of
Montana that pinpointed the bank’s branch locations.
Rocky Mountain
Bank’s site
includes a map of
Montana pointing
out the bank’s
branches
(http://www.
rmbank.com/
about.asp).
Rocky Mountain Bank, based in Billings, Montana, has done a

good job listing helpful information at its site. When we went to
http://www.rmbank.com/contact.asp, we found the hours of oper-
ation, the address, and phone numbers for all the branches.
Although this
page provides
brochure-type
information, it
sure beats getting
it offline by call-
ing and getting
stuck in a voice-
mail system. (Press
3 if…Press 4
if…Press 5
if…And doesn’t
that get a little
aggravating
sometimes?)
Get Maps of ATM Locations

Sometimes locating ATMs can be difficult. And in these times of
getting charged a fee for using another bank’s machine, it’s
important to know where your bank’s ATMs are located. Chase
Manhattan Bank (www.chasemanhattan.com) has an easy-to-use
ATM locator.
At Chase
Manhattan Bank’s
site, you type in a
ZIP code and click
Search to see the
locations of the
ATMs in that
zone.
82 CHAPTER 6
Send Email
There are many other basic features at banks, including sending
emails. You may want to send an email to inquire about a fee or
about something you’ve seen on your transaction statement. One
word of caution about email—most of the time that we use email,
it’s not in a secure Internet environment. When you are communi-
cating with your bank via email, don’t include sensitive financial
data unless you know the system is secure at that point. If you
aren’t sure, call the bank and ask if its online email is secure.
Order Checks Online

Even though you may be banking online and paying many of
your bills online, you’re still likely to have a need for good old-
fashioned paper checks. Some financial institutions provide con-
sumers the opportunity to order checks online. The check order
forms, such as the one at Tinker Federal Credit Union (www.
tinkerfcu.org), are generally very easy to fill out. There are also
non-bank providers of checks, such as Deluxe Corp. at
www.deluxe.com. You’ve seen order forms like the one at this
site—if you’re like us, you get glossy ads for them in the mail
several times a month.
You can order

checks online in
two ways: directly
from your bank-
ing institution (as
shown here at
Tinker Federal
Credit Union) or
from a third party
such as Deluxe
Corp.
The Average User Keeps Coming Back

Digital Insight, an online bank consultant for the industry, polled
350,000 online bank customers. The company learned the following
about those of us who bank online:
• We log on about 4.6 times each month, slightly more than once a
week.
• We average 6.6 account summary inquiries each month and 5.5
account history inquiries.
• We pay about 9.1 bills every month.
“These figures demonstrate that online banking is definitely a ‘sticky’
application, one that gets customers to return repeatedly,” said Paul
Fiore, co-founder and executive vice president of new market develop-
ment at Digital. “Yahoo.com would die for that kind of loyalty.”
84 CHAPTER 6

It’s easy to open an account online, but it’s not always instant. If
you already bank at the institution in the offline world, you usu-
ally can start right away. Otherwise, you have to get funds into
the account, and that can take many days.
To get funds into an account, it usually takes up to two days if
you transfer the money electronically and up to 10 days if you
mail in a check or money order.
After you have an account there are many simple tasks to perform
including viewing your account, transferring funds, looking at
canceled checks or even downloading the information into finan-
cial software like Money and Quicken.
Remember you don’t have to get lost in voice mail “press heres”
any more to get information about your bank. For information
about the closest ATM to you or about the hours of a certain
branch, check your institution’s Web site. Many banks now list
this valuable information on their Internet sites.
CHAPTER 7
No Postage Necessary:
Paying Bills Online
You thought viewing accounts and transferring funds was a power What You’ll Learn
in This Chapter:
trip. Now, we’re going to take you into one of the most conve-
. Why paying bills
nient reasons to bank online: Paying your bills from anywhere, online is addic-
anytime, without a single stamp. As the Wells Fargo bank says tive.
about its bill payment system: “You’re in control. You tell us how . How the online
bill-paying
much to pay and when, we take care of the rest. It’s that easy.”
process works.
Internet banking has many advantages; when it comes to paying . Why you should
bills, the convenience is pleasantly addictive. You can pay most insist on a guar-
antee.
bills online—whether you owe your baby sitter, the butcher, or
the baker.
The person or company you owe doesn’t have to be electronically Fun Fact:
set up to take the payments. You could even tell your bank to send Jupiter
Communications, a
your mom a check once a month. Most banks will simply cut and New York-based
mail checks for you to the less-technically connected people you research company,
says Americans write
owe. The only bills you can’t pay online are the ones owed to tax- 68 billion checks
each year. Of those,
ing authorities and the courts. The reason for this restriction is
18 billion are
that these institutions usually need additional documentation from mailed. A few other
Jupiter statistics: 15
you along with what you are paying them. Some banks also won’t billion households
let you pay alimony or child support using online methods; they will pay bills online
in 2002, up from 3
don’t want to get involved in extra legal matters. million in 1999.
At first you might think that there would be a lot of forms to fill
out to get started with online bill payment, but that’s not the case.
When you are setting up your payee or biller list, the amount of
information you need to have is usually limited to simply the
right address and an account number, for a credit card or electric
bill, for example. The other great advantage is that you can set up
recurring payments. You plug in the information once, indicate
86 CHAPTER 7
Save on Stamps: how much and when you want bills paid, and the bank does the
Let’s say you’ve rest on schedule. You don’t have to dread setting aside a night for
tracked down a
free Internet bank-
bill paying each month!
ing service that Some banks allow you to schedule payments one month in
allows you unlim-
ited bill payments advance; others let you schedule them up to one year ahead of
each month. What time. If you plan to take a trip around the world but you need to
can you save if you
make sure that the bills are paid while you are away, this feature
pay 15 bills a
month online is especially handy. Wells Fargo (www.wellsfargo), for example,
instead of through will let you schedule payments for the full year in advance. If you
snail mail? If first-
class stamps are 33 are taking a much shorter trip, First Internet Bank (www.firstib)
cents, you’d save will let you set payments one month before the due date.
$4.95. Over a year,
you’d save $59.40. If bill paying is the main reason you want to bank on the Internet,
That’s not a lot of we advise that you pick an institution that offers this service for
money, but you
never know when
free. There are a wide range of fee schemes for this feature, but
the U.S. Postal the best sites offer free online bill payment with no limits on the
Service will raise its
number of bills you can pay.
rates. And that
would at least be The other factor you should consider when choosing a bank based
one or two coffees
on bill payment is how strong its guarantees are and whether a
these days.
So how does a
bank protects you from bounced, or NSF (for non-sufficient
bank make money funds) checks and the subsequent charges.
from this feature?
Well, some banks
do charge you and
Test Drive Some Bill Payment Systems
will limit you on There are many reasons to like and to dislike certain bank sites.
the number of bills
But if you have ever been bogged down at a site that takes a long
you pay each
month. When a time to load, you will welcome an opportunity to go to a page
bank places no lim- that has a quick response time at the click of your mouse. One
its on you and
offers the service
bank that we found to be fast was Ohio Savings Bank
for free, the bank (www.ohiosavings.com) based in Cleveland.
is hoping to attract
customers who Although Ohio Savings charges $2.95 a month for its bill pay-
will, ultimately, use ment feature, we liked the swiftness of the site enough to make it
other services that
our first example of how bill payment systems work.
will bring in addi-
tional fees.
NO POSTAGE NECESSARY: PAYING BILLS ONLINE 87
The first step to online bill payment is setting up a payee. Most Free For All:
banks have a list of companies and people with which it has part- If you are looking
for a bank with free
nered and that it can pay electronically (that is, the bank can do online bill payment
and no limits on the
an electronic transfer of funds, to the entities on its list). But you
bills you can pay
don’t need to know who’s on the list because, ultimately, you will each month,
Citibank
be able to pay almost anyone. After you complete the information (www.citibank.com)
about the person or company you want to pay, the bank site will might be the online
bank choice for you.
tell you whether that party is on its list of payees. If the person or But check out our
company is on the list, the bank will send the payment electroni- list later in this chap-
ter for a few price
cally. If it isn’t, the bank will simply cut a paper check and comparisons.
mail it.
This is the demo

at Ohio Savings.
As you can see,
you don’t have to
spend a lot of
time setting up
payments. At this
site (as with most
banks), you simply
need the name,
address, and
phone number of
the person or
company you
want to pay.
After you have set up a payee with the bank, you can decide to
pay your bills to that person or company manually (meaning that
you go to the bank’s site each month and initiate the payment), or
you can schedule the payments to go automatically.
88 CHAPTER 7
This is the system

Ohio Savings pro-
vides to set up
recurring bills.
You can schedule
payments weekly,
monthly, or up to
one year in
advance.
Suppose that you want to pay bills at Chase Manhattan Bank

.
Try It Yourself
(www.chasemanhattan.com). It’s pretty simple, just as it is at most
banks.
1. Log on to Chase Manhattan Bank at

www.chasemanhattan.com and click Payment. A bill payment
screen appears, giving you several options. Click one of the
options, depending on the task at hand: one time payment,
repeating payment, cancel payment, change payment, pay-
ment history, pending payments, add payee, edit payee,
delete payee, or review payee.
2. For this exercise, click Add Payee. At this point, you have a
little work ahead of you: You must note the name of the
payee, give the payee a short name (also called a nickname),
account number, address, and telephone. You also indicate
whether the payee is for personal or business purposes. Then
click the arrow at the end of this list.
3. Voila! You get a glimpse at the online file you’ve just created.
4. This payee is now ready for instant payments anytime in the

.
future. You’ll never have to fill out all that information again.
When Does the Money Leave Your Account?

The trickiest part of bill paying online is understanding when the
money is taken out of your account. There’s a big difference in
the approaches used by the real and virtual worlds. When you pay The Automated
Clearing House as
bills through the mail, you send a check to the person you owe Middleman in
and the money isn’t taken from your account until the check is Your Online
Transactions:
cashed or deposited. This isn’t the case in the cyberworld.
When you are
When you tell your bank that a bill is due on a certain date, the reading about your
bank’s bill payment
bank will calculate when it must initiate the transaction. Let’s say
feature, you will
that you owe your brother $10 on January 1. Ohio Savings will find that some
take the money out of your account four business days in advance banks indicate that
they transmit and
and begin the process of paying your bill. If the bank can make receive ACH funds.
the payment electronically, it will take the funds out of your What this refers to
is the handy work
account two days before the bill is due.
of the Automated
At most banks, if the payment is electronic, the transaction will Clearing House
network. ACH is a
take two days. But, with a lot of the banks that actually have to nationwide batch-
cut and mail checks, we found that they take the money out of oriented electronic
funds system that
your account anywhere from five to seven days before the bill is
provides for inter-
due. The date the money is taken from your account is called the bank clearing of
processing date. In reality, however, the money is taken out the electronic pay-
ments. The
night before the actual processing date. For example, First American Clearing
Internet Bank of Indiana takes the funds out at 9 p.m. Eastern House Association,
the Federal
Time one night before the processing date. This is an important
Reserve, the
detail to know because you can make changes, stop, or alter the Electronic
payment up until then. Payments Network,
and Visa act as ACH
Although paying bills online is an easy process, it still means that operators or cen-
you have to have money in your account. Each bank will handle tral clearing facili-
ties through which
situations involving non-sufficient funds differently. If you have financial institu-
established a recurring payment but don’t have enough funds in tions transmit or
receive ACH
the account one time, some banks will just not pay the bill—and
entries.
not even notify you. That’s why it’s smart to check whether your Basically, the ACH
recurring bills are being paid by going to the bank site and click- system is the mid-
dle guy when
ing the list of paid bills. In this same circumstance, other banks
banks transmit
will pay the bills and charge you for non-sufficient funds. That funds to one
service could cost you up to $25 per transaction at some banks. another.
First Internet Bank of Indiana has a good system in place. If you

have an overdraft account, the bank will simply pull the money
90 CHAPTER 7
Ask for Overdraft from there. If you don’t have overdraft protection in place, the
Protection:
bank will not process the payment, nor will it charge you for non-
Not everyone has
overdraft protection. sufficient funds. However, First Internet Bank of Indiana will
You have to request
place a message on your Current Payments screen, indicating that
it when you sign up
for a checking your payment failed because of non-sufficient funds. As is true
account. If you have
a tendency to have
with most banks, if the payment fails the first time because you
more outgoing didn’t have enough money in your account, the bank will not try
funds than incoming
in your account to pay the bill again, and you must manually initiate the payment.
every once in a
while, this is a good
As we’ve been repeating, all institutions don’t treat cases of non-
feature to request. sufficient funds in the same way. It pays to investigate the policies
an online bank has regarding this situation. Netbank, for example,
says that it can charge you overdraft penalties for not having
enough money in your account to pay a designated bill. Further,
the bank warns that you could incur a $25 fee from them and
another fee from your payee.
Check Out Your Bank’s Bill Payment Summaries

After you have set up your payee list and any recurring bill pay-
ments, what other functions can you perform when paying bills
online? You can view your account transactions to see whether
your bills have been paid on time. You can view the list of
upcoming recurring payments you have scheduled. You can make
simple changes to your payee list or even cancel future payments.
There’s a lot of power you can harness with an online bank’s bill
payment system.
At Citibank, one of our favorite features of its bill payment sys-
tem is the ability of customers to see total payments made to cer-
tain payees. This feature can help you get a good assessment of
how much you paid your credit card in one year or how much
went to paying off your student loan. Being able to summarize
your payments to any single entity can come in handy if you are
having a dispute about how much you’ve paid someone. Without
going to the bank or calling anyone for help, you can pull this
report together on your own.
The personal financial management software products Quicken
and Microsoft Money also enable users to track payments to cer-
tain parties or by category of payment. Online banking providers
have taken a similar approach in providing such power-searching
capabilities. These features put more of your financial manage-
ment into your own hands. In days gone by, to identify a series of
payments to one person or company, you would have had to sit
down with a teller and pore over ledger books. Now you can
point and click online or in a personal money management soft-
ware package.
This demo page

at Citibank shows
how much you’ve
paid a company in
the current year
and in the past
year. This page
provides you with
a complete history
of your relation-
ship with this
payee.
Citibank, which offers its online service and bill payment feature
free of charge, has a system that is simple to navigate and offers
several easy to read, helpful screens.
92 CHAPTER 7
This helpful
Citibank page
shows the cus-
tomer his or her
future payments
pretty clearly. If
there is a problem
and he or she
want to stop or
change a pay-
ment, he or she
simply click the
payee’s name.
So he or she
clicked one of the
payees and got
this easy-to-read
screen. This page
allows the cus-
tomer to make
quick edits to the
payment—stop a
future payment or
change the
amount.
What if the Online Payment System Fails?

We’ve described a pretty rosy scenario when it comes to bill pay-
ments online. But what if there’s a glitch in the system? What if a
payment doesn’t get to your biller or payee on time? Who is to
blame?
The Killer App: Bill Presentment

In this chapter, we’re giving you the ins and outs of online bill payment,
but there’s another feature under development that’s about to take cen-
ter stage. It’s something called bill presentment. This is when companies
send you bills electronically instead of through the mail. The financial
services world and merchants are trying to figure out the best way to
make this happen on a widespread basis.
This service is currently available at a few non-banks online, but as we
went to press, there were still many kinks to work out.
One non-bank offering this service is the MoneyCentral offered by
MSN.com. MoneyCentral offers a limited service: you will receive bills
from only a few select merchants participating in this feature with MSN.
The day we logged in, there were only 32 e-billers listed. For example,
Con Edison of New York was one of them. That won’t do you much
good to you if you live in Louisiana.
Here are just a few of the questions being asked about this system:
Should the bills be sent to you through your bank? Should merchants
send bills to you through your Internet service provider? Should the mer-
chant just send bills directly to you?
Banks, of course, want the bills sent to you through them. If merchants
bill you through the banks, this will further ensure that you will use that
bank’s online bill payment service. That’s why some bankers and finan-
cial service providers believe that bill presentment is the killer applica-
tion. If they get this feature on their systems, it will practically ensure
that you will use them, and not a non-bank competitor, for bill present-
ment and bill payment.
Look for the Guarantees

If you want to know what happens if a payment isn’t made and it
wasn’t your fault, you need to check out each bank’s guarantee.
These policies are customarily listed behind a Terms and
Conditions button.
We reviewed several guarantees and found that the best sites have
established aggressive strategies to set the record straight for you
if the bank failed for some reason to make a payment. Problems
do occur sometimes—whether there is a system breakdown at
your bank or with your bank’s third-party processor. Remember
that you may do business with a certain bank, but your financial
institution has likely outsourced this function to another company.
94 CHAPTER 7
Online Resources & Communications, one of these third-party

providers based in McLean, Virginia, has challenged the entire
industry to maintain “airtight consumer bill pay guarantees.”
What does this mean? The company will pay unlimited late pay-
ment fees and penalties if the biller does not receive properly
scheduled bill payments on time. With an Online Resources sys-
tem, the customer also is protected from paying non-sufficient
fund penalties. With this system, the consumer is notified about
the problem and given a chance to deposit funds so that the pay-
ment can be made.
Many of the guarantees are similar, but it’s best to always read
your bank’s terms and conditions. Most banks won’t come to
your aid if your account does not contain sufficient funds, if the
processing center is not working and you’ve been notified of that
fact, if the payee mishandles the payment, or if you made mis-
takes when naming the payee or listing its address.
We liked CompuBank’s terms stating that it “guarantees that any
errors made by its vendors or staff in regard to bill payment will
be rectified. CompuBank (www.compubank.com) further guaran-
tees to pay any late fees associated with payments that arrive
late.”
Hibernia Bank (www.hibernia.com), based in New Orleans, also
has a few reassuring words: “Hibernia will reimburse you (up to
$50) for any late fee or penalty you incur and work with you and
the payee to resolve any issues associated with a delayed pay-
ment.”
Shop ‘Til You Find the Right Price

If bill paying is the main reason you want to bank online, it’s smart to
shop around for an institution that offers this service for free. There are
a few banks out there that offer free bill payment, but most have some
complicated charging schemes.
Here is a look at how much it costs to pay bills online. We’ve gotten
prices from some giant, regional, and small banks, as well as a few
Internet-only institutions to help you determine what’s right for you. All
these fees are subject to change.
Flagstar Bank (www.flagstar.com), based in Bloomfield, Michigan, pro-
vides online banking with bill payment free of charge for the first six
months. After that period, online banking is $4.95 without bill payment;
with unlimited bill payment, the banking service is $8.95 a month.
Citibank (www.citibank.com) has made it simple: Online banking is free
of charge and so is unlimited bill payment.
Wells Fargo (www.wellsfargo.com) offers bill payment for free if you
keep a combined monthly balance of $5,000 in your personal checking
and savings accounts. If you don’t maintain that balance, the bill pay-
ment service is $5 each month.
Washington Mutual Savings (www.washingtonmutual.com), based in
Seattle, Washington, has no basic charge for banking online but does
charge $5 for unlimited bill payment each month.
First Tennessee Bank (www.ftb.com), based in Memphis, charges a $10
setup fee for most customers (except for students and “priority choices”
account holders), no monthly fee for online access without bill payment,
but $5.95 with this service. For the first two months, you can get bill
payment for free.
Ohio Savings Banks (www.ohiosavings.com), based in Cleveland, charges
$2.95 a month for unlimited bill payment.
Wingspan Bank (www.wingspan.com), an Internet-only bank, offers free
unlimited bill payment to its customers who have a combination of
checking accounts, certificates of deposit, installment loans, credit cards,
and investment services. For other customers, the fee for bill payment is
$4.95 each month for the first 10 transactions. After that, each payment
is 25 cents.
CompuBank (www.compubank.com) another Internet-only bank, offers
free unlimited monthly payments.

Not all banks offer the same bill payment features. Check out the
demos offered on the bank sites to see what systems you like best.
If you pay a lot of bills each month, it’s a good idea to shop
around for banks that offer the service for free. They are out
there—keep searching.
Read your bank’s “terms and conditions” statement. There you
can get the details about what the bank will guarantee if their sys-
tem breaks down and your biller doesn’t get your money on time.
CHAPTER 8
Beyond the Basics: Cool
Add-On Products and
Services
Banks are offering a lot more today than they were just one or What You’ll Learn
in This Chapter:
two years ago. That’s the beauty of online banking: You can per-
. All about online
form the traditional functions, such as depositing money and loans and credit
transferring funds, but you can also buy other financial prod- cards.
ucts—including insurance and securities—from the comfort of . How banks get
into the invest-
your home, 24/7. Investment firms are entering into the banking ing and insur-
business, and banks are entering into the investment world. The ance businesses.
lines between all these different types of financial institutions . How you can
involve the fed-
have been blurred.
eral government
Banks are also offering their loan products, services, and credit in your banking
investments
cards online. After you’ve tried these functions over the Internet, (hint: buy a U.S.
you might not want to ever fill out an application with pen and Savings bond
paper again. online).
One word of caution: Americans have traditionally thought of the

money we’ve deposited in banks as safe and secure. But if you
opt to make an uninsured investment in a product such as a
mutual fund from your banking institution, you need to know that
such a securities investment is not insured by the Federal Deposit
Insurance Corporation. We’re reminding you of this harsh reality;
when you enter into one of these circumstances with a bank, the
bank will also remind you.
In this chapter, we will provide you with an overview of a few
financial products being offered by banks online. In Chapter 9,
“Shortcuts to the Best Deals,” we’ll give you several tips on how
to get the best deals on these products and services.
98 CHAPTER 8
A Loan in a Matter of Minutes

Banks aren’t anxious to give away their money, but they are using
computer programs that allow them to determine your credit risks
and to issue you a loan in a matter of minutes over the Internet.
Banks operating on the Internet are buying software systems that
enable them to offer loans to people who have never set foot
inside their doors. For example, one company, The Forms Group,
is marketing to community banks a basic Web online banking
solution with a function called ZipDecision. With this add-on,
banks offer their customers real-time decision-making on loan
applications. The process takes into account a customer’s credit
history, or credit score, and the institution’s lending policies.
The Forms Group’s ZipDecision product provides a means for
financial institutions to offer online loan applications with deci-
sion-making capabilities on their Web sites. For example, a cus-
tomer would enter information on a secure credit application and
submit it electronically to the bank. The ZipDecision software
applies the bank’s credit criteria to render a decision on the loan.
Credit Scores
What’s credit scoring? Credit scoring is a system used by banks and oth-
ers to determine if you are a good loan risk. The process takes into
account your credit experiences, your bill paying history, the number and
types of your accounts, collection actions, late payment history, and out-
standing debt. This information is processed into a computer program
that compares your credit performance with that of consumers with sim-
ilar profiles. The result of this comparison is a total number of points—
your credit score—that helps banks predict your credit worthiness.
Loans from Online Credit Unions

Let’s look at one institution: a credit union that offers a quick
loan approval service. Most of the sites we discuss in this book
are banks, but we wanted to highlight the services of at least one
credit union. Although credit unions offer competitive rates and
fees, they also are off limits to many of us. Credit unions limit
their customer base to the members of its organization. Legally,
they are supposed to serve only those members. But if you can
join a credit union (through the company where you or your
BEYOND THE BASICS: COOL ADD-ON PRODUCTS AND SERVICES 99
spouse may work), you should check out what it has to offer. Banks and Thrifts:
Credit unions are offering online services, just as banks and The term thrift typi-
cally has described a
thrifts are doing. savings institution,
but there really is no
With that said, let’s look at the loan service of Security One practical difference
Federal Credit Union (www.sofcu.org). This institution is open to between a thrift and
a bank.
“anyone who lives, works, worships, or goes to school in
Arlington, Texas.” It’s likely that your financial service provider
will offer loan services similar to those from Security One.
This screen shows

all the types of
loans that
Security One
Federal Credit
Union offers to its
customers. The
drawback to a
credit union is
that you have to
be a member of a
specific group
before you can
qualify for any of
its services.
After you submit your information, it could take as little as two Fun Fact:
minutes to learn if your loan has been approved. If the loan isn’t Americans will
obtain 8.9 million
approved online, you are encouraged to contact a loan officer loans and credit
using the old-fashioned method of the telephone or an in-person cards over the
Internet by 2003,
visit. As is true for all credit unions, you must provide some proof according to
Forrester, an online
of membership in the credit union before you can be approved for
research and con-
an online loan. sulting firm.
Additionally,
Forrester estimated
Loans from Online Banks that in 1999, eight
percent of online
Let’s look at another institution’s online lending service. Rocky
consumers turned to
Mountain Bank (www.rmbank.com), based in Billings, Montana, the Internet for
mortgage informa-
allows you to apply over the Internet for several consumer and tion.
residential loans. The Rocky Mountain system isn’t instant. After
you fill out the application, you have to print it out and mail or
fax it to the bank.
100 CHAPTER 8
The latter point is important. If time is important to you, you’ll

want to investigate how long it will take for your “online” loan
application to be processed. In some cases, it can occur in real-
time (minutes or less). More complex loans, such as home mort-
gages, will likely take at least 24 hours or more.
Rocky Mountain
Bank’s system is
pretty easy to
navigate. Here is
its special mort-
gage center,
where you can
apply for a loan
or get a pre-
qualification.
Rocky Mountain
Bank also makes
interest rate com-
parison easy for
its customers by
including this rate
chart on the first
page of its mort-
gage center.
Telebank (www.telebank.com), based in Arlington, Virginia, was

one of the more user-friendly sites we found for getting loans.
This bank makes it easy to apply online for an auto loan or mort-
gage. It has partnered with E-Loan (a mortgage loan portal) to
provide home loans and with People First Finance (a consumer
loan portal) for its auto loans.
What did we like in Telebank’s mortgage center? It provides a
payment calculator so that you can figure your payment for dif-
ferent loan amounts, interest rates, and amortization terms. It pro-
vides an amortization calculator so that you can determine the
breakdown between your principal and interest payments. It

allows you to get pre-qualified, and it will recommend the best
loan in your area based on your situation. The E-Loan database
contains more than 50,000 mortgage loans from 70 lenders. In a
matter of seconds, the site will show you the best available loan
rates that day.
Unlike most online financial institutions, Telebank’s mortgage
center is a portal to multiple mortgage loan providers. Most insti-
tutions taking online loan applications will subsequently fund
those loans.
You can apply online for loans at the Telebank center. The com-
pany estimates that it takes about 20 minutes for you to fill out
the loan application. You don’t get instant approval, but a loan
consultant is supposed to call you within 24 hours. That same
loan consultant will work with you until the closing.
The biggest selling point for going to Telebank to get a mortgage
loan through E-Loan may be that you might be able to save some
money. E-Loan estimates that its loan process is $1,500 less
expensive than using an offline loan agent. One caveat: A low
interest rate on a mortgage loan does not always mean the best
service. It pays to shop around and to talk to others when consid-
ering a mortgage loan. Another caveat: Pay attention to the rate-
locking features of any mortgage loan. An advertised low rate
today may be higher tomorrow.
We especially
liked the Home
Finance 101 site
provided by
Telebank and E-
Loan. Here you
can read the
questions of other
customers, see the
answers, and
learn about sev-
eral mortgage
terms such as
“good faith esti-
mate.”
102 CHAPTER 8
When we linked to E-Loan from the Telebank site (E-Loan’s

direct Web address is www.eloan.com), we found a glossary of
mortgage terms that proved tremendously helpful. We learned all
about amortization. They defined two terms in the following
manner:
amortization—The repayment of a mortgage loan by install-
ments with regular payments to cover the principal and interest.
amortization term—The amount of time required to amortize
the mortgage loan. The amortization term is expressed as a
number of months. For example, for a 30-year fixed-rate mort-
gage, the amortization term is 360 months.
Review Your Credit Report

You also can order copies of your credit reports off the E-Loan
home page. Three companies, Experian, Trans-Union, and
Equifax keep records of our credit histories. Banks use these
reports to determine whether we are safe risks for loans. It’s a
good policy to review your own credit report now and then, espe-
cially when you are about to apply for an important loan. E-Loan
allows you to request a report online from Experian—and receive
that report within 30 seconds —for $8. It will mail you reports
from all three of the companies for $29.95.
What Are Credit Reporting Agencies, Anyway?

We don’t like to think that anyone is keeping track of our personal lives,
but it’s true that certain aspects of your life are being monitored. For
example, three credit reporting companies are tracking your financial
histories. And they aren’t just tracking you, they are giving that informa-
tion to your bank.
The following are the three major credit bureaus and their contact infor-
mation:
• Equifax—P.O. Box 740241, Atlanta, Georgia., 30374-0241, (800) 997-
2493
• Experian—P.O. Box 949, Allen, Texas, 75013, (888) 397-3742
• Trans-Union—760 West Sproul Road, P.O. Box 390, Springfield,
Pennsylvania, 19064-0390, (800) 916-8800
When you contact one of these agencies, they must give you all the
information they have on you, and they must tell you who has
requested your report within the past year (two years for employment-
related requests).
These agencies must provide free reports to you if you are unemployed
and plan to look for a job within 60 days if you are on welfare or if your
report is inaccurate because of fraud. Also, if a company took adverse
action against you because of a report, you are entitled to one free copy
within 60 days of receiving the disappointing notice. If none of these
scenarios work for you, by law, the agencies can charge up to $8 a copy
when you request your report.
If you get a report and spot information that isn’t accurate, the agency
has a responsibility to make proper corrections. If you want more infor-
mation about credit reports, the consumer division of the Federal Trade
Commission (the government’s best kept secret) has several articles that
can help you. To learn more, go to www.ftc.gov and click the consumer
protection section.
This is a sample
page from a
demonstration
credit report on E-
Loan’s Web site at
www.eloan.com.
This is just one
page of informa-
tion; credit
reports can con-
tain many pages
and be pretty
comprehensive. If
you never have
checked on your
reports, do so
soon.
Applying for Credit Cards
Credit card deals are abundant in the online world. Shop for Your
Advertisements for low-interests credit cards are splashed across Banking Service:
If there is one point
many of the bank sites and on search engines and Web hubs. we want to empha-
Although you are probably bombarded with credit card applica- size, it’s this: Shop
around for your
tions in your offline mail boxes, the Internet allows you to shop banking services.
around for good deals on your own. Because the competition is According to the
Credit Union
hot for your business, watch out for the low teaser rates (the National
Association,
attractive interest rates offered to you for an introductory period
Americans spend
before much higher rates apply). more than $25 bil-
lion a year on fees
Applying for credit cards is made easy at many sites, but the fea- for checking and
bank cards—about
ture that will bring even more convenience into your busy life is
$250 for each
the ability to view your account balance and other information household.
104 CHAPTER 8
online. Citibank (www.citibank.com) allows its basic banking cus-

tomers, as well as non-customers, the opportunity to view and pay
their credit card accounts online. With this service, you can check
account activity, your credit limit, and when your next payment is
due. If you are a Citibank customer, you simply use the bank
site’s Direct Access online service. If you aren’t a customer, you
use the site’s Account Online feature.
Citibank offers
several different
credit cards and
makes it easy for
you to apply on
the Internet for
any one of them,
whether you have
an account at the
bank or not.
1. To apply for a credit card from Citibank, go to the institu-

.
Try It Yourself
tion’s home page at www.citibank.com.
2. Under the Personal Financial Services heading, click Credit

Cards. Then, at the bottom of the subsequent page, select the
United States as your country and click Go.
3. At the top right of the new page, under Apply for a Card,
click Go.
4. Click any of the card products presented to learn more about

their features.
5. From any of the specific card product pages, click Apply

Now, which appears on the left side of every page.
6. Fill out the application and wait for your new card to arrive
.
in the mail!
Investing and Buying Insurance Online

Along with account products (such as checking and savings
accounts) and loan products, online financial institutions are
branching out to offer customers additional products and services.
These new products include investments and insurance.
Investing in Stocks and Bonds Online

At many of the online bank sites, you can click your way into a
financial service center (think of it as a virtual bank lobby that
can lead you to all manner of financial services products).
Net.Bank (www.netbank.com), for example, has partnered with
the discount brokerage, UVEST Investment Services. You can buy
stocks online and have your trading fees deducted from your
checking or money market accounts.
WingSpan Bank (www.wingspanbank.com) has an extensive
investment service (click Brokerage at the top of WingSpan’s
home page). WingSpan Investment Services offers many prod-
ucts, including an extensive line of securities. There’s no charge
for accessing this service, but when we went to press, a trade was
$19.95.
This is the first

page of
WingSpan
Investment
Services, a sub-
sidiary of
WingSpan Bank.
This page gives
you quick access
to quotes and
market news.
Fun Fact:
Forrester reported
that of the 28.6 mil-
lion online house-
holds in the United
States, 1.4 million
were trading over
the Internet.
106 CHAPTER 8
Bank of America (www.bankofamerica.com) offers an investment

service that we found easy to navigate. Products offered include
mutual funds, stocks, and options offered through Banc of
America Investment Services, Inc., brokerage account informa-
tion, company research, market data and news, and real-time
quotes.
As an aside, note that in the name Bank of America, the word
bank is spelled with a k. In the name Banc of America Investment
Services (which provides investment products), the word banc is
spelled with a c. Welcome to the wild, weird world of bank and
banc holding company nomenclature.
If you are a novice to the world of trading stocks, you may be
under the impression that the average Joe or Jane can’t trade
stocks unless he or she has a broker. The truth is that you can buy
stock from anyone; a stock broker just connects buyers and sellers
of shares of publicly traded companies. The online investment
services act as that go between for you and the stock market.
If you want to learn how to trade online, Bank of America has a
good demo that you can use to test your skills.
1. Go to Bank of America’s home page at

.
Try It Yourself
www.bankofamerica.com. In the upper-right corner of the
screen, click the Learn More button under Online Investing.
2. Scroll down the page and click the Demo of Discount

Brokerage Services Online Trading Capabilities hot link.
3. Use the demo to research a particular company’s stock. How

about Microsoft, Incorporated (which has the NASDAQ
ticker symbol MSFT)?
.
4. Begin takeover of Microsoft (we’re just kidding).

Banc of America’s
investment service
page is where you
go to buy or sell
stocks. Notice the
customer service
number in the
upper-right corner
you can use if you
are having prob-
lems or have a
few investing
questions.
Buying Insurance Online

The next non-bank product we want to discuss is insurance. In
using the word insurance, we’re referring to the gamut of insur-
ance products, including auto, life, home, health, and business, as
well as insurance products that are also investments, such as
annuities.
The Telebank site (www.telebank.com), mentioned earlier in this
chapter, makes the process of shopping for insurance online sim-
ple. Telebank’s insurance center is affiliated with The Insurance
Answer Center. Although you can’t actually buy insurance online,
you can learn about rates and then make a call to a service repre-
sentative, 24 hours a day, to make the purchase.
Some of the best features of The Insurance Answer Center
include free quotes, a dictionary of terms, and an online storage
vault where you can keep your policies and copies of your insur-
ance applications. You can obtain a myriad of policies from this
site and its representatives, including auto, home, life, and
annuities.
108 CHAPTER 8
This is what your

My File page
might look like at
The Insurance
Answer Center. It’s
an excellent way
of keeping track
of some of your
insurance paper-
work.
PNC Bank (www.pncbank.com), based in Pittsburgh,

Pennsylvania, offers an insurance service that works in coopera-
tion with Ins Web Corporation. With Ins Web Corporation, as
with many online insurance centers, you can fill out one form and
receive multiple quotes. This site also offers a learning center,
called “Financial Peace of Mind,” that could come in handy if
you need to know more about insurance products.
Insurance shopping has never been this easy. Your options are
available 24/7, and these sites help you shop around for the best
rates.
Keep in mind that it’s not just banks marketing insurance online
these days. Insurance agencies and insurance companies are pro-
viding online insurance quotes. To see what’s out there, type
online insurance in any Internet search engine’s search box.
Buying Savings Bonds Online

Everyone is getting in on the act of e-banking and e-investing.
The U.S. government is no exception. By logging on to the U.S.
Department of Treasury’s Web page, you can purchase savings
bonds over the Internet.
As investing tools, savings bonds have always been a safe bet;
now they are a 24-hour service. You no longer have to go to a
bank or credit union to buy the bonds. Go to the Department of
Treasury’s Web site at www.treas.gov, click Sales and Auctions,
and you are moments away from investing in U.S. savings bonds.
Loaning money to the government has never been so easy.
In addition, the interest rates on savings bond are competitive

with other bond investments, with the added security of the back-
ing of the full faith and credit of the U.S. government.
The process of buying the bonds is simple and quick. The govern-
ment site presents several pages that explain all the different
bonds. Then you simply buy what you want using your Visa or
MasterCard. You can buy up to $500 in bonds during each online
transaction.
This is one of the

Web pages the
government uses
to explain how
much Series EE
bonds will
cost you.
When you arrange to buy bonds online, the paperwork (that is,
the amount of computer input you have to do) is limited. You fill
in your name, address, Social Security number, and a beneficiary
(if you choose to include one). After you input your information,
the site shows you what the actual bond will look like with your
name printed on it. You can have the bond sent directly to you or
to a friend or relative, if you are giving it as a gift.
Buy Bonds to Bail Out the Government

Most of us buy bonds because we know they are safe investments and
offer good tax breaks. But the bottom line on U.S. savings bonds is that
they help the government deal with its debt. In that spirit, after you buy
a bond, you can click the Bureau of Public Debt Web page and check to
the penny how much the government owes on any given day. When we
checked on the figure in the fall of 1999, it was a whopping
$5,696,176,434,485.80. To review our nation’s debt today, go to
http://www.publicdebt.treas.gov/opd/opd.htm.
110 CHAPTER 8

Getting a loan doesn’t have to take days or weeks. At some online
sites, it takes only minutes. The Internet also makes it simple to
apply for credit cards and to keep track of your purchases from
your own computer.
Banks aren’t what they used to be. They are offering a variety of
products, including insurance policies and securities.
Even the U.S. government is in on the online financial services
game. It allows you to buy U.S. Savings bonds at the U.S.
Department of Treasury Web page.
CHAPTER 9
Shortcuts to the Best
Deals
It seems like cruel and unusual punishment that we didn’t start What You’ll Learn
in This Chapter:
with this chapter, but we wanted to explain some of the basics
. You can surf for
before you got here. The better informed you are about Internet hours, or you
banking, the better consumer you will be, with or without cheat can just go to
sheets from a few online-savvy advisors. the online con-
sumer help sites.
There are companies who want to help you out with your search . Where to find
for online banking products, and they offer this service free of the best deals in
online banks.
charge. We can’t list them all, but in our search, those we found
. What’s an online
to be most helpful were Gomez Advisors, which rates and com- calculator?
pares online bank sites; Bankrate.com, which offers you a mon- . Some banks are
ster amount of information on the best deals going on credit hot-linked to
your favorite
cards, home loans, certificates of deposits, and a long list of other stores.
products; and Financenter.com, which also includes information
about the best financial services deals on the Internet.
In this chapter, we will also explain how an online calculator can
help you make up your mind about several financial questions
that might be haunting you, and show you how you can save
some dough by shopping online through your bank’s home page.
Gomez Advisors: A Powerhouse of Advice

Gomez Advisors (www.gomez.com) works both sides of the fence.
It advises companies on how to better get your business while
you shop or bank online, and it provides consumers with rankings
of a host of merchants in the e-commerce world. It will also link
you to a few good deals each day and provide you with some
basic consumer information
112 CHAPTER 9
You Can Stay on Top of the Trends

Gomez, which calls itself “The eCommerce Authority,” has a lot of good
statistics and basic information to share with you to make you a smarter
online bank customer and shopper.
From the Internet Banking Division’s Web site, we learned that “by an
82 percent to 56 percent margin, Internet-only banks were more likely
than branch banks to respond promptly and accurately to phone and
email customer service inquiries about banking and about Web offer-
ings…. Internet-only banks are also much more likely to help customers
apply for new products with Web-enabled applications and tend to be
more adept at coordinating their Internet offerings with ATM networks
in real-time.”
Gomez advises consumers on several topics. It will tell you about

the best sites selling automobiles, and it will enlighten you about
online auctions. We, of course, are interested in how Gomez can
help you pick an online bank.
1. Open Gomez’s first page on banking at

.
Try It Yourself
http://www.gomez.com/channels/index.cfm?topcat_id=1.
There’s a lot to choose from. We found the Overall Score link
at the top of the page and the Compare Online Banks section
at the bottom of the page to be the most helpful tools.
There’s a lot of
information on
Gomez’s first page
about banking.
Explore the links
or click directly on
the Overall Score
link.
2. Click the Overall Score link at the top of the page. The
Internet Banker Scorecard page opens. Here you can see how
Gomez ranks a raft of online banks. Click Bank Scorecard
Methodology at the bottom of the page if you want to see the
criteria by which the banks were judged.
SHORTCUTS TO THE BEST DEALS 113
Gomez’s Internet
Banker Scorecard
is a great place to
go if you are
starting from
scratch in your
search for an
online bank.
3. Click the name of a bank in which you are interested to see a

description of the services and then link directly with the
bank.
4. Back on Gomez’s first page on banking, you can scroll down

to access the Compare Online Banks area. Select two banks
from the drop-down list boxes provided and click Compare to
see a page that compares these two banks. This tool is a
handy way to conduct a side-by-side comparison of two .
banks that you may be considering.
Gomez’s Compare
Online Banks fea-
ture lets you
choose two banks
you want to com-
pare; it then
shows you a page
like this one to
help you with
your choice.
If you are always in a rush and speed is important to you, Gomez

can show you how fast a bank’s pages will download onto your
114 CHAPTER 9
screen. From the Internet Banker Scorecard page, select the bank
you’re interested in and then click the Bank Performance Monitor
link to see how your bank ranks in this area.
Although Gomez doesn’t rank all the banks in the country, it does
include in its survey all Internet bank sites with more than $2 bil-
lion in deposits. It uses more than 100 criteria to rate the sites,
including whether the bank guarantees on-time bill payment and
whether the bank allows customers to submit loan applications
over the Internet.
We don’t think you should use Gomez exclusively as you pick
your bank, but you can see that the features this company offers
certainly will be a big help to you. Two additional sites that can
help you sort through the hundreds of online bank options avail-
able are described in the following section.
Find Your Best Rates

As you’ve seen, Gomez Advisors can list a few good deals in the
banking world each day. However, other sites also specialize in
helping you shop around for all sorts of banking products. We
found two that were easy to use: Bankrate.com and
Financenter.com.
Bankrate.com
Bankrate.com (www.bankrate.com) has been online since 1995.
It’s produced by the same company that publishes the Bank Rate
Monitor, a newsletter for banks and consumers. At first, the site is
overwhelming because of the amount of information it presents,
but if you have the time to spend with it, you are sure to learn
about a few good deals. Overall, Bankrate.com gives you rate
information on 51 products, including mortgages, certificates of
deposits, and money market accounts from about 4,000 financial
institutions around the country. The following three figures show
some of the many informational screens available at
www.bankrate.com.
These are the top

five deals on one-
year certificates of
deposits on the
day we checked
the Bankrate.com
site. The data is
updated every
weekday night.
This is what we
learned about
credit card rates
at Bankrate.com.
The page includes
a lot of good
details that can
help you make a
decision about
where to apply
for your next
piece of plastic.
Bankrate.com’s
Internet Banking
Deals page gives
you another way
to compare
online bank sites
and what they
offer by compar-
ing rates on a
few of their
products.
116 CHAPTER 9
The site also includes several helpful articles to keep you

informed about trends in banking. While we were there, we
learned the following interesting bits of information:
• 64 percent of the banks online offer an online banking ser-

vice for free.
• The average cost for online banking is $5.44 a month.
• 25 percent of the banks online don’t charge for their elec-

tronic bill payment service.
• It costs a consumer about $94 a year if he or she has a check-

ing account and does not maintain a balance that would make
the online banking service free.
One of our favorite features of this site was the Get Rates pull-
down option. This function allows you to compare rates on a vari-
ety of products offered by banks in the city of your choice. In
addition, the Internet Banking Deals link provides another source
you can use to compare what’s out there, and the High Five link
leads to a page that lists the top five deals on any given day on a
variety of products.
Bankrate.com claims it uses journalistic standards as it collects its
data and makes its suggestions. We definitely got the feeling that
the site was fair and reliable. It also has a strong pro-consumer
tone.
Financenter.com
Financenter.com sprang from a company that originally marketed
home equity loans on the Internet. Today, it partners with busi-
nesses to promote their products in exchange for compensation.
Some of the deals are worth checking out. In addition, the site
provides basic information about finances.
Although you can use the Financenter.com site to shop for good
deals in credit cards, savings accounts, and so on, our primary
interest in this site is the 110 calculators the company makes
available through its ClickCalcs link. The company also places
these calculators on other sites. Banks can buy software from the
company to place these calculators on their sites. When you, the
consumer, use these calculators at a bank site, it’s a seamless

function. You aren’t even aware that Financenter.com is involved.
When we went to press, Financenter.com had its calculators on
about 150 sites on the Web. Don’t know anything about online
financial calculators? The next section helps you out.
Although
Financenter.com
has a friendly site,
the best part of
the site is
ClickCalcs, a link
to 110 calculators
offered by the
company.
The Calculator Is Your Crystal Ball

The online calculator is one of the best added values a bank can
put on its site. It’s a tool you can use to help make decisions
based on your own personal information. Banks hope these tools
motivate you to open a savings account, invest in a certificate of
deposit, or buy any one of their services. There are calculators
that can tell you which Roth IRA is best for you, how much life
insurance you might need, the impact of different interest rates on
credit cards, whether a new or used car is better for you, whether
you are better off retiring, and what it will take for you to become
a millionaire. Let’s take a tour with a calculator provided by
Financenter.com.
1. Open the Financenter.com home page at

.
Try It Yourself
www.financenter.com. Click the ClickCalcs link at the bottom
of the page to open a new page that has a list of all the types
of calculators the company offers.
2. Click the Millionaire link to open a form page. This page is

actually the calculator; you answer the questions by filling in
the blanks. As you can guess, changing the values you enter
in these blanks affects the outcome.
118 CHAPTER 9
With this calcula-

tor, you can find
out what it will
take to become a
millionaire (in our
case, about a mil-
lion dollars). Type
in the numbers
based on your life
and click for the
answer.
3. Click the Results button to view the calculated results for the
values you entered. Click the Inputs tab at the top of the page
if you want to change any of the values you entered origi-
nally. Click the Graphs button if you want to see graphics
depicting the likelihood of your becoming a millionaire any
time soon.
The news
returned by the
online calculator
isn’t always the
best, but at least
you know now.
We’d better save
a little more if we
want to become
millionaires
before age 96.
.
Shop Till You Drop

Banks are always looking for gimmicks (such as the calculator)
to get you to return to their sites. One of the growing new ser-
vices is the virtual mall. Smaller banks are posting hot links to
the merchants in their own towns, further establishing themselves
as a connection to the local community. In essence, these online
banking sites are bringing the traditional town square to the

cyberworld.
Other banks are partnering with nationwide merchants to bring a
large variety of items and services together in one shopping area.
They are also offering discounts and guarantees. Chase
Manhattan, which has a very user-friendly site in many regards,
has a pretty extensive marketplace.
The Chase Manhattan site at www.chasemanhattan.com offers a
large virtual shopping mall. On top of that, the company will give
you discounts if you buy items from selected merchants and use
your Chase credit or debit card. Why go straight to the merchant’s
shop when you can go to your bank first and save a little money?
You can go straight to Chase’s online mall by clicking
www.chaseshop.com. Here, the bank offers you discounts and
customer service to help you shop without hassles. We also liked
the free ground shipping offered on the night we went to the site.
In all of our surfing, we found that Chase had the most extensive
and helpful cybermall.
The Community Bank Connection

Community banks are known for offering a few good deals. But many of
them are too small to appear in the lists at the sites that rank online
banks, and they have too few dollars to market themselves to you.
When we went to press, we were awaiting the launch of Bankzip.com.
This site is a one-stop shop for customers looking to bank online with a
community bank in their area. Bankzip.com is also supposed to offer a
nationwide network of surcharge-free ATMs.
Pennsylvania-based Patriot Bank Corporation developed Bankzip.com,
an Internet banking network. Consumers type in their zip codes when
they arrive at the site; the site then transfers the customer to a bank in
the network that has laid claim to that area. Banks will be charged a
$25,000 admission fee to be included in the site’s list of resources.
Bankzip.com won’t guarantee that you are getting the best deal, but it
will be another source to use as you look for an online bank.
Community banks that decide to join this service will have the benefit of
a national marketing campaign and back-office support, including loan
origination and servicing and a call center that enables Web customers
to call for assistance.
Why might a local community bank be a good bet for you as you pick an
online bank? At some point, you might want to actually meet your
banker. If you opt for an online bank far away or one that is Internet
continues
120 CHAPTER 9
continued
only, you will be destined to bank only in the cyberworld. You will have
no human touch, except perhaps over the phone. If you pick a commu-
nity bank, you have the option to walk into a branch at some time. A
possible downside to a community bank is that it may not have a lot of
money to spend on the latest technology.

In this chapter, you’ve learned about some shortcuts to finding an
online bank and about some hot gimmicks that banks are using to
entice you to their sites. The following is a review of what you
should have learned:
• There are a few “cheat sheets” on some Web sites to help you
analyze what bank is best for you, including Gomez Advisors
(www.gomez.com), Bankrate.com (www.bankrate.com), and
Financenter.com (www.financenter.com).
• Take advantage of calculators. Most bank sites have them,

but if yours doesn’t, go directly to www.financenter.com to
test drive a few.
• Online banks are offering discounts on cybershopping expe-

ditions if you shop from their sites and use their credit or
debit cards. A few online banks also offer guarantees. Your
bank is a good place to start when shopping online.
CHAPTER 10
Attention All Small
Business Owners
As a consumer, online banking gives you more immediate control What You’ll Learn
and management of your personal finances. In essence, it helps in This Chapter:
. What products
you do your job better as chief executive officer of You, Inc. by
and services are
making your financial information available to you anytime, any- available.
where, through the power of the Internet. . How to shop for
online business
If you’re the owner and manager of a small, or large, business, banking services.
online banking can help you do your job better as the CEO of . Security issues
Your Business, Inc. Banks are reaching out to business customers you must
address.
through online products and services including business checking
accounts, loans, and cash management.
We’ll look at some of the products and services banks are offering
online for businesses, and will also provide you with some tips to
consider for online business banking. You’ll see some similarities
with online banking product and service offerings for consumers
and businesses—such as checking, loans, and savings account
products—but there are some differences.
What’s on the Menu?

Online business banking products and services include business
checking accounts, loans, savings accounts, and more sophisti-
cated products, such as sweep account arrangements. A sweep
account enables a business to earn interest on excess funds on
deposit in transactional accounts.
Business Financing Services

Online business banking products and services include financing,
such as credit lines, term loans, real-estate secured loans, and
122 CHAPTER 10
loans guaranteed by the Small Business Administration. Zions

Bank of Salt Lake City, Utah, provides business loan applications
online at its Web site (www.zionsbank.com).
Zions Bank provides both online consumer and business banking
services. Many banks that are offering online banking services
offer products and services geared to consumers as well as to
businesses.
Zions Bank pro-

vides business
owners a compli-
mentary “Capital
Resource Guide”
when they submit
an online business
loan application
to the bank.
Bank of America (www.bankofamerica.com) also provides online

applications for loans and financing, as well as a “Business
Center” featuring information and resources for businesses. To
access the Business Center, Bank of America requires you to reg-
ister. Be careful here. Bank of America is likely prospecting for
potential business customers, so be ready for a phone call, a let-
ter, or an email when you sign up.
Business Checking and Savings Accounts

Online banking services for businesses also include business
checking and savings accounts. These services are similar to their
online consumer account counterparts. They allow a small busi-
ness owner to track account balances, payments, and deposits, as
well as make payments electronically through online bill payment
or directly through the automated clearing house network.
ATTENTION ALL SMALL BUSINESS OWNERS 123
As we’ve discussed in earlier chapters, the fees for bill payment

services can and do vary. You’ll want to include such fees, if there
are any, on your comparison-shopping checklist.
The online account services offered to business patrons may also
include payroll and payroll tax preparation. Bank of the West
(www.bankofthewest.com) promotes this feature among its online
business banking services.
Integrated Banking for Businesses

One of the major benefits of online banking for businesses is the
ability to integrate a variety of financial management activities
and to track them online through a secure Internet connection.
Merchant services, such as the electronic submission of daily Fun (but
Frightening) Fact:
credit card receipts, are another valuable benefit of online busi-
One-third of new
ness banking. How so? Let’s say that you own a retail gift shop businesses fail within
and submit your credit card receipts to your bank through your six months, and
three-fourths of
electronic payment terminal at your cash register at the end of business start-ups
shut down within
each business day. The next morning, you could go online to your
five years, according
business bank to quickly confirm the deposit of those credit card to the University of
Virginia’s McIntire
receipts. School of Commerce.
Wells Fargo Bank (www.wellsfargo.com) is one of the standouts
in marketing this integrated approach to business banking. The
institution’s Business Gateway provides “…the power to see
transaction history, transfer funds, view the detail of any deposit,
pay federal business taxes, and much more, right from your
own PC.”
At one of Wells Fargo’s Web pages (http://wellsfargo.com/biz/
demo/demoStart), you can test drive the institution’s Business
Gateway.
Wells Fargo’s online Business Gateway services include transfer-
ring funds between accounts, setting account balance warning
screens for individual accounts (the bank describes this as a fuel
gauge for an account), paying federal business taxes online, and
initiating stop payments and ordering checks.
The Business Gateway also allows business owners and managers
to monitor all transactions, assign access rights to an accountant
124 CHAPTER 10
or employee, and view detailed lists that can display each check
in a deposit.
Here’s the open-

ing page of Wells
Fargo’s online
business banking
demonstration.
From this page,
we clicked the
Account Balances
hot link…
…and got a look

at the overall sta-
tus of accounts.
Note the similari-
ties between the
look and feel of
this program and
consumer online
banking systems
illustrated in ear-
lier chapters.
Cash Management Features for Businesses

Cash management is another example of how the technological
melding of a bank’s back-office data processing and the Internet
can help small businesses increase revenues by earning interest on

otherwise idle funds. The Federal Reserve Board’s Regulation Q
prohibits the payment of interest on business checking accounts
and is one of the last vestiges of interest-rate regulation on the
part of the government.
Banks have learned to get around Regulation Q through sweep
accounts in which a business’ checking account funds are swept
each night into an interest-bearing account. This maneuvering is
somewhat complex and, many banks argue, completely unneces-
sary.
These banks and their trade associations would prefer that
Congress simply eliminate Regulation Q through legislation. In
the meantime, sweep accounts remain the primary way for busi-
nesses to earn interest on their money.
Through online banking, a business can determine how much
cash should be swept out of its checking account and into an
interest-bearing savings account at some point during the day.
Those funds can earn interest until the business decides it needs
the cash for upcoming expenses, at which time the funds are
swept back into the checking account.
GrandBank of Maryland explains the mechanics of sweeping suc-
cinctly in its page on Business Checking at its Web site
(www.grandbank-online.com/bbcheck.htm). “Earn interest on
excess funds with an automatic ‘sweep of funds’ from checking to
savings,” the bank says. “Simply set the minimum amount of
funds to be maintained in your checking account and we’ll do the
rest.”
Chittenden Bank of Burlington, Vermont, provides a look at its
online business banking system through a series of demo screens
on its Web site (www.chittenden.com/demotest/intro.html).
126 CHAPTER 10
Chittenden Bank’s
online business
banking demon-
stration shows
how users can
navigate the sys-
tem’s cash man-
agement and
transaction fea-
tures.
Similarities in Online Banking for Businesses and

Private Customers
As we mentioned earlier, there are many similarities between con-
sumer and business online banking products, services, and fea-
tures. Philadelphia-based Pennsylvania Business Bank provides
an interesting side-by-side comparison of the benefits of online
banking for consumers and commercial customers at its Web site
(www.bizbank.org).
As we’ve noted elsewhere, many of the online products and ser-
vices for consumers and businesses are similar, as Pennsylvania
Business Bank explains in its comparison. For businesses, one of
the primary benefits of online banking is cash management—the
ability to track and monitor accounts and account balances, and to
quickly put idle funds to work earning interest.
Here’s
Pennsylvania
Business Bank’s
comparison of the
benefits of its
online banking
services for con-
sumers and busi-
ness customers.
Finding an Online Bank for Your Business

Our advice to private consumers in Chapter 4, “Choosing Your
Bank,” on shopping for an online bank is also helpful for business
owners looking for Internet banking services. As with shopping
for a consumer online bank, we would encourage you to first take
a first at your current bank’s online business banking services.
By moving to online business banking through your current bank,
you’ll avoid the hassles of changing banks, which can be complex
if you’ve got loans or lines of credit and use other banking ser-
vices. For example, if you’re a retailer, your new bank will likely
need to be able to provide merchant processing services to enable
you to accept credit and debit cards for payments. You may also
need courier or other cash-handling services.
Many small businesses will be geographically limited when shop-
ping for online business banking services. If you’re taking in cash
from customers, such as a restaurant or retail store, you’re going
to need a local branch to make your end-of-day or end-of-week
deposits. Obviously, if you handle physical cash, a bank that
exists only in cyberspace is not for you; you need the physical
presence of a teller window and a deposit box.
128 CHAPTER 10
Take a look at your current business banking provider’s lineup of

offerings. Also consider what services you’ll need from online
business banking. Ask your account representative for a demo, or
schedule a meeting to learn more about your bank’s online ser-
vices and how they fit the needs of your business.
If you’re going to have to shop around for online business bank-
ing services, you’ll need to carefully compare features and fee
structures. Most online business banking sites we visited offer a
variety of accounts with fees that vary depending on average bal-
ances kept at the bank.
This is a common practice. Business banking, also known as com-
mercial banking, is typically priced by a bank based on the con-
cept of “account analysis.” What this means is that a bank looks
at a business’s average deposits and transaction volume and
applies this analysis in the form of a credit against fees charged
for account maintenance and other business banking services.
This makes fee comparison a tricky venture, so keep that in mind
when considering taking your business to a new bank.
Here’s another way to look at it. A bank earns interest on the
money you have on deposit by using those funds to make loans or
other investments. However, it costs your bank to provide you
with checking account and other services. Account analysis is a
phrase that describes how your bank gauges what it earns and
what it costs to handle your business accounts. If your business
maintains high average balances or a steady flow of deposits at
the end of each business day, your business likely will have lower
fees.
One way to learn more about what other business owners are
doing online through their banks is to network with your peers.
We suggest your local chamber of commerce as a good resource.
If your bank offers online business banking, talk to other business
owners who are online and using those services.
A Word About Security

We’re going to examine online banking security issues in more
detail in the next few chapters, but if you’re a small business
owner, you’ve got some additional security concerns that you’ll
want to address before banking online.
One issue is account access. You’ll want to make sure that you Attention
QuickBooks Users:
can establish levels of access to your business’s online accounts.
Intuit, the maker of
This is not much different from your deciding who can write Quicken personal
financial software,
checks on your business checking account. Maybe the only per-
also produces the
son with that access level is you. However, if you have an accoun- popular small busi-
ness accounting soft-
tant or bookkeeper, you’ll need to consider what level of access ware products called
that person will need to all your online accounts. QuickBooks and
QuickBooks Pro 99.
Wells Fargo’s online business services allows business owners to If you’re a
Quickbooks user and
establish three levels of account access privileges: Do Banking, are considering
View Only, and No Access. For those employees who have full online banking ser-
vices for your busi-
access to “do banking,” you, as the owner, will want to impress ness, you’ll want to
upon them the importance of keeping passwords and other infor- check out how your
online bank’s system
mation confidential and secure (we’ll give you some common- works with this busi-
sense security tips in upcoming chapters). ness software.
Richmond County Savings Bank in New Jersey describes the

access-setting features of its online business banking services in a
FAQ on its Web site at www.rcbk.com. The bank’s system enables
business owners to restrict access to specific functions, reports,
and accounts. Special profiles can also be created to allow confi-
dential information to be shared among those with privileged
access (such as accountants and managers).
The bank also notes that business owners can export their account
information to financial management software such as Quicken,
Money, or QuickBooks.
SunTrust Bank of Atlanta provides a demo of its online business
.
Try It Yourself
banking services using QuickBooks through its Web site at
www.suntrust.com.
1. Go to www.suntrust.com. Under the SunTrust Online head-

ing, at the upper-left of the home page, click PC Banking for
Business.
2. A new page opens. On the upper-right side of the page, click

the word Demo under the QuickBooks logo.
3. Follow the directions on the next page for loading the

QuickBooks demonstration. This may take some time.
4. Try the various options after you’ve loaded the demo. The
.
demo is a good way to get an idea of QuickBooks’ capabilities.

130 CHAPTER 10
For Starting a Business

Maybe you don’t need online business banking services just now because
you’re still thinking about how to start up a business. There’s help avail-
able on the Internet.
The Small Business Administration provides information about starting a
business, as well as how to obtain financing. The SBA, as it is called, is a
government agency that provides loan guarantee programs and other
services to assist small businesses. Its Web site address is www.sba.gov.
Another good source for information about starting a small business
and electronic commerce is the U.S. Business Advisor, which is main-
tained by the SBA on behalf of several federal agencies. The address is
www.business.gov.
An Info Desk button is available on the home page of the U.S. Business
Advisor that provides online information about small businesses includ-
ing business plans, Web links, assistance and training, government publi-
cations, business development, financial assistance, laws and regulations,
and e-services. The site also has links to the National Fraud Information
Center, which provides information on Internet-related fraud and the
Better Business Bureau.
The U.S. Business Advisor even offers an Internet tutorial covering topics
such as email, teamwork, finding information, and a parent’s guide for
safe and effective use of the Internet. The tutorial is available from a
hot link at the bottom of the U.S. Business Advisor home page (click
Learn the Internet).
A good private-sector Web site to learn more about starting a business is
American Express’ Small Business Exchange
(www.americanexpress.com/smallbusiness). The Small Business Exchange
offers advice on buying or selling a business, day-to-day management,
finding financing, business insurance, cash management, and other key
topics.
The American Express site also offers tips on creating an effective busi-
ness plan, including a Try It Yourself section (hey, we love those!) in
which you can test your management skills by helping a hypothetical
bakery, Bella’s Biscotti, get up and running.
Going Beyond Banking

Although they’re emphasizing online integration of all of the
financial service needs of a business, many banks are also helping
their business customers get on the Internet and conduct e-
commerce, as well as establishing communities of Web-based
businesses and merchants.
Bank of America, with its Business Center, and many others,
including Wells Fargo and SunTrust (www.suntrust.com) are using
their Web sites to help small businesses by acting as information
resources as well as financial services providers.
Some institutions are even using their Web sites to provide virtual
town squares or shopping malls to link consumers and businesses,
and businesses with other businesses, online. The concept is
based on the idea of a virtual community that brings together
businesses or consumers with common needs.
Suppose that you’re in the business of making widgets. Through
your online bank’s town square or shopping mall, your specialty
is highlighted for other consumers and businesses to see. In other
words, the town square virtual community provides another
avenue for businesses to market their products and services,
whether they are widgets, wedding cakes, or consulting services.
Wells Fargo pro-

motes Web mer-
chants through
hot links from this
page on its
Internet site.
There are some
big players here,
including eBay
and OnSale.

In this chapter, we’ve covered the basics of online business bank-
ing as well as provided guidance for shopping and adopting
online banking if you’re a business owner. The following are
some reminders:
• The products and services offered to businesses are similar to

online banking services offered to consumers, including
viewing accounts and transactions online, paying bills elec-
tronically, and transferring funds. Look at your business’s
current banking needs, as well as possible future services, to
determine how you can benefit by interacting online with
your business bank.
132 CHAPTER 10
• If you use a business accounting software product, such as

Intuit’s QuickBooks or a financial management product such
as Quicken or Money, check with potential online business
banks about how their systems will work with your manage-
ment software.
• Our advice for finding an online business bank is similar to

what we’ve recommended for consumer online services:
Look locally first and find out what your current bank offers.
Be careful when comparing fees for online business banking
because of the wide variety of accounts and services avail-
able. Talk to your business bank’s representative and ask for
a demo of online business banking.
• As a business owner, you’ll have some unique security issues

you’ll need to address as you go online with your business
banking. If you have employees, such as accountants or
bookkeepers, will they have full access to your business’
online account? Check with your online business bank about
appropriate controls to ensure security and to control who
can access the financial information.
PART III
The Facts About Security
and Privacy
CHAPTER 11
Trust Is More Than a
Word
In the early to mid-1800s, banks provided a safe place for people What You’ll Learn
in This Chapter:
to store money or gold. Banks had huge, heavy safes or vaults
. All about secu-
where cash and other valuables could be kept. This was quite lit- rity and the
erally a safer option for people than hiding money in a mattress, Internet.
burying it somewhere, or carrying it around. . What the online
banks are
In addition, banks offered to pay customers interest in exchange promising you
for the use of their funds on deposit. Even with inflation and the about how
secure they are.
time value of money factored in, this was an attractive option.
. What the gov-
However, there were risks. These were the days before deposit ernment’s role is
insurance, when banks often went…well, bankrupt. In such in Internet secu-
rity.
instances, depositors of failed banks were left high and dry with-
. Why the issue of
out their funds. security should
In those days, what would it take to encourage someone, say your be a shared
responsibility.
great-great grandfather, to keep his money in a bank? Probably
not a higher rate of interest. Your forebearer might suspect that a
high-rate-paying bank was “gambling” with depositors’ money.
The inducement was, in a word, trust. Today in a banking context,
“trust” most often means services such as estate planning and
other fiduciary activities, but it still carries a powerful connotation
of entrusting a third-party (the bank) with your money. Banks
have worked hard to live up to this expectation.
So much and so little has changed. Today, of course, federal
deposit insurance protects consumers’ deposits in insured banks
and credit unions, as discussed in Chapter 5, “Ready, Set, Stop:
Do Your Due Diligence.” That’s a big change from the banks in
frontier life.
136 CHAPTER 11
However, banks still “buy” our money from us in the form of

interest on our checking account deposits, savings deposits, and
certificates of deposit. In turn, the banks “rent” our money to
other customers in the form of loans—for education, homes, busi-
ness ventures, credit cards, or other purposes. Although we may
sound like Jimmy Stewart in his speech to depositors in It’s a
Wonderful Life, we’re getting to a point: Money and credit are the
lifeblood of the American and the global economy, and the issue
of trust remains very important.
The Internet and Security

The issue of trust extends to online banking over the Internet. In
fact, it could be argued that online banking has grown slowly,
even as the Internet exploded in recent years. Why? Because
financial institutions were willing to wait until issues such as
security had been more clearly addressed by this new and very
low-cost delivery system.
Jumping to provide online banking in the early phases of the
Internet’s evolution would have meant risking the trust that banks
have earned from their customers. Instead, most banks tackled the
Internet in stages, beginning with a simple Web site (now some-
what derisively called “brochureware”) and then moving on to
provide more advanced products and services.
The financial services industry has also formed organizations and
groups that work together to help ensure the security of the
Internet as a place to do banking business and conduct e-com-
merce. One such organization is the Banking Information
Technology Secretariat, or BITS, which we will tell you more
about in Chapter 14, “A Security Checklist.”
“Security has been a high priority since BITS’ inception because
without security, there will be no e-commerce,” says Catherine
Allen, chief executive officer of BITS. Allen is not alone in her
TRUST IS MORE THAN A WORD 137
view about the high regard financial services providers have for
security on the Internet.
A New Realm
The explosion of the Internet and e-commerce over the past few
years has challenged financial services providers along with many
other businesses and industries.
One major challenge for banks is simply keeping up with the lat-
est technological innovations and industry practices. The Internet
is such a new delivery mechanism for products and services that
many financial institutions lack the internal resources, or techni-
cal skills, necessary to adapt to the new medium.
In response, financial institutions are partnering with third-party
providers of technology resources and solutions in their quest to
better serve customers through the Internet and online banking.
These third parties provide online banking software that links a
financial institution’s data and information resources to customers
through the Internet. This is why you’ll notice, as you shop for
online banking services, that two banks’ online sites may look
and feel quite similar. If so, the chances are the two institutions
are using the same online banking software interface to provide
customer access to account information.
“Technology is now the key driver in the delivery of financial ser-
vices,” says Matt Chapman, chairman and chief executive officer
of Concentrex Inc., a technology provider to the banking industry.
“This means that financial institutions need assistance to keep up;
even the largest institutions will need to rely increasingly on
external providers.”
“New entrants into the financial services market can succeed
based on superior technology, and many long-time players won’t
survive because they won’t keep up,” adds Chapman. “In this
138 CHAPTER 11
environment, innovation in the delivery of financial services will

depend largely on developing and deploying the underlying tech-
nology that drives that delivery, together with the necessary
industry and regulatory knowledge to make the technology work.”
To look at this another way, online banking requires a broad range
of technological services in form of hardware, software, and
expertise. A bank will likely need to shop for a third party to pro-
vide the necessary software and interfaces to provide online ser-
vices—in a secure environment—to its customers.
What Are Banks Promising?

Many financial institutions that provide online banking services
are up front in informing consumers about Internet security and in
answering consumers’ possible questions to help ease their
concerns.
When you click a

link on the home
page that asks
“Concerned about
security?”,
Lyndonville
Savings Bank
(www.lyn-
donville.com) of
Lyndonville,
Vermont, provides
this security state-
ment.
Some Good Examples of How Bank Sites Explain

Security
Busey Bank (www.busey.com) of Urbana, Illinois, provides a ster-
ling example of explaining Internet security to consumers:
“You probably often write a check at a store or to pay a bill,”

the bank says. “Consider the information printed on your check
that is easily read by anyone processing that check—your name,
address, phone number, bank name and account number, and
perhaps your driver’s license number or Social Security number.
“In contrast to this printed information which anyone can read,
the information that travels across the Internet using a secure
Web banking system like ours, is encrypted (scrambled) accord-
ing to a complex mathematical algorithm. To unscramble the
data, someone would have to have both the ability to ‘crack’
this algorithm plus many, many hours of computing time on a
super-computer.”
Stillwater National Bank & Trust Company of Stillwater,

Oklahoma, does a very good job of explaining the three general
categories of Internet security on its Web site at www.snb-ebank.
com. The three categories are
• Log-in protection for the user—This is when you use a pass-

word and login I.D. to begin an online banking session. It
also includes security features such as “three strikes and
you’re out.” This feature allows a user three chances to log in
for an online banking session and guards against a “brute
force” hacking attempt in which passwords are randomly and
repeatedly attempted (more on this in Chapter 12, “The Dark
Arts: Cryptography and Encryption”).
• Transmission security—This security category involves meth-

ods to ensure information security between your computer
and its Web browser software and your online bank, such as
encryption and decryption. (Encryption means encoding a
message; decryption means decoding it. We’ll cover the spe-
cific techniques in Chapter 12.)
• Server security and information privacy/integrity—This secu-

rity category includes security techniques to protect a bank’s
information from outside threats. These techniques include
firewalls, separate computer servers, and filter routers.
140 CHAPTER 11
Busey Bank pro-

vides a Security
FAQ link on the
right side of this
page on its Web
site. When we
clicked it…
…we arrived at a
series of informa-
tive questions and
answers about
online banking
and Internet secu-
rity.
Fun Fact:
In the 1940s, a num-
ber of children’s
radio shows, such as
Little Orphan Annie,
closed with a secret
message to the lis-
tening audience that
could be deciphered
with an official
decoder ring. Most
decoder rings fea-
tured the alphabet
and the numbers 1 We’re going to get into the mechanics of encryption in the next
through 26 on two
different rings. For
chapter, but we very much like Busey Bank’s plain-language
each show, the nar- response to the question, “How secure is the Internet for bank-
rator would tell the
audience the correct
ing?”
ring setting for that
episode, such as A-
We also like the bank’s admonition to customers at the bottom of
10. A series of num- its security FAQ page. “Remember: Do not give your user I.D.
bers was read off,
which then could be
and password to anyone,” the bank warns.
decoded and turned
into letters of the
alphabet using the
ring. And so, a gen-
eration of cryptolo-
gists was born.
Stillwater
National Bank &
Trust Company
(there’s that word
again, trust) high-
lights the word
“secure” on its
home page. We
clicked it…
…and arrived at
this page provid-
ing details on
“three general
categories of
Internet security,”
including log-in
protection, trans-
mission security,
and server secu-
rity and informa-
tion
policy/integrity.
Scrolling down
the same page,
we arrived at this
chart illustrating
Stillwater
National Bank’s
various security
measures and
practices. This is
probably more
than most people
need to know,
but it’s still good
to see and a nice
example of pro-
viding informa-
tion for
technologically
inclined cus-
tomers.
142 CHAPTER 11
First National
Bank and Trust of
Pipestone,
Minnesota, pro-
vides a Security
button on the left
side of its home
page. Note the
prominent place-
ment of the FDIC
logo and the
Equal Housing
Lender logo, as
well as the
graphic concept
of a “drive-
through on the
Information
Superhighway.”
Clicking First
National Bank &
Trust’s Security
button took us to
another solid
explanation of
online banking
security issues and
measures. Like the
preceding exam-
ple from
Stillwater
National Bank,
First National’s
Web page also
has an illustrative
chart depicting
the flow of com-
munications
between the bank
and its online cus- How Banks Are Protecting Themselves Against the
tomers. Terrors of the Internet
Online financial services providers are employing a number of
protective measures to guard themselves against hacking. These
steps were highlighted by Peter A. Browne, a senior vice presi-
dent of First Union Corporation, who testified with Catherine
Allen of the Banking Information Technology Secretariat before

the House Banking subcommittee:
“It is important that you appreciate the extensive measures that
banks and other financial institutions have in place and continu-
ally improve in order to assure the security of our systems,”
Brown told the congressional panel. “This is historic and has, if
anything, increased in importance with the addition of the
Internet environment.”
Online banks, said Brown, are doing the following to

heighten security:
• Using updated virus scanning software packages on all file

servers and PCs.
• Ensuring that all network connections are properly secured.
• Ensuring that desktop modems used by employees are

secured and properly registered.
• Using real-time, inbound scanning systems for electronic

mail and attachments.
• Educating customers and employees not to download files

from unknown origins.
• Implementing broad-based customer and employee educa-

tion.
• Employing strong password processes and controlling pass-

word changes.
• Masking customer account number information from online

banking screens.
• Providing a timed log-out feature on online banking sites.
• Providing remote access security systems for those employ-

ees and business partners who dial in to corporate networks.
• Conducting periodic tests of security from the viewpoint of

someone trying to hack in to an online bank site.
144 CHAPTER 11
We’re going to cover many of these topics in the next chapter, but
we mention them here to underscore how seriously financial insti-
tutions view Internet security.
The Government’s Role in Online Security

Of course, part of the industry’s seriousness regarding Internet
security is driven by the fact that the federal government—includ-
ing Congress, the executive branch, bank regulatory agencies, and
others—are watching as the ultimate overseers of e-commerce.
In that overseer role, Congress (through new laws) and the admin-
istration (through government agencies) could mandate security
requirements relating to the Internet. The banking industry in gen-
eral does not want this to happen, preferring instead to advocate a
self-regulatory approach in which the industry develops standards
for Internet security.
In her testimony, BITS’ CEO Catherine Allen called on Congress
to do the following:
• Allow the financial services industry to meet its security

commitments. “We are serious, proactive, and strongly com-
mitted to self-regulation.”
• Look to the regulators to conform to congressional policy

favoring a flexible, non-governmental approach to developing
technology and security procedures.
• “Work with us collaboratively, as you are today, to develop

the kind of informed framework that is necessary to foster the
growth of electronic commerce in the kinds of safe, sound,
and secure ways that are necessary for the confidence of con-
sumers and the growth of the economy.”
The government also has a role in overseeing Internet security

because it’s a national security issue. According to a 1998 direc-
tive signed by President Clinton, “…financial services are among
the nation’s critical infrastructures that must be protected from
intentional acts that would threaten the orderly functioning of the

economy.” The directive mandates the following:
“Any interruptions or manipulations of these critical functions
must be brief, infrequent, manageable, geographically isolated,
and minimally detrimental to the welfare of the United States.”
Security Is Not a One-Way Street

Despite the steps that financial services industry players have
taken in pursuing and ensuring Internet security, consumers have
a responsibility, too. “We would like to emphasize that security is
a shared responsibility,” Allen told the congressional panel.
Consumers, she said, should do the following:
• Become knowledgeable about online banking services. (Hey,

you bought this book! Great job!)
• Investigate their online bank to ensure that it is federally

insured.
• Actively ask questions of their financial services provider to

learn how best to continually protect the security of their
transactions.
• Limit unauthorized access to their personal computer.
• Protect their personal identification number (PIN) and pass-

words.
• Create PINs and passwords that cannot be readily identified.
• Install and regularly update virus detection and eradication

software on their personal computers.
• Use a browser that is configured properly and that supports

secure and private transactions. (Some online bank sites, such
as Wells Fargo’s site at www.wellsfargo.com, can help you
evaluate your Web browser software to ensure that it is up to
date with current security and encryption standards.)
• Do not open email attachments from unknown or

untrusted sources.
146 CHAPTER 11
• Do not install pirated software or software from an unknown

source.
• When finished using online banking services, log off com-

pletely, and then close and restart their browsers before doing
other Internet activities.

This chapter addressed the broad issues of security on the Internet
and also looked at what banks are doing to educate consumers
about security practices. We’ve also examined the federal govern-
ment’s overseer role in ensuring the integrity of finance and com-
merce activities on the Internet.
• The Internet is a secure environment, and online financial

services providers along with other e-commerce players have
every interest in ensuring that this remains so.
• The better online banks do a good job in explaining what

security measures are used to protect consumers as well as
how they’re used. These online banks are working to educate
consumers early on with easy-to-recognize buttons or links
from their Internet home pages.
• The government’s role in Internet security is primarily as an

overseer. So far, the government has been fairly hands-off
regarding the Internet, allowing e-commerce providers, such
as online banks, to develop and implement “best practices”
for ensuring the integrity and security of the Internet as a safe
place for consumers to do business.
• Although both online banks and the government have vested

interests in the security of the Internet and are working to
ensure that it remains a safe and secure environment, security
is not a one-way street. Consumers (that’s us) need to learn
about the Internet, e-commerce, and security. Consumers also
need to follow certain steps to help ensure Internet security.
We’ll get into the details of what you can do to guard your
security in the next chapter.
CHAPTER 12
The Dark Arts:
Cryptography and
Encryption
Cryptography and encryption provide the security you need when What You’ll Learn
in This Chapter:
you access your online bank. In general, common security mea-
. How encryption
sures used by online banking providers are of the highest order works.
available or allowed by the federal government. . How you can
help ensure
Remember, trust is a bank’s middle name (it’s often the bank’s
security.
last name). Many financial institutions have decades of experience . Steps to take if
ensuring transaction security for their customers in the physical you forget your
world. This investment of time, energy, and resources is being password.
carried into the virtual world, too.
The Security Debate

Basically, encryption technologies represent locks and keys to
data in our information age. These technologies are designed to
protect sensitive information transmitted over computer networks.
They operate by scrambling and encoding information so that
communications can be kept confidential between a sender
and recipient.
Cryptography, encryption, and data security is, and will likely
remain, a controversial topic.
148 CHAPTER 12
Some Key Definitions

Cryptography describes the field of using codes and encryption to
exchange sensitive information between two or more parties.
Encryption is the process of using codes or software to scramble a sensi-
tive message so that it is unintelligible to anyone other than the appro-
priate recipient of the message.
Data security refers to procedures and practices used to protect sensitive
computer networks and equipment. Both cryptography and encryption
are among those procedures and practices.
Law enforcement authorities would like to be able to examine

computer files as part of their criminal investigation authorization
and would like to see the lower levels of encryption used to
ensure Internet security. Consumer and freedom-of-speech advo-
cates argue that such investigative policies intrude on the private
lives of law-abiding citizens. They believe consumers should be
able to rest assured that all their data being transmitted through
the Internet is protected with the best encryption available.
This debate will undoubtedly continue; it is a healthy aspect of
the development of the Internet as a place to exchange informa-
tion and conduct business. The debate also continues with the
ongoing dialog regarding individuals’ rights and freedoms bal-
anced with law enforcement’s efforts that date back to the birth of
the United States. Should we be able to transmit our data in sys-
tems that not even the government can intercept and read?
What Is Encryption?
In a nutshell, encryption means taking a normal message such as
“Watson, come here I need you” and converting it into ciphertext,
which looks and reads like gibberish unless you have the ability
to decrypt the message.
When it’s in ciphertext, our message might look like “adgdbq
zncc udkj e wssx arf.” (We ran our original, readable message—
called plaintext—through an Enigma program. This program
mimics the Enigma encryption system used by the German mili-
tary and broken by the Allies in World War II. We go into some
detail with Engima encryption later in this chapter.)
THE DARK ARTS: CRYPTOGRAPHY AND ENCRYPTION 149
Most online banking providers ensure security through Netscape’s

Secure Sockets Layer protocol (SSL). SSL provides privacy for
data transmitted between your Web browser and your online
bank’s computer, which is often referred to as a server.
SSL uses encryption to ensure security and confidentiality. Here’s
how: When an SSL session is started, your Web browser (such as
Netscape Navigator or Microsoft Internet Explorer) sends its pub-
lic key to your online bank’s server so that the bank can securely
send a secret key to your browser.
A public key is the published portion of an encryption system. It
allows for the transmission of a secret key, which is known only
by the holder of the private, or secret key.
Internet encryption is based on a mathematical algorithm that
uses this secret key. The secret key is a binary number that is typ-
ically from 40–128 bits in length. As the number of bits in the
key increases, the number of possible mathematical key combina-
tions increases, as does the level of security.
In computer terms, a binary number is a number stored in binary
form (that is, a number that is represented as a series of 0s and
1s). Within 1 byte (8 bits) of data, the values from 0–255 can be
represented. Two bytes of data (16 bits) can store values from
0–65,535.
These value capacities increase exponentially. This is why 128-bit More Bits Means
More Possible
encryption is stronger than 40-bit encryption. With more possible Values:
values represented, it would take longer to break a message that It takes longer to
uses 128-bit encryption. break a 128-bit
encrypted code than
a 40-bit code
because of the addi-
The First Cryptographer tional number of
Cryptography, described as the conversion of information into a secret possible mathemati-
code, has been around for more than 500 years. cal combinations.
Johannes Trithemius (tre TAY me us), a Benedictine monk in Spanheim,

Germany, is credited as the first practitioner of cryptography. He wrote
Polygraphiae libri ses (“Six Books of Polygraphy”), which is viewed by
historians as the first published treatise on cryptography.
Trithemius’ Polygraphiae was published in 1518, two years after his
death. In 1499, he wrote Steganographia (“Covered Writing”). This man-
uscript, which was widely circulated, described a cipher, or encryption
continues
150 CHAPTER 12
continued
code, in which each letter is represented by words in successive columns

of text in a book of prayer.
One portion of Trithemius’ Steganographia, the once-mysterious third
book, has been revealed by cryptanalysts and scholars as written almost
completely in code. The third book contains hidden cipher messages
within what a casual reader would think is a book about magic, a point
that had been debated up until the mid-1990s.
The title of Trithemius’ Steganographia gives rise to steganography, a
word used to describe a messaging technique of hiding one type of
computer file within another. This technique is sometimes used as an
alternative to encryption.
How Banks Use Encryption

Most online banking systems use 128-bit encryption, which is the
highest level of encryption allowed by the federal government.
The federal government’s policy is aimed at terrorists and other
criminals. For example, the export of 128-bit encryption is pro-
hibited unless “key recovery” is provided to a third party, such as
law enforcement authorities. This allows for the recovery of data
but, for obvious reasons, rankles privacy advocates. Information is
encrypted mathematically by combining the bits in the key with
the data bits. At the receiving end, the secret key is used to unlock
the code and restore the original data.
As a result of this secret hand-shaking between your computer
and your online bank’s computer, data can be exchanged securely
and confidentially during your banking session.
Many experts believe it is much safer to put your credit card
online than it is to leave it with a waiter or bartender. When you
give people your credit card in the offline world, there’s a much
greater possibility that the carbon copy of the charge slip will be
taken out of the garbage and used or that the card number will be
simply stolen by your merchant.
The biggest threat to putting your credit card number online is not
that it will be intercepted. The real concerns is that the business or
bank you are dealing with could have dishonest employees work-
ing behind the scenes who might misuse your information.
The SSL security standard for data transfer is expected to be

superseded at some point by a new Internet security protocol
called Transport Layer Security (TLS). This new standard is back-
ward-compatible with the SSL standard.
A major plus in favor of TLS is that it uses a triple Data
Encryption Standard (DES). Simply put, that means that TLS uses
three “keys” to encrypt messages. And, when it comes to encryp-
tion, more is better than fewer (it’s like having three locks on a
door rather than one).
Other Security Measures a Bank Can take

Another Internet security measure that online banks typically
employ is a firewall. An Internet firewall is a physical computer
system that enforces a security policy between an organization’s
network and the Internet.
A firewall determines which inside services can be accessed from Firewall
Clarification:
the outside over the Internet. On the flip side, a firewall also
Although it’s easier
determines which outside services can be accessed by insiders. In to think about a
firewall as a sepa-
effect, the firewall computer filters attempts to access the bank’s
rate computer that
main computer where sensitive data resides; it also filters physically separates
the bank’s main
attempts from users at the bank to access the Internet. server from the
Internet, the firewall
For a firewall to work, all traffic to and from the Internet and the
can also be filtering
bank’s main computer must pass through it. The firewall then software that resides
on the main com-
inspects the traffic and permits only authorized information to puter.
pass.
According to the technology company 3Com, an Internet firewall
helps organizations, such as online banking providers, define a
central “choke point” that keeps unauthorized users, such as hack-
ers, crackers, vandals, and spies, out of a protected network.
“Firewalls offer a convenient point where Internet security can
be monitored and alarms generated,” says the company. “It
should be noted that for organizations that have connections to
the Internet, the question is not whether but when attacks will
occur.”
152 CHAPTER 12
Shedding Light on the Enigma

One of the keys to the Allied victory in World War II was their
code-breaking efforts focused on the German military’s Enigma
machine.
The Enigma machine randomly encrypted messages and was
thought to be unbreakable. It wasn’t, thanks to some very smart
people, and important German military intelligence thus became
available to the Allies on a timely basis. The lesson here is that
any encryption system is breakable, if those trying to break it are
given enough time (years in some cases).
However, simply breaking an encrypted message may not be
enough. To illustrate, the Allies’ code-breaking of the Enigma
machine wouldn’t have been very helpful if it took months to
understand a single message. Meaningful military strategies could
not have been developed had there been such a time lag in mes-
sage decryption.
Our point here is that being able to decrypt an encrypted message
that is months or years old is not of much practical value. In gen-
eral, with current online banking encryption standards, it would
take several years to decrypt a transaction, thus offering an
unscrupulous person little or nothing to gain.
A number of experts have developed Internet-based Java applets
to demonstrate how the Enigma machine operated. (A Java applet
is a simple program that operates as part of a Web page.) You can
try to encrypt and decrypt a message yourself using one of these
applets.
1. To find an Enigma applet, go to a search engine such as

.
Try It Yourself
Google.com (www.google.com) and search for the term
Enigma applet. The search engine should return a list of
applets designed to mimic the operation of the Enigma
encryption machine.
2. Click one of the hot links for an Enigma applet. You’ll have
to wait a brief period for the applet to load.
3. You’ll then be able to experiment with the Enigma mechani-

cal encryption system (and your school-age children will get
.
extra credit in history).

What’s Your Password?

The following are some suggestions we’ve gleaned for maintain-
ing secure passwords. Do not use any of the following as your
password:
• Any variation of your computer login name, full name,

birth date, Social Security number, or any other personal
information
• Dictionary words, place names, or proper names of any kind

or from any language
• Jargon, slang, acronyms, the names of literary characters,

movie characters, or celebrities
• Any word or name spelled backwards, with or without inter-

spersed punctuation marks, symbols, or numbers (for exam-
ple, !n!o!s!i!r!r!a!H is a bad choice for a password)
• Any variation of your name, address, license plate number,

telephone number, or other information that can possibly be
accessible to others
• Your pets’ names or the names of any family members
• The first letters of the words of a common phrase, such as

igwt for “In God we trust”
Generating a Secure Password

We scouted the Internet in a search for how to best generate a
secure password, which you’ll need for online banking. We found
a good system that randomly generates passwords at
www.diceware.com.
The Diceware system requires dice. Various rolls of the dice are
used to determine a password from a list of words, which can be
downloaded from the Diceware site. The password system allows
for different password lengths based on what you need.
154 CHAPTER 12
The Diceware site

provides a thor-
ough background
on the importance
of random pass-
word generation,
as well as instruc-
tions on how to
use dice to create
secure computer
passwords.
The Diceware system also allows for the use of special characters,
such as #, $, or ! to introduce additional variables into a pass-
word. This can be an important feature because, as you read in
our password security tips, basic dictionary words can be tried
sequentially by a computer hacker running a “brute force” pass-
word-cracking program.
Brute force password cracking relies on software designed to try
different combinations of symbols, numbers, and letters to gain
access to a restricted network. This method is by far the most
popular way for computer hackers to cause trouble on the
Internet.
However, a brute force attack will not work for online banking.
Most online banking systems restrict a user to three incorrect
password attempts over a given time period, such as a few days or
weeks. Then, on the fourth attempt, access to that user’s account
is automatically shut down.
This should help you sleep better at night.
What do you do if you mess up and are locked out of your online
bank? (Don’t laugh, this has happened to us.) Call your online
bank. A staff member should be able to walk you through what
you’ll need to do to get up and running (and banking) again.
Security Steps You Can Take

Along with following our password tips, you can take some addi-
tional security steps to protect your online banking experience.
For one thing, don’t write your password down or allow your
browser to store your online banking password on your computer.
Doing so could provide the opportunity to anyone with access to
your computer to simply turn it on, log on to the Internet, and
access your bank accounts online.
Also, we don’t recommend that you bookmark your online bank’s
Web site or list it under Favorites in your Web browser software.
This makes possible access to your online bank that much easier.
You’re probably thinking that much of our advice here is common
sense. Our answer: It is. However, it’s important to understand
and think about how a stranger in your home might be able to
access
• Your computer (typically by just turning it on)
• The Internet (by double-clicking your Internet service

provider’s icon on your computer’s desktop)
• Your online financial services provider (perhaps by rummag-

ing through your desk or work area and finding your
password)
If you bank online from your office, you have additional con-
cerns, because it is likely that others have access to your com-
puter as well as knowledge of how to shortcut any startup
passwords.
The following are some additional steps to keep in mind to pro-
tect your security:
• Completely log off and close out of your Web browser soft-
ware after completing an online banking session. There is a
chance that, when visiting another site, information about
your earlier banking session can still be accessible and avail-
able in your computer’s memory.
156 CHAPTER 12
• Do not leave your browser open to your online banking

provider’s Web site. Typically, your online bank will log you
off after a certain period of inactivity. Even so, don’t walk
away from your computer to go run errands and leave an
online banking page open onscreen.
• Can neighbors or passers-by see you typing on your com-

puter? Or your co-workers? Passwords can sometimes be
picked up by the unscrupulous simply through observation or
educated guessing.
• Do not leave blank checks, canceled checks, statements,

printouts, or other information about your online bank near
your computer. Information from these items could be used
by a crook to attempt to hack into your account or simply to
write checks on your account. Here again, real-world security
measures are similar to cyber-security steps. Don’t do any-
thing to make a criminal’s job easier.
• Never, ever give your password out to anyone. This goes for
your online banking password as well as passwords you may
use to gain Internet access through your Internet service
provider or other Internet sites. No one has any reason to ask
you for your password.
I’ve Lost My Password…

It happens to everyone. We’ve drawn a blank at the ATM several times
and one of us—we’re not saying who, of course—has lost her wallet sev-
eral times.
What to do if you forget your password for your online bank? Call your
online bank. They will tell you what you should do to get up and run-
ning again.

In this chapter, we’ve reviewed crytopgraphy and encryption. We
discussed how you can employ crytopgraphic techniques to gen-
erate secure passwords and steps you can take to enhance your
security.
Encryption as part of online banking is generally of the highest

order permissible by the government—128-bit encryption, to be
exact.
You can help ensure security by using randomly generated pass-
words, jealously guarding passwords, and following other basic,
common-sense security practices.
If you forget your online banking password, call your bank. They
can help you get up and running again. Never give your password
out. Your online bank representative (or anyone else, for that mat-
ter) has no reason to ask you for your password.
CHAPTER 13
Privacy Please! How to
Protect Your Privacy and
Who Else Cares About It
The development of powerful computers that can store and ana- What You’ll Learn
in This Chapter:
lyze massive amounts of information is your first sign that privacy
. The issues and
should be a top concern to you. Businesses are using the new the players in
technologies to conduct what they call customer relationship the privacy
game.
management, which simply means analyzing who you are by
. A look at a few
ciphering through any and all data about you. privacy policies.
This type of information mining helps banks and other retailers . Privacy seals are
decide what to market to you. For example, a computer will take certifications by
third parties.
into consideration your basic demographic information and com-
bine that with previous buying habits such as what you eat, what
you wear, where you shop, and how much you spend. The fact
that you might get more direct marketing calls, emails, or snail
mail as a result of this data gathering might not concern you. But
what if your bank is selling personal information about you to
other businesses? Your bank may be trustworthy, but are the com-
panies to whom your information is being sold also honest? Do
they have employees who are unscrupulous enough to take your
information and steal your identity? If so, the next thing you
know, you could start getting credit card bills from around the
world.
All this may seem like one big paranoia trip, but it’s the real
world as businesses learn how to better harness the immense
power of computers.
The issue of privacy should cause all consumers to have some
concerns, but for the online bank customer, it has to be a top pri-
ority. When you bank online, you are asked to transmit some of
160 CHAPTER 13
your most personal information over the World Wide Web. Your
Social Security number and birth date are needed to conduct
almost any business with a financial institution. That’s why there
is a lot of discussion between the banking industry and the gov-
ernment about what must be done to protect consumers’ privacy
while banking online.
The federal government has tended to take a laissez-faire
approach to how business is conducted on the Internet, but a few
laws have been passed and banking regulatory agencies are moni-
toring privacy on the Web closely. This somewhat hands-off
approach to privacy and e-commerce has been viewed as a means
to encourage rapid innovation and development of the Internet as
a vehicle for finance and commerce.
Jodie Bernstein, director of the Federal Trade Commission’s
Bureau of Consumer Protection, has a lot to say about privacy
and e-commerce. When she’s online, privacy is a top concern. “I
usually ask if they have a privacy policy, and if the answer is ‘no,’
I’m likely to say ‘thank you very much’ and go to another site,”
she says. “What information do you need from me so that I can
buy my pantyhose? What are you going to do with that informa-
tion? I don’t want to get a lot of weight loss ads mailed to me.”
Who Else Cares About Your Privacy?

Privacy has proven to be a top consumer issue in online banking.
Studies show that consumers want the ability to control their
information and to be comfortable with how it is used. Banks and
the government have taken notice. Both are backing policies and
laws that they say will protect the consumer, whether online or
off. But frankly, there’s a compromise mentality at work.
Everyone wants to ensure privacy, but the industry—sometimes
with backing from the government—believes that privacy policies
also have to recognize that businesses need to exchange certain
information to become better marketers and sellers and, therefore,
more profitable.
U.S. businesses of all sorts are facing another big privacy issue
from beyond our shores: The European Union won’t allow its
businesses to work with U.S. businesses if they don’t adhere to
PRIVACY PLEASE! HOW TO PROTECT YOUR PRIVACY AND WHO 161
strong privacy standards. Europeans don’t really appreciate our

government’s hands-off approach to online regulation. But the
U.S. Commerce Department is attempting to negotiate with the
EU a compromise. The gist of the proposal: Give U.S. companies
a vote of confidence if they adhere to strong privacy principles,
even if the federal government isn’t passing laws to enforce these
standards.
Are You Really Who You Say You Are?

There’s a burgeoning concern about “identity theft” in the online and
offline worlds. Thieves are gathering information about you—your
address, passwords, Social Security number, telephone numbers, email
addresses, medical records, and whatever they can get that helps them
pretend they are you. After they gather enough information, for exam-
ple, they will apply for a credit card and start sending you to the clean-
ers. The credit card bills are in your name and they are going unpaid.
Your credit ratings sink to the bottom of the sea.
How can you avoid becoming a victim of this crime?
Truste, a third-party privacy seal provider, offers these suggestions: don’t
list your full name in a telephone book; don’t put addresses or driver’s
license numbers on checks; keep your mother’s maiden name private;
shred financial, medical, and other personal documents before discard-
ing; request security codes for your telephone and bank accounts; give
out your Social Security number only in very special circumstances; if you
suspect that someone is using your identity, call your local law enforce-
ment agency.
What’s the Government Doing to Protect

Your Privacy?
President Clinton has outlined a broad proposal to protect finan-
cial privacy. His administration wants to limit the sharing of
information and require institutions to inform consumers of plans
to share or sell their financial data. One of the White House’s
biggest concerns is the sharing of medical information between
financial services providers.
Cross-industry mergers and consolidation are making medical
information more accessible to banks. Should a consumer take a
physical exam to get an insurance policy, and should the results
of that visit be used to lower credit card limits? This scenario
seems farfetched but, with the convergence of the insurance,
162 CHAPTER 13
banking, and securities businesses, the sharing of information is

getting easier for corporations and scarier for consumers.
When the president announced his plan to enhance financial ser-
vices privacy, he said, “You should not have to worry that the
result of your latest physical exam will be used to deny you a
home mortgage or a credit card.” When Congress passed its finan-
cial services modernization law in 1999, it addressed some of the
president’s concerns, but not all. In fact, some consumer advo-
cates feel the new law was a setback to consumer privacy. The
reality: It represents a Washington compromise where both sides
gained and lost a little ground.
What does the new banking law do on the privacy front? The law
does the following:
• Prohibits banks and all financial institutions from disclosing

customer account numbers or access codes to unaffiliated
third parties for telemarketing or direct marketing purposes.
• Enables consumers to opt out of having their personal finan-

cial information shared with unaffiliated third parties in
almost all cases, except if the bank shares information with
an unaffiliated third party that performs functions for the
bank. An example of an unaffiliated third party is a company,
such as an insurance provider, that is not under a bank’s cor-
porate umbrella. In such an instance, although the bank does-
n’t have to give the consumer the right to opt out, the bank
does have to fully disclose the information-sharing to the
consumer and require the third party to maintain confidential-
ity of the information.
• Requires that banks annually disclose their privacy policies to

customers. Although many online banks do this now, this is
no longer a suggestion from the government but a require-
ment.
• Prohibits persons from misrepresenting themselves to obtain

personal information about others (this seems like a no-
brainer). This part of the law is directed at identity pirates
who are in the business of gathering as much personal infor-
mation about consumers as they can and then selling it.
A New York Times report on the new law included a great quote
from David Komansky, the head of Merrill Lynch, showing the
delicate balance of consumer and industry concerns in the privacy
debate. The story quoted Komansky reflecting on the impact of
the law: “I have two points of view. As an individual and con-
sumer, I think that I am entitled to certain privacies. The things
that concern me are health records as they apply to mortgages
applications, for example—I want to have those protections…
As a business person, having the option to data-mine investment
traits of clients can position us to be able to more efficiently mar-
ket our products. It’s an important advantage and something I
value.”
A Medium-Rare Deal
The consumer could have gotten a much better deal with the new law.
For example, we are given an opportunity to opt-out of having the bank
share information with unaffiliated third parties. This, in essence, puts
the burden on us, the customer. The legislators could have made this
provision more consumer-friendly by saying banks must give us the
option of opting in. That would have meant that our information would
be shared only if we gave permission. That wouldn’t have put the bur-
den of privacy on us!
On the positive side for consumers, the new law makes it clear that
banks have to at least send their privacy policies to consumers. In the
online world, those policies are usually posted on the home page.
The new law is important to online banking because of the

enhanced power that electronic commerce gives to financial insti-
tutions. With the new capabilities allowed by faster and smarter
computers, banks are collecting more data on their customers than
ever before.
Hence, banking regulators have a few specific policies for the
online banking world. The Federal Deposit Insurance Corporation
and the Office of Thrift Supervision have both advised banks that
they regulate to post privacy seals and to provide consumers a
chance to opt out of a plan to collect information for marketing
purposes. Banks have also been advised to notify consumers
about how information will be used and to allow access to col-
lected information so consumers can see whether it is accurate.
164 CHAPTER 13
Privacy Seals
Don’t get confused between a privacy policy and a privacy seal. Here are
their simple definitions.
An online privacy policy is a statement by a bank or any e-commerce
business indicating to you how it will use the information it gathers
about you as you surf its site. Policies will tell you, for example, that the
business is asking you for your address so that it can mail to you market-
ing materials.
An online privacy seal is a completely different story. A seal is granted to
a bank or business by an organization that suggests and monitors
whether the institution is adhering to certain privacy guidelines. A seal
tells a consumer that a third party is making sure that the bank follows
certain privacy rules. Banks usually have to pay the third party to investi-
gate them and get the seal.
What Are Banks Doing to Protect Your Privacy?

To avoid too much government oversight, the banking industry
has banded together to try to police itself. This coming together
has resulted in privacy and security certification seals and the
issuance of principles by industry associations. The BBBOnline
privacy seal, for example, shows that the bank has allowed the
Better Business Bureau to review its privacy policies for effective-
ness.
BBBOnline charges a bank to participate in this online privacy
program. Under the agreement between the bank and BBBOnline,
the institution must adhere to BBBOnline’s guidelines or they
lose permission to display the seal on its site. For example, the
guidelines include that the certified online business must explain
to consumers what is being collected and why. BBBOnline also
insists that the business agree to random audits of its system and
to participate in dispute resolution procedures if a consumer has a
complaint.
Why would a bank want to pay BBBOnline for this service?
Because the customer will more likely trust the bank or any e-
commerce site if it displays the trusted symbol of the Better
Business Bureau. In the online world, the seals are usually listed
at the bottom of the home page.
Although these seals are popular in the e-commerce world at
large, they have not been widely adopted among banks as of yet.
As a lt, you won’t see too many of them at online bank sites.
Banks believe they don’t need the seals because their relationship
with customers is based on trust.
Banking trade associations, however, have drafted the U.S.
Banking Industry Privacy Principles, the Banking Industry
Technology Secretariat has created a Privacy Principles
Implementation Plan, and other industry executives have formed
the Online Privacy Alliance at www.privacyalliance.org. This lat-
ter group represents companies trying to enforce privacy guide-
lines on one another. The American Institute of Certified Public
Accountants has also launched a privacy assurance program.
What Does a Privacy Policy Look Like and

Where Can I Find One?
Privacy policies vary widely, but most start with the language,
“We recognize the importance of protecting your personal infor-
mation.” From there, policies vary greatly. You also never know
exactly where a privacy policy will appear on a Web site.
Sometimes it’s on the first page, and sometimes it’s buried and
almost impossible to find. This section discusses what some of
the major e-banks are doing on privacy.
Security First Network Bank (www.sfnb.com) posts its privacy
policy front-and-center, as you can see in the following figure;
you can’t miss it. The link to the privacy policy is at the top of the
home page. This is not always the case; many times the links to
the policy are on the side, at the bottom of the first page, or
placed deep into the site where no reasonable person can find it.
You go, SFNB!
166 CHAPTER 13
The Security First

Network Bank
makes the link to
a privacy policy a
top priority on
their Web page.
Click Your Privacy
to read what
SFNB will do to
protect you.
The language of the SFNB site is not remarkable, but it’s clear. It
tells you when the institution collects personal information, how
the information is used, and it proclaims, “Does Security First
Network Bank provide information to external parties? Absolutely
not!” But the bank clarifies this statement by saying that it will
share information with a company that is helping it carry out its
business. For example, it will share information with the company
managing its ATM and debit cards.
We’re Watching On the other hand, the First Internet Bank of Indiana
You:
(www.firstib.com) doesn’t display its privacy policy on the first
Yikes! Privacy is a
top concern for con- page. In fact, the link to the policy is hard to find. After clicking
sumers online. In a through the site, we found it on a page titled “About First IB.” Its
survey by Privacy and
American Business, a policy looks like that of many other online banks, but a close read
whopping 81 percent
of Internet users and
shows just how far an institution will go to collect information
79 percent of about you.
Internet consumers
were concerned First, IB collects a lot of details about you while you are on its
about threats to
their privacy online.
site. While you are just surfing around, the bank is, in essence,
reading over your shoulder. The privacy policy explains just how
much it might learn: “First IB is committed to continuous
improvement of our Web site. We may use software tools to
gather information about site visitors’ browsing activities in order
to target areas for improvement. Information gathered may
include date and time of visits, pages viewed, time spent at the
site, browser types, Internet service provider, and the site visited
just before and just after the First IB site.” That’s a lot of informa-
tion, but at least the bank tells you what it’s doing.
Wingspan Bank (www.wingspan.com) places its privacy policy at
the bottom of its first Web page. It’s one of the more detailed
policies online. It also allows consumers opening a checking or
credit card account, obtaining an unsecured installment loan, or
buying a certificate of deposit the option of providing necessary
information by telephone or mail instead of by transmitting it
online.
CompuBank (www.compubank.com) has its privacy policy hidden
on its security page. Although security and privacy are separate
issues, there is enough overlap that you can understand this juxta-
position. Still, the policy is hard to find when you first get to the
site, shown in the following figure.
CompuBank puts
its privacy policy
on a security
page, which may
not be an obvious
connection to a
customer visiting
the Web site.
CompuBank has three seals at the bottom of its page to give the
consumer more confidence about its privacy and security:
BBBOnline, TravelersProperty Casualty, and VeriSign. You can
click each seal to learn more about what they mean. Like other
banks, one part of CompuBank’s privacy policy is very helpful to
the consumer: The bank provides an email address and phone
number that customers can use to check what information has
been gathered about them.
168 CHAPTER 13
What’s Behind Those Seals?

Bankers view the online world as the wild, wild West. It’s their
new frontier, promising expanded markets and more efficient
ways to serve customers. But just as many a sheriff wasn’t much
liked in the days when our country was rushing west to find gold,
banks aren’t exactly hankering for government oversight of cyber-
space. To prevent the government from passing too many laws,
banking and other industries are attempting to police themselves.
BBBOnline is the Better Business Bureau’s attempt to bring its
mission to the online world. BBBOnline has three seal programs,
one for reliability, one for general privacy, and one for children’s
privacy. Companies that display the reliability seal have agreed to
fair advertising standards, established by the Better Business
Bureau, to respond promptly to consumer complaints and to com-
mit to independent third-party dispute resolution.
BBBOnline is bet-
ting that its good
name will bring
consumer confi-
dence to online
commerce. That
BBB image has a
long history in the
offline world.
Truste is a nonprofit privacy initiative. It provides third-party

oversight of the privacy standards at sites. Companies join the
initiative, have their systems certified, and then carry the Truste
seal, usually found at the bottom of the first page of the Web site.
Similar to that of BBBOnline, the intention of this initiative is to
increase the confidence of consumers when they are conducting
e-commerce.
This seal from

Truste is all about
privacy, indicating
that the site has
taken steps to
protect your per-
sonal information.
Truste has a good
reputation with
online watchdogs.
VeriSign does more than certify sites as secure. It also sells a

security infrastructure to the banks, meaning that it provides
advice and computer technology to ensure security. The company
has partnered with some of the larger players on the Internet,
including Visa, Netscape, Microsoft, and America Online.
When you see

this VeriSign
check mark, you
can be assured
that the Web site
has taken an
extra step to
secure your infor-
mation.
TravelersProperty Casualty is unlike other seals that certify

whether a system is secure or maintains privacy standards.
170 CHAPTER 13
Instead, this seal is displayed on the sites of online banks that

provide their customers with insurance protection against unau-
thorized transactions from their online accounts. This insurance
protection is provided by a SafeWeb Remote Banking Insurance
policy from Travelers Bond, a unit of TravelersProperty Casualty.
The policy insures you for up to $4,000 in losses.
Who doesn’t feel

safe under the
familiar Travelers
red umbrella?
The Gold Standard for a Bank’s Privacy

Policy
Government regulators haven’t yet mandated what should go into
a privacy policy. They are only making strong suggestions. The
following are the suggested elements that should appear in pri-
vacy statements. If a policy has these components, you know the
bank is at least trying to be consumer friendly. These principles
have been developed by the Federal Trade Commission.
• A notice to consumers about information-gathering practices

before any personal information is collected
• Choice for consumers about the collection and use of infor-

mation from or about them and the option to restrict use of
the information
• Security and accuracy of consumer information collected

protecting against loss, unauthorized access, and disclosure
of information
• Access for consumers to information collected and the ability

to identify and correct errors in a timely and inexpensive
manner
• Enforcement and consumer redress to ensure compliance

with the privacy policy and information practices and a
means of recourse for an injured party

Privacy is a top concern of most Internet users; you shouldn’t be
any different. Always read your bank’s privacy statements. That’s
where you can learn what it intends to do with the information it
collects about you.
The government has a laissez-faire attitude about placing man-
dates on the e-commerce world. You have to be the one who pro-
tects your own privacy.
Look for privacy seals on your bank’s Web site. These seals can
help you have peace of mind that the bank’s privacy policies are
being monitored by a third party.
CHAPTER 14
Your Privacy and Security
Checklist
Privacy and security are two of the hottest issues in the online What You’ll Learn
in This Chapter:
banking world. If we, as consumers, don’t feel as though our
. The bottom line
money is safe and our information is private, we just won’t use an on protecting
online service. And that’s not good for banks. your privacy.
In the two previous chapters, we gave you the details about the . Aggressive secu-
rity steps you
security and privacy policies at banks. In this chapter, we want to can take.
give you the best tips to help you proactively protect your money . How online
and identity when online banking. banks are trying
to outmaneuver
hackers.
10 Privacy Consumer Tips
The following words of caution on how to protect your privacy
are good advice for you when banking online—and when you are
conducting any e-commerce:
• Look for posted privacy policies—It’s a great way to learn

directly why a bank is asking for certain information.
Regulators aren’t mandating that privacy policies be posted
as of this writing, but they are advising that policies be
posted on sites. If your bank doesn’t have a policy at its site,
call and ask why. If it refuses to give you the policy, choose
another bank.
• Don’t give out personal information if it isn’t necessary for

the particular transaction—For example, why should you tell
a bank your mother’s birth date when you are opening a
checking account? The institution might want that informa-
tion to market flowers to you on that day, but providing that
information isn’t vital to the opening of the account. Call the
bank and ask why this information is being collected.
174 CHAPTER 14
• Know that certain information is more sensitive than other

data—Your birth date, Social Security number, and mother’s
maiden name should only be given when you feel comfort-
able that the information will be used properly. Why your
mother’s maiden name? The banking industry has determined
that the chance of any stranger knowing that about you is
very remote. Because of that, the industry has adopted that
information as one of the secret codes to have access to infor-
mation about your accounts.
• Parts of your bank’s site are secure, and others aren’t—If

you are emailing the bank from its site, ask first whether its
email is secure. If not, don’t email the bank information from
there. Most email is not secure and, therefore, is not private.
• Never give out your passwords—Passwords have become as

sacred as our mothers. There are a few bank sites that have
begun asking you to share passwords of your accounts with
other companies. If you do share your password, you will
have access to balances at one site, in one glance, for
accounts you may have with any number of businesses
(including airline frequent flyer programs or grocery store
purchasing points). If your bank offers this capability, you
should call and achieve a comfort level with the security of
the system before giving it your passwords.
• If asked for a credit card number, make sure that your system
and that of the bank’s is secure—If someone steals your
credit card number, you will only be responsible for $50, but
it can wreak havoc with your credit ratings, which can take a
long time to fix.
• If you are the type who needs third-party confirmation about

serious matters such as privacy, look to see if your bank’s
policy is certified by other organizations—Some of the seals
to look for are BBBOnline, Truste, and VeriSign.
• Beware of scam sites—Never give personal information to a

site that you aren’t 100 percent sure is legitimate. If you
decide to do business with an online bank, make sure it’s
YOUR PRIVACY AND SECURITY CHECKLIST 175
legitimate. Go to the FDIC site at www.fdic.gov and click the

Is My Bank Insured? link. It’s a great way to verify your
bank’s trustworthiness.
• See whether you can stop cookies—If you don’t like cook-
ies—those files sent to your computer by Web sites to track
your online activities—you may be able to stop them. Some
browsers can stop cookies and others can warn you when you
are about to get one deposited on your hard drive.
• Look for alternative methods of providing information—If

you are uncomfortable for any reason with giving your bank
information online, call your bank and ask whether you can
provide the information over the phone or with snail mail.
Some banks list these options in their privacy policies.
10 Security Consumer Tips

Banks are doing a lot with technology to ensure the security of
their systems. But you can help ensure security with a little com-
mon sense.
• Security starts at your desktop—When banking online, the

security of your transactions isn’t only up to the bank. It’s
also up to you. Never log on to your online bank’s site and
just walk away from your computer, especially if you’re
banking on a computer in a workplace or some other location
where others have access to your system. Some bank sites
realize, however, just how forgetful some of us can be. Many
of the online banks will automatically log you off if your
screen is left idle. This policy is for your own good. If your
bank doesn’t do this already, ask it to add this safety
function.
• Make sure that your bank is federally insured—This is easy

to do, and besides, you’ll feel like a sleuth in the process.
Log on to the Federal Deposit Insurance Corporation’s Web
site at www.fdic.gov. On the left bar, click the Is My Bank
Insured? box; you will soon find out whether your institution
of choice is a bank backed by the full faith and credit of the
176 CHAPTER 14
U.S. government. If your bank doesn’t show up in the FDIC

database, call (800) 934-FDIC or email consumer@fdic.gov
to ask why. There are some banks licensed to do business
that aren’t members of the FDIC. However, the standard in
the industry is definitely to be a member and to offer con-
sumers the assurances of federal deposit insurance.
When you check

at consumer@
fdic.gov, this is
what the screen
will look like if
your bank is a
member of the
FDIC.
• Make sure that your bank exists—Some companies that

aren’t banks use the word bank in their names. The govern-
ment has already shut down two sites that weren’t banks but
were using the names Freedom Bank and Netware
International Bank. As noted in the preceding tip, check with
the FDIC, call your state banking department or any of the
federal regulators to verify the legitimacy of the institution.
One sure sign that something might not be right is rates that
are too good to be true. If you think a site is suspicious,
report it to the FDIC. The FDIC gives details on how to
make suspicious bank reports at www.fdic.gov/bank/individ-
ual/online/sspcious.html.
• After using online banking services, log off before going to

other Internet sites—To be extra careful, close your browser
when you’re done with your banking activities and restart it
when you continue other online activities. Some sites like to
track where you’ve been just before you visit and just after.
You can prevent this snooping by just logging off.
• Use only a secure browser that supports private

transactions—The browsers accepted by most online banks
are Netscape Navigator, Netscape Communicator, and
Microsoft Internet Explorer. Many bank sites will allow you
to download a secure browser if your system doesn’t already
have one. Some banks will let you check your browser at its
site. If you don’t know what browser you have, you do a sim-
ple check at the Wells Fargo site (http://wellsfargo.com/per/
services/security/security2/) to find out.
The first page of

the Wells Fargo
site has a Security
Guarantee but-
ton. Click it.
When you get to
the Customer
Service page, click
Test Your Browser.
If your browser is
online banking
ready, you’ll see a
screen like this
one.
• Protect your computer from viruses—This is a constant

process. There are always new viruses. You must buy virus-
protection software and upgrade it (that service is free) on a
regular basis. Some bank sites, like Wells Fargo, will let you
buy this software online at its site.
• Be very wary of doing business with foreign banks—Many

foreign banks aren’t FDIC insured. If the bank closes, you
won’t get your money back. One foreign bank on the Internet
that closed was the European Union Bank based in the
West Indies.
178 CHAPTER 14
• Know where to get help—In addition to the government regu-

lators, know that you can get help from your state attorney
general’s office. Also, if you feel that you were victimized by
fraud, contact the Internet Fraud Watch of the National Fraud
Internet Center at www.fraud.org. The center will forward
reports to the appropriate government agency.
• Get a referral—The industry might disagree with this tip, but

before you sign on with a bank, try to find another person
who already is a customer. Another consumer can serve as
your best source for knowing whether there are any major
security problems with the bank.
• Adhere to basic Internet safety tips—The long list of basic

Internet safety tips also apply to online banking, including
limiting access to your computer, protecting your PIN and
passwords, creatively creating your passwords, refraining
from opening email attachments from unknown sources, and
refraining from installing pirated software.
Just How Much Does Industry Care About Security? A Lot

One of the basic operating principles of your bank is trust. A bank
knows it wouldn’t have your business unless you trust it with your
money. Maintaining this trustworthiness is key to a bank’s success.
That’s why some of the biggest players in the industry have created the
BITS Financial Services Security Laboratory. Banks backing this project
include the giants First Union Corp., Bank of America, BankBoston, Bank
One, Chase Manhattan, Citigroup, and Wells Fargo.
The BITS testing lab, based in Reston, Virginia, is where online banking
security systems are tested and developed to stay ahead of the efforts of
hackers. Cybercriminals are always trying to break into banking systems,
but they have had very little success so far. One reason is because busi-
nesses as a whole are always looking for ways to stay one click ahead of
the bad guys.
The technicians in the BITS lab have created a seal to certify testing of
security-related technology. The lab also has created an information-
sharing and analysis center to alert the industry to new security threats.
Companies that make the software and design the electronic systems for
online banks bring their products to the BITS lab to be tested by in-
house hacking experts. If a bank’s system proves immune to attacks by
the BITS hackers, the system is awarded a certification seal from the lab.
This seal helps banks know before they buy into these online banking
systems just how secure the systems are.

Privacy and security are top concerns for you and your bank. But
you can take aggressive moves to protect your money and identity
over the Internet.
• First things first. Always learn whether the site is a legitimate

bank. We’ve suggested that you find another customer who
has banked at the site and ask that person about the bank or
check with the FDIC Online (www.fdic.gov) to see whether
the institution is insured.
• After you know it’s a legitimate bank site, practice safe

e-banking, get a secure browser, protect your password, and
use common sense.
• You can’t take too many precautions.

PART IV
The Banking Revolution
Is Just Beginning
CHAPTER 15
What Customers Like
Best About Their Online
Banks
The rule of thumb on the Web: If your page takes longer than 10 What You’ll Learn
in This Chapter:
seconds to appear on your customers’ computers, you’ve probably
• The hottest fea-
already lost them. In the banking world, consumers want a quick tures and func-
visual response to their mouse clicks, and they want transfers tions of online
from one account to another to take place in real-time. banking.
• Award-winning
online banking
Speed Comparisons sites.
If speed on the Internet is your ultimate point of contention, and you
want find an online bank that downloads quickly, you can see compar-
isons at the Gomez Advisors site at www.gomez.com. When you’ve
opened the Gomez site, scroll down and check out the How Are the
Banks Performing? area. Type the name of the bank you want to check
out and bingo! You’ll see how your bank rates in the industry.
If you make a transfer from your checking account to your sav-

ings account on your home computer on a Sunday night, can you
rush out to the closest ATM and see that the transfer actually took
place? Some bank sites give you this real-time speed; others have
systems that are too clumsy or too inefficient to provide that level
of responsiveness. It costs a bank about $12,000 to build a Web
site that has limited bells and whistles and as much as $500,000
to develop an online, fully-transactional banking site at which you
can do all your business in real-time.
184 CHAPTER 15
Online banking sites compete against one another in all sorts of

categories, including what they offer and what they charge you
for their services. The industry is still young, so it’s taking some
banks longer than others to adopt the best features on their
domains. In this chapter, we’ll tell you what you can expect from
the best sites and just which banks keep rating high in online
banking beauty contests when compared with other banks.
The Features You Should Expect from the

Best
If your bank doesn’t have most of these features, we suggest that
you shop around. There are many star bank sites out there, and if
you use one that doesn’t offer the best bells and whistles, you will
likely get discouraged and go back to banking offline.
• Solid security systems—As discussed in Part III, “The Facts

About Security and Privacy,” your online bank site should
give you details about its security system. If the bank doesn’t,
this site is probably not where you should be doing business.
If you can’t find a security statement, call the bank and ask if
it has one posted on its site. One special note here: You want
the bank to have a system that automatically logs off if it
remains idle for a certain amount of time. That’s the best way
to stamp out fraud on your end if you get called away from
your computer by someone at the door or by a barking dog.
It’s also important to ask your banker whether the institution
considers security a one-time accomplishment or an ongoing
challenge. Hackers are smart enough these days that your
bank needs to think of security upgrading and vigilance as a
never-ending task.
Wells Fargo gives a detailed explanation of its security sys-

tem. It also gives its online site users a 100 percent guarantee
for any funds improperly removed from your account. Check
out http://wellsfargo.com/per/services/security/distributed/.
WHAT CUSTOMERS LIKE BEST ABOUT THEIR ONLINE BANKS 185
Wells Fargo shows

how security is
important at your
PC, over the
Internet, and in
the bank’s own
systems. On this
page, the bank
allows you to click
through explana-
tions of how secu-
rity is maintained
at all three loca-
tions.
• Posted privacy policies—The government doesn’t mandate

privacy policies yet, but banking regulators have suggested
that all bank sites post policies explaining why they take cer-
tain information from you, how they will use that informa-
tion, who they will share it with, give you an opportunity to
correct any information they gather about you, and give you a
chance to opt-out of any plans to share your personal infor-
mation with any other business. These policies are often
posted at the bottom of the first page of a bank’s site. Yes,
look for the small print, because it’s usually there and is
important for you to know.
• Real-time, not batch processing—To put up a real-time site,

banks have to spend thousands of dollars more on their
online operation. But, because consumers are demanding this
feature, some banks are making this investment. What’s the
difference between real-time and batch processing? In a real-
time system, transactions are actually made to your account
right when you click your mouse. If you transfer $1,000 from
your savings account into your checking account, you should
186 CHAPTER 15
be able to see that transaction at an ATM instantly. A batch

processing system, on the other hand, notes your order to
transfer funds; the bank actually makes the transfer after-
hours or later in the day. When deciding on a site, just ask a
bank representative whether the system is real-time or batch.
That’s the best way to learn this handy information before
you sign on with any bank.
• The site offers you the world in financial services—Some

sites are somewhat useless. They function simply as elec-
tronic brochures. You can learn what a bank has to offer, but
you can’t do any actual business online. The sites where you
can actually do business—transactional sites—are what you
need for Internet banking. In addition to being transactional,
the sites that get the best reviews are those that allow you to
do basic banking functions and obtain other financial prod-
ucts, including securities and insurance.
Walden Federal
(waldenbank.com)
offers its cus-
tomers a financial
services center.
Here you have a
clear menu of ser-
vices, from bill
paying to invest-
ing to shopping.
• The service is free! Or almost—How much you get charged

for online banking can get complicated. But some policies
are simple.
Wingspan has no charge for its checking account, which also

earns interest and has no cost for reviewing accounts and
transferring funds. Its bill-paying service is also free for 10

payments a month (25 cents for each additional payment) if
you have a checking account. If you don’t have a checking
account, you pay $4.95 per transaction.
Wells Fargo doesn’t charge anything for reviewing accounts

and transferring funds, but it does charge $5 a month for bill
payment, which allows you to pay 25 bills. Any additional
bills in a month cost 40 cents apiece.
At Citibank, the online connection is free if you have a regu-

lar checking account, and you can pay as many bills as you
want at no charge. If you customarily pay bills with a check
in the mail, this service could mean a lot in postage stamp
savings.
What’s odd about all of this is that it is not clear what banks
charge for what services. You will have to shop around. It’s
hard to find any pricing on the actual sites, and only a few
will list their fees.
• You get rebates for ATM fees—This is becoming an offering

by many Internet-only banks. Because they don’t have
branches or their own ATMs, some Internet banks will reim-
burse you for any fees a foreign ATM charges your account
to get your business. (A foreign ATM is any ATM not owned
by your bank.)
Wingspan Bank (www.wingspan.com) promotes its ATM Remember:

rebates on its first page, but you have to click deep into the Not all rebate poli-
cies are alike, and
site to the page that explains the terms of its checking some are hard to
account. There you find that the bank will rebate up to $5 find!
every month. As another example, Compubank

(www.compubank.com) will give you four $1.50 reimburse-
ments each month.
• Bill payment—The best banks will pay those you owe either
electronically or by cutting an actual check. As noted previ-
ously, there are different types of payment streams. In all the
systems, you may lose the “float” that customarily came
188 CHAPTER 15
when paying bills through the mail. For example, when pay-
ing through the mail, you can send your landlord a check on
the 25th of the month and your account holds on to those
funds until the landlord cashes the check and his or her bank
processes it. The time between the day you write the check
and the day it is actually cashed is the float period. With
online banking bill payments, the money is taken out of your
account on the same day the bank makes the payment,
whether the payment is made by cutting a check or taking out
the funds electronically.
• Twenty-four-hour phone access—It feels like a treasure hunt

sometimes, but the best sites have phone numbers clearly
posted. These dream sites also have these lines staffed, 24
hours a day, seven days a week. If your bank only lets you
talk to a machine, you aren’t getting the best
customer service.
Salem Five Cents Savings Bank, based in Salem,

Massachusetts, has been a long-time award-winning site. It
now has an electronic division (www.directbanking.com)
from which its customers bank online.
Salem Five Cents

has an excellent
contact informa-
tion page. From
the bank’s home
page, the contact
information is
easy to find, and
you have lots of
options.
First Internet Bank

of Indiana at
www.firstib.com
makes it easy for
its customers. The
contact informa-
tion link is exactly
where it should
be—on the first
page of the site.
And the Winners Are…

The award for “best online bank” is not an Emmy or an Oscar,
but online banks are nonetheless fighting for customers and good
ratings. Several different companies rate the banks, but the two
that stand out and that are quoted most often are a survey by
SmartMoney and an extensive rating by Gomez Advisors Inc., a
company that advises consumers about e-commerce and gives
advice to companies on how to be effective online.
In the last survey by SmartMoney, which is owned by Dow Jones,
the magazine considered 13 of the largest banks and the six
Internet-only banks that were up and doing business at the time of
its survey. The survey took into consideration six categories: secu-
rity, fees, level of service, account information, products, and cus-
tomer service. The last big winner in SmartMoney’s survey was
CompuBank (www.compubank.com), established in 1998 and
based in Houston. The magazine proclaimed that this Internet-
only bank “…placed first in our survey thanks to nonexistent fees,
a smorgasbord of services, and a cutting-edge Web site.” In last
place was Mellon Bank (www.mellonbank.com) for offering
“…few online products, a limited Web site, and fees for routine
services like the return of cleared checks.”
190 CHAPTER 15
If you visit the CompuBank home page, notice that this institution
places its pricing policy front and center. It’s easy to see why—its
services are free and it offers four ATM surcharge reimbursements
each month. Other consumer-friendly features include the click
box for 24-hour phone service and a host of security seals.
A quick review of
CompuBank’s
home page shows
that this bank
clearly under-
stands what’s
good for con-
sumers.
Gomez Advisors only ranks online banking sites for institutions

with $2 billion or more in deposits. The firm uses more than 100
criteria, including whether these online banks guarantee bill pay-
ments, provide real-time transactions, and offer customers com-
plete loan applications at the site. In the last ranking by Gomez,
the winning bank was Security First Network Bank
(www.sfnb.com), established in 1998 and based in Atlanta. In
hailing this bank, Gomez said, “SFNB holds on to the top spot by
offering a tightly integrated suite of deposit and credit card prod-
ucts with online applications, lifetime account histories, and com-
petitive pricing.” Another big plus with SFNB is that it maintains
a customer phone service 24 hours a day, every day.
Security First
Network Bank has
a simple-looking
home page that is
packed with fea-
tures that make
Internet banking
easier for the con-
sumer. This page
is a winner
because it makes
access to what
you really want
very convenient.
At the SFNB site, you can find the guarantees, locate the privacy
policy, and access your account very easily. Note also that the
contact information is right there on the first page. This bank has
nothing to hide.
Online and Old-

Gomez Advisors’ Top 10 Internet Banks, Fall 1999
Fashioned Banks:
You don’t have to read Smart Money or go to the Gomez site to learn There’s a good mix
which banks are ranked high in these contests. When the banks are of Internet-only
highly ranked, they will make that fact known when you get to their institutions and the
Internet sites. Security First Network Bank (www.sfnb.com) proclaims on old brick and mortar
its first page: “We’re number 1, Winter 98, Spring 99, Summer 99, Fall 99 banks in this list.
and we’re celebrating!” You can click a Gomez seal to see the top five Security First, which
banks for each of those ranking lists. ranks number 1,
brags in its market-
1. Security First Network Bank, www.sfnb.com ing language that
2. Wells Fargo, www.wellsfargo.com it’s “the world’s first
fully-transactional
3. Net.B@nk, www.netbank.com Internet bank.”
4. First Internet Bank of Indiana, www.firstib.com Ranked just below it
is one of our
5. WingspanBank.com, wingspanbank.com
nation’s oldest
6. CompuBank, compubank.com offline world banks,
Wells Fargo. We
7. Bank One, www.bankone.com
think you can find
8. Citibank, www.citibank.com good service with
9. US Access Bank, usaccessbank.com both types of banks.
In reality, they are
10. Huntington, www.huntington.com all starting to look
alike as competition
intensifies.
192 CHAPTER 15
SmartMoney’s Top 10 Internet Banks, June 1999

1. Compubank, www.compubank.com
2. Citibank, www.citibank.com
3. Wells Fargo, www.wellsfargo.com
4. Security First Network, www.sfnb.com
5. Crestar, www.crestar.com
6. Net.B@nk, www.netbank.com
7. Key Bank, www.key.com
8. USAccess, www.usaaccessbank.com
9. Wachovia, www.wachovia.com
10. Bank of America, www.bankamerica.com
11. Telebank, www.telebank.com

Test drive a lot of Internet banking sites and shop around for the
good fees and rates. We think the top features to look for when
choosing a site are solid security, privacy guarantees, and policy
statements. And yes, these features must be easy to find.
It doesn’t hurt to see how the experts at Smart Money and Gomez
Advisors rank online bank sites. Look for the institutions that
appear in both lists—such as Compubank, a pure-player, and
Citibank, a brick-and-mortar bank with an Internet presence—and
compare them by checking out their demos.
CHAPTER 16
The Bottom Line on
Sanity and Banking
Online
There’s fear hovering in the board rooms of banks around the What You’ll Learn
in This Chapter:
country. Bank directors know that competition lurks just about
. That the compe-
everywhere. Businesses that traditionally haven’t offered banking tition is fierce;
services are now marketing them along with credit cards, mutual it’s a consumer’s
market.
funds, insurance policies, and loans. And just about every type of
. All about the
enterprise online is breaking into the financial services world, “clicks” of the
whether the company sells clothes, books, or Internet access. trade.
For you, the consumer, this intense competition means that you . What to do if
you feel you’ve
can demand a little more from whomever you are entrusting with been burned.
your money. You can and you should.
We think it’s good for consumers to remember this power they
have with their banks. In many ways, banks have the upper hand,
but we think you should just go to another institution if you aren’t
treated fairly—in either the online or offline world.
Up until this chapter, we hope that we’ve made banking online Why Banks Like
the Internet:
seem easy. We aren’t going to completely change gears now, but
ebank.com
we know that even the most determined consumer will run into (www.ebank.com)
trouble now and then. That’s why we want to show you a few says that the aver-
age payment trans-
powerful tools to keep in mind as you venture out with millions action over the
telephone costs 54
of others into the world of banking on the Internet. cents; over the
Internet, the trans-
Why Consumers Have the Power action costs 4 cents;
at a bank branch,
When we were growing up, most families didn’t have a tough the cost is $1.44.
decision when picking a bank: It was usually the bank around the
194 CHAPTER 16
corner. Today, your “bank” can be a credit card company, a

department store, an investment firm, a traditional bank, or a
credit union. And it’s rarely located just around the corner.
Many of us are choosing to manage our money with entities
called non-banks. We are taking our money out of traditional sav-
ings and checking accounts. Banks no longer hold the majority of
America’s wealth. More of us are betting on other money man-
agement strategies, including investing in the stock market. For
the community bank or credit union, even more competitive fac-
tors have been put into play. Internet banks are offering highly
competitive rates and marketing their products directly into our
living rooms over our home computers. And megabanks are grow-
ing into one-stop financial shops as they merge and acquire insur-
ance companies and investing firms.
Banks Are Losing Business

Banks are losing it, literally. From 1990 to 1998, bank shares of private
domestic assets fell from 21 percent to 9.2 percent; equities rose from
20.6 percent to 32.8 percent; pensions declined from 20.3 percent to
18.5 percent; mutual funds rose from 3.5 percent to 7.7 percent; and
money markets went slightly down from 2.9 percent to 2.8 percent.
Banks hope that by getting online and offering a wide variety of prod-
ucts and services, they will regain some of their share of the wealth.
No one is predicting the complete demise of the traditional bank. But
the bankers who run these old-fashioned institutions have to wake up
and smell the new e-conomy if they are going to survive and thrive in
this new century. That includes getting up to speed with the Internet
and adding other services, such as small business lending.
Who Wants Your Banking Business?

Who are the newcomers coming after your money? When you’re
surfing on the Internet or walking down a city street, banking ser-
vices are now available at many non-traditional locations.
THE BOTTOM LINE ON SANITY AND BANKING ONLINE 195
Bill Payment Agencies

In an earlier chapter, we told you how banks want to help you pay
your bills. Traditional banks want to provide this service—and so
do a host of non-banks on the Internet. PayMyBills.com is one of
these new competitors.
PayMyBills.com will send you bills through email and allow you
to pay them through its Internet system. Here’s the way this
works: You tell your payees to mail your bills to the PayMyBills
address, and PayMyBills then emails the bills to you. When you
get the email about the bill, you go to the PayMyBills Internet
site and initiate payments. One big plus about this site is that
when you move, you never have to worry about whether your
bills will find you. If you use this service, your permanent billing
address can always be PayMyBills.
If you use the

PayMyBills service,
you can have all
your bills directed
to the company,
which will then
email you when it
receives a bill. You
can then go the
site at www.
paymybills.com
and initiate pay-
ments.
World Wide Web Be-Alls

One of the Internet giants getting into banking services is
MSN.com, Microsoft’s online ramp on to the World Wide Web.
When you open this home page (www.msn.com), click the Money
button to enter MoneyCentral, Microsoft’s comprehensive report
on everything you need to know to manage your finances.
MoneyCentral has a lot of information about banking and bills,
taxes, savings, retirement, and wills.
196 CHAPTER 16
When we went to the site, we learned a lot about how banks

make or lose money off their customers. Did you know that if a
bank doesn’t generate any fees by giving you a checking account,
it loses about $100 a year? On the other hand, the average check-
ing account brings in $200 to $600 in cross-selling profits a year.
MoneyCentral is just another competitive force for banks to
reckon with as they go after managing and holding your wealth.
MoneyCentral
offers a lot of
basic information
and updates on
rates, but it also
offers an online
bill-payment ser-
vice. This screen
shot shows you
the first page of
its bill-payment
system.
Credit Card Companies

Another new player venturing into banking is the credit card com-
pany American Express. In July 1999, American Express
launched its online banking service, Membership B@nking
(www.membershipbanking.com). This service offers competitive
interest rates and reimburses ATM charges assessed by other
banks.
The Ubiquitous On the home page of the service, there’s a chart that makes it
Credit Card:
easy for you to locate the interest rates the company offers. We
In the United States
alone, American like the chart because it uses up-to-date numbers provided by
Express has 22 mil- Bankinfo.com. You should know that American Express is not just
lion charge card cus-
tomers. The a credit card company anymore. It can provide you with money
company is aiming
market investment products, savings and checking accounts, cer-
for 1 million bank
customers in five tificates of deposit, and lines of credit.
years. (Online
Banking Report, July
1999)
On the front page

of its site,
American Express
Membership
B@nking makes it
easy for you to
see its rates and
to compare.
Membership
B@nking has an
easy site to navi-
gate. On this
demo page, the
bank doesn’t
make you hunt
around for the
functions you will
likely use regu-
larly.
You Can Make Deals with Your Bank

We’ve painted this scenario of competition only to reinforce that Where Have All
the Banks Gone?
you should be bartering with your bank. Tell your current bank
In 1985, there were
about the better certificate of deposit rates you spot online or 14,417 banks and
about the interest-bearing, free checking accounts. To keep your 3,626 thrifts or sav-
ings and loans in
business, your current bank has to meet these offerings. the United States.
At the end of 1998,
Who should you call? If there is a nearby branch, call or visit the there were 8,774
branch manager. If you bank with an Internet-only institution, banks and 1,728
thrifts. In just 14
send an email to customer service and ask that a manager years, 42 percent of
all depository insti-
call you. tutions disappeared.
Consolidation was
Smooth Surfing in Troubled Waters rampant in the
1990s.
We strongly recommend that you place calls to the management
of your current bank if you are having problems or need to nego-
tiate rates and fees. We also think you should avoid banking at
institutions that don’t have strong, user-friendly policies in place.
Internet banks have several features that can give you fair warning
about their policies and give you a clear glimpse of how they
work. If you use these tools before you sign up with a bank, you
198 CHAPTER 16
will have a better understanding of the good and the bad you
might encounter with the bank.
Visit the Physical Branch

Our first suggestion is helpful only if your Internet bank also has
brick-and-mortar branches. If it does, visit your bank and try out
the Internet site on their computers with a banker nearby. Many
banks have demo computers for you to use in their lobbies so that
you can test drive their systems. Some banks also hold one-night
lectures on how to use their online services. Both of these learn-
ing vehicles are worth your time to make your online banking
experience go smoothly from your first click.
Online Tools to Make the Banking Experience

Better
If there is no actual bank to visit, there are many tools online that
help you pick a bank or solve a problem. Use the features
described in the following sections.
Frequently Asked Questions (FAQs)

FAQs are gold mines of information. As we were exploring
dozens of sites, the FAQs are where we found some of the best
information about the banks. Most of the time, you can find the
FAQs for a site on the home page, but they can also be hidden
behind customer information boxes or somewhere around the
demos.
These lists of questions and answers can give you quick informa-
tion. For example, if you can’t find a rates button to learn what a
bank charges, go to the FAQs page because that question will
probably be answered there.
Firstar (www.firstar.com), based in Milwaukee, Wisconsin, has a
FAQs list of about 10 questions and answers that give you the
basic insights you need about a bank you are considering. The
FAQ page tells you about the security at the site, the equipment
you will need to use the site, and other useful information.
On the FAQ page

of the Firstar site,
you’ll find ques-
tions and answers
that can help save
you money if you
don’t use the site
at least once a
month. Wow!
That $10 charge
could sting if you
didn’t know this
information in
advance.
Bank of Hawaii
(www.boh.com)
has a FAQs link
you can click on
the first page of
its online banking
feature. The FAQs
page lists answers
to 15 questions,
from how to pay
bills online to tips
on keeping your
transactions
secure.
Demonstrations
The demos are your next best source of information. In the real
world, it’s rare for your banker to give you a tour of the facilities.
But in the virtual world, almost every Internet bank will take you
on a tour of its site with a demo session.
200 CHAPTER 16
Presidential
Savings Bank,
based in
Bethesda,
Maryland, has cre-
ated a very help-
ful demonstration
site that lets you
quickly surf its
Internet banking,
bill payment, and
statement viewing
features. We like
how the bank
includes basic
guidance next to
the demo link
buttons.
Ohio Savings
Bank plays up its
demo a little
more than most
banks. It has an
animal charac-
ter—a mouse
named Webster—
that will take you
on a tour of the
site.
24/7 Telephone Help

Although we’ve mentioned customer service help lines already,
let us repeat that we consider this feature your best offline tool for
your online banking. Some banks offer telephone access only dur-
ing workday hours; others offer the service 24 hours a day, 7 days
a week.
Because the beauty of online banking is the anytime, anywhere
reality of it, we think you would be wise to pick a bank with 24-
hour telephone access. That’s the point of all of this. You want to
bank at midnight, 3 a.m., or whenever you have the time.
Some banks list their customer service telephone numbers on the

first page of their sites; others place these phone numbers in the
FAQs section or under a customer service or information click
box.
In addition to their customer service by phone, banks also offer
email assistance. Although we’ve found that banks are prompt in
responding to emails, we still think that the phone service is the
better route for instant information.
Site Directories
Site directories aren’t unique to online bank sites, but most banks
include them. It’s a good way to learn what’s there without all the
interference from busy graphics. A site directory lists all the
pages you can access, usually on one or a few screens, so that it
only takes a quick glance to find what you want without having to
click and click and click.
Bank United
(www.
bankunited.com),
based in Houston,
has a tab on its
home page you
can click for a site
directory. When
you open the
directory, you’ll
find the list clear
and to the point.
News Releases
Not all banks include news releases on their sites, but these arti-
cles can be very helpful as you try to learn more about your bank.
The news releases are meant to give information to reporters, but
consumers can use them to get the news directly from the
institution.
202 CHAPTER 16
Search Bars
As we were surfing hundreds of sites to do the research for this
book, we sometimes found it nearly impossible to find what we
wanted (like the site’s demo or the FAQs). Luckily, some banks
include search bars on their home pages. If you’ve been surfing
around a site and are unsuccessful in finding what you want, try a
search, if one is available.
You use the search bar in an intuitive manner: type the phrase
you’re looking for in the box and press Enter or click the Search
or Find button next to the box. Most bank sites offer some tips on
using their search function, so don’t hesitate to use it if you’re
really stumped.
We know you are pressed for time and that scrolling through
FAQs, reading news releases, and playing around with demos
may at first seem like a waste time. Who likes to read the instruc-
tions anyway? When it comes to putting a ping-pong table
together, you’re right. You might be able to get by without reading
the how-to booklet. But when it comes to Internet banking, we’ve
found that the more you know, the better the experience, and the
easier it is to get your banking accomplished.
Where to Go If Your Bank Fails You

If you do a lot of banking online or offline, you may run into
problems when you feel you aren’t being treated fairly at some
point. Perhaps you signed up for a bill payment service, don’t use
it for a several months, and then discover that the bank is charg-
ing you for the service anyway. Because we are in a consumer’s
market, you might have a chance of getting those fees waived by
calling the bank.
But sometimes you will have problems and your banker won’t
budge. This is when you should file complaints with state or fed-
eral banking regulators. At the least, you should contact the regu-
lators to see whether they can offer assistance.
Keep the following list in mind when you need to take your com-
plaint to someone who will care:
• Federal Deposit Insurance Corporation—Insurer of the

majority of banks, Division of Compliance and Consumer
Affairs, (800) 934-3342
• Office of the Comptroller of the Currency—For national

banks, Customer Assistance Group, (800) 613-6743
• Office of Thrift Supervision—For thrifts or savings and loans,

Consumer Program Division, (800) 842-6929
• Board of Governors, Federal Reserve System—Banks with

state charters, Division of Consumer and Community Affairs,
(202) 452-3667
Most of us don’t know which of these agencies regulate our

banks. To the consumer, it really doesn’t matter until you have to
file a complaint. For a quick online way to find out who regulates
your institution, go to the www.fdic.gov site. There you can click
Is My Bank Insured? And type in the name of your bank. If the
bank is insured, the FDIC site will tell you which agency is the
institution’s primary regulator.
We also found the Federal Trade Commission Internet site
(www.ftc.gov) to have helpful online advice. You can reach the
FTC Consumer Response Center by phone at (877) FTC-HELP.
Bad, Bad Banks

We’ve tried to help you to find good banks online. But if you
wind up with a dog of an online bank, you should know that you
have plenty of other options. There is a site on the Internet, devel-
oped by an upset bank customer, that highlights complaints about
banks online and off-line. The site is www.badbanks.com.
When we talked to the creator of BadBanks.com, he explained
that he doesn’t check on the complaints filed, but he does use
some discretion and his instincts to determine which should be
placed on his site.
204 CHAPTER 16
The site keeper hears from bankers, too, griping about the com-
plaints. This home page may be worth checking to see whether a
bank you are considering as your financial institution has ended
up with a complaint.
It looks official,
but it’s not. It’s
the Internet doing
what it does best:
providing a free
forum for just
about anyone to
speak his or her
mind about bad
bank experiences.

Don’t be afraid to call your banker to complain, to ask for better
service, or to negotiate a better rate. One of the hottest topics
today for bankers is how they can retain their customers. That’s
you. Perhaps you can make a few suggestions.
Some of the best tools you can use as you learn to bank online
are demos, frequently asked questions (FAQs), news releases,
and site directories.
If you think your bank is treating you unfairly, take your
complaint to the next level. Banking regulators want to hear
from you.
CHAPTER 17
Welcome to the Future:
What’s Next for Online
Banking?
Bankers are falling over each other—and every other Web What You’ll Learn
player—as they race into the future. They want to be the ultimate in This Chapter:
. Why bankers are
Web host, better than Charles Schwab & Co., Yahoo!, Microsoft,
striving to be
eBay, and any of the other Internet-smart giants. A bank’s compe- cyber-central.
tition comes in many forms in the online marketplace. It’s not just . Smart appli-
other banks. ances: How you
can bank off
Banks know they must get online with more than static marketing your microwave
oven.
pages and traditional financial service products. They’ve done that
. How online
pretty well already. Take for instance, WingspanBank.com banking helps
(www.wingspan.com), an Internet-only bank based in Wilmington, complete your e-
Delaware, established in 1999. This pure player, a bank without life.
brick-and-mortar branches that is connected with its customers

solely through Internet access, offers a wide array of financial
products and management tools, including checking and savings
accounts, mortgages, insurance products, and mutual fund invest-
ments. Today, a growing number of banks want to offer those
products and more. They want to be the end-all, be-all love in
your cyber world. You shouldn’t have to go to any other site for
your e-satisfaction. Whether it’s for medical information, the
weather, sports scores, insurance, investing, or buying certificates
of deposits, banks want to be the key source of your e-xistence.
206 CHAPTER 17
The Crystal Ball

Here are some predictions by a few of the top thinkers in the banking
industry.
Harvey Sax, president of HomeCom Communications: “Not too far in the
future, consumers will log on to their community bank Web site and be
greeted with a message addressing them personally such as ‘Welcome
back, Mr. Sax. It is good to hear from you again. Your last visit was on
March 15, 2002.’”
Matthew P. Lawlor, chairman and CEO of Online Resources &
Communications Corporation: “The end of banking as we know it is not
around the millennium corner, but there’s no question that a new cus-
tomer will dominate by 2020. She will rarely, if ever, set foot in a branch
but will want instant access to her money and to move it in real-time.”
There are primarily two ways bank CEOs will be able to achieve
this unrequited relationship with us. They’ll have to have smarter
brains than other corporate executives, and their machines have to
be smarter, too.
So what’s next?
How Your Bank Plans to Woo and Wow

You
Hopefully, this won’t scare you: Banks plan to get into your
brain. They want to market services and products to you that they
already know you will want to buy. Mass-marketing to all six bil-
lion of us on planet Earth is definitely out. Customer-specific
marketing is in. Each of us represents an individual market. We
are no longer a part of a huge demographic group. With the abil-
ity of computers today to store and sort massive amounts of infor-
mation, banks and other businesses are using data-mining
techniques to increase their ability to understand who we are.
This computer analysis allows a bank to predict with great preci-
sion the products and services we want to buy and exactly how
much we are willing to spend to acquire those products.
Amazon.com is an expert in this one-on-one, highly-sophisticated
marketing approach. When you buy a product from Amazon
(www.amazon.com)—a book, for example—its system transfers a
file into your computer’s system. This sneaky file, called a cookie,
tracks information about where you go on the host site and what
WELCOME TO THE FUTURE: WHAT’S NEXT FOR ONLINE BANKING? 207
interests you. With cookies, an e-business can customize mes-

sages to you each time you go to its domain. For example, if you
buy a science book from Amazon.com, the next time you log on,
the site will suggest other science-related publications. That’s
what happened to us when we bought a book about Rosalind
Franklin, a woman scientist who took the first pictures of DNA.
Note how
Amazon.com sug-
gested that we
might want to
consider several
titles related to
DNA and science.
The last book we
bought was about
DNA (don’t ask),
so why not offer
us a few other
titles on the same
theme?
The players in e-commerce know that they must use technology

tools such as cookies to stay in business. The Web world is cold,
and we consumers will look for sellers who show at least a little
care about who we really are—even if it isn’t a human touch but
a smart computer reaching out to us. The Internet is overwhelm-
ing to us as surfers and consumers. Thus, anyone who can filter it
down to identify, in a non-intrusive fashion, what we really want
is more likely to get our attention and business.
Banks and other e-commerce merchants may even have to give a
little to their competitors if they want to become central points of
contact for a consumer on the Web. The financial services indus-
try likes to call this one-stop shop an aggregator. An aggregator
collects information about all your commerce records and
accounts, whether financial or not, and reports this data to you at
one site. You may bank at Chase, fly with Delta, invest with
Schwab, and have a couple of certificates of deposits at Citibank.
208 CHAPTER 17
Even though these are separate companies, the smart bank—or

for that matter, any aggressive e-commerce site—will want to
enable you to get a report on all these accounts at their
home page.
A banking software and systems provider, Edify, is already mov-
ing in this direction. The company is convincing its bank clients
to become the aggregator of choice for its customers. BellSouth is
one of the early users of this technology.
You can see that

BellSouth is beat-
ing many e-sites
in the race to
become an infor-
mation center for
its customers.
Here, with one
master password,
you can view your
frequent flyer
accounts for more
than one airline,
your investment
account with
Schwab, and your
different email
accounts.
Your One-Trick Computer Is Simply

Outdated!
The future also brings with it the promise of a lot of cool, new
hardware that will make online banking more convenient and far
from what we knew in the late 1900s. What do you think about
cooking a chicken in the microwave and reading your checking
account balance at the same time off the door of the oven? NCR,
which provides banks with computer systems, opened the
Knowledge Lab, based in London, in 1996. The lab has devel-
oped a smart appliance—a microwave oven that can perform
electronic banking functions while it heats up your dinner. The
creators of the microwave bank figure that the kitchen is one of
the most-used rooms in a home and that it would be a prime loca-
tion to identify new Internet outlets. You are already there to cook
and eat, so why not take a few moments to check on your savings
account balance? The NCR microwave bank has been designed
with a touch-screen monitor in the door and voice recognition
software that eliminates the need for a keyboard.
The onslaught of other devices, many hand-held or that fit into
your pocket, are also challenging the laptop and PC as the hard-
ware of choice for banking online. Wireless connections to the
Internet are gradually making hard-wired, bulky computers seem
like unnecessary desk clutter. Palm Computing, Inc. has devel-
oped a hand-held platform that enables its users to access the
Internet by simply raising a small antenna and dialing to the Web
over the airwaves. Several models of cell phones have also
evolved into Web phones, giving users access to the Internet over
tiny, pocket-sized devices.
Both of these handy, hand-held devices keep you in touch with
the cyber world, even if you are walking to lunch or rushing to
and from meetings. As discussed in Chapter 11, “Trust Is More
Than a Word,” there is still a lot of product development neces-
sary to combat the transfer of financial information over the
Internet—especially over the airwaves.
The future will also bring with it a slew of new services and prod-
ucts offered by banks. Just last year, Congress and the president
cleared the way for banks to more easily delve into the insurance
and securities business. Along with making it easier to offer addi-
tional products, such as insurance and stocks, competition among
online banks will force some banks to offer more novel products,
services, and functions.
Bankinfo.com (www.bankinfo.com), an all-around source of bank-
ing information on the Web produced by Thomson Financial
Publishing, asked its visitors what features they would like to see
offered in the future as online banking grows and matures. The
suggestions included providing customers with a personal finance
program that would track their transactions (including noting
what would be tax deductible); providing extranet sites that would
allow a consumer to manage mortgages, auto, health, and home
insurance, educational loans, and savings plans; offering cus-
tomers free palm-held computers; providing free Internet access;
210 CHAPTER 17
using real-time emails to alert customers about low checking

account balances; and providing online chat sessions and online
banking schools.
One of the more innovative suggestions from consumers was that
banks should provide virtual-reality kiosks that would allow them
to interact with the type of banker with which they are most com-
fortable (for example, a woman or a man, old or young, and per-
haps even a dog). Bankinfo.com gladly reported that its survey
showed that 85 percent of participants in its survey preferred
banking with a golden retriever (a person’s best friend).
Will All This Technology Drive Us Insane or

to an E-asy Life?
The clock strikes 6 a.m. Your coffee maker clicks on and begins
brewing your first cup of java. You rise to the morning news on
your radio.
As you read the newspaper—yes, an old-fashioned paper ver-
sion—you speak to your microwave bank. Recognizing your
voice, the microwave begins summarizing the day’s issues and
events for you, including the status of your investment portfolio,
what the markets are doing in other hemispheres, a reminder that
today is the day to renew your certificates of deposit, an update
on your checking and money market account balances, a sugges-
tion to avoid the expressway on your way to work because of
construction, a warning to wear a heavy coat to keep warm in the
snow, and—by the way—congratulations, your favorite NFL team
won in overtime after you went to bed.
Coming Soon: Before you take your last sip of coffee, your online bank makes
The NCR Knowledge one final suggestion: It’s your mother’s birthday and she likes red
Lab has already
developed this roses. You tell it to send a dozen ASAP. It shows you a picture of
microwave bank. As a bundle of roses and, through digital smell technology, you enjoy
the lab asserts,
“Tomorrow’s finan- a whiff of the sweetness of your gift. When you are walking out
cial consumers will
be as different as
to the car, you realize that any bank after the heart of your mother
the technology they deserves all your business—whether it’s as the vendor for your
use. Today’s 7-to-15-
year-olds—the Wired
checking account or the purveyor of tickets to a Yankee’s game.
Generation—will Your father’s bank just won’t ever be what it used to be.
have no concept of a
bank branch.”

More and more, banks are adding several non-banking features to
their sites to stay ahead of all of the competition on the Internet.
They want to be your Web host. Don’t be surprised when you can
buy flowers from an Internet bank.
Get ready for banks to get inside your brain or at least into your
home computer. They are dropping cookies into your hard drives.
Cookie files track information about where you go on the host
site. The banks want to customize marketing pitches to you based
on your Web surfing.
In the future, will we do all of our banking on smart appliances in
our homes and never set foot in a bank branch again? Yes, if
banks can continue to improve their Internet sites by making them
easier to navigate, faster, and free!
PART V
Appendixes
APPENDIX A
Banking Sites in This
Book
Institution URL Comment

BankBoston www.bankboston.com Boston-based
super-regional
bank.
Bank of America www.bankofamerica.com Nationwide
bank that has
resulted from
the merger of
Nationsbank
and Bank of
America.
Bank of Hawaii www.boh.com Hawaii-based
bank.
Bank of the West www.bankofthewest.com California-based
provider of
online banking
services.
Bank One www.bankone.com A large nation-
wide bank and
the backer of
Wingspan Bank.
Bank United www.bankunited.com Houston-based
bank.
Bay-Vanguard www.bayvanguard.com An example of
Federal Savings how a smaller
Bank community bank
can effectively
compete and
serve customers
through
Internet-based
online banking.
Busey Bank www.busey.com An Urbana,
Illinois-based
bank.
216 APPENDIX A

Carolina First www.carolinafirst.com South Carolina-
Bank based bank
founded in
1986.
Centurion Bank www.americanexpress. American
com/banking Express’s bank
and the home
of its Internet
Membership
B@anking.
Chase Manhattan www.chasemanhattan.com New York-based
Bank global bank.
Chittenden Bank www.chittenden.com Burlington,
Vermont-based
institution.
Citibank wwww.citibank.com New York-based
global bank.
CompuBank www.compubank.com Another in a
growing list of
Internet-only
banks or pure
players.
Crestar Bank www.crestar.com A bank based in
Richmond-
Virginia.
Exchange Bank www.ebankperry.net Home of
& Trust Exchange Bank
& Trust of Perry,
Oklahoma, on
the World Wide
Web.
First Internet www.firstib.com An Internet-only
Bank of Indiana bank and the
originator of the
ad slogan “bank
naked.”
First National www.fnbpipe.com Pipestone,
Bank & Trust of Minnesota-
Pipestone based bank.
1st Source Bank www.1stsource.com Web site of 1st
Source Bank of
South Bend,
Indiana.
BANKING SITES IN THIS BOOK 217

First Tennessee www.ftb.com Based in
Bank Memphis,
Tennessee.
First Union www.firstunion.com With BofA, one
of the Charlotte,
North Carolina-
based heavy-
weights of
banking.
Flagstar Bank www.flagstar.com Online banking
provider based
in Bloomfield
Hills, Michigan.
GrandBank www.grandbank-online.com A Maryland-
based bank.
Hibernia Bank www.hibernia.com Online banking
in the Big Easy:
Hibernia is
based in New
Orleans. Next
challenge: vir-
tual beignets
and chicory-
flavored coffee.
Key Bank www.key.com Owned by
Cleveland-based
KeyCorp.
Lyndonville www.lyndonbank.com A Vermont-
Savings Bank based bank.
Net.B@ank www.netbank.com One of the new
breed of
Internet-only
banks.
Ohio Savings Bank www.ohiosavings.com A Cleveland,
Ohio-based insti-
tution with a
speedy Web site.
Pennsylvania www.bizbank.org A Philadelphia-
Business Bank based bank.
PNC Bank www.pncbank.com Pittsburgh-based
bank.
218 APPENDIX A

Presidential www.presidential.com Bethesda,
Savings Bank Maryland-based
bank.
Richmond County www.rcbk.com New Jersey-
Savings Bank based bank.
Rocky Mountain www.rmbank.com A Billings,
Bank Montana, bank
that provides
online banking
services.
Salem Five Cents www.salemfive.com One of the first
Savings Bank financial institu-
tions to branch
onto the
Internet, Salem
Five has
expanded its
Web presence to
become even
more of a full-
service financial
services provider
through
www.direct-
banking.com.
Security First www.sfnb.com The first bank to
Network Bank provide a full
array of services
from a site on
the Internet.
Security One www.sofcu.org Membership
Federal Credit includes anyone
Union who lives,
works, or wor-
ships in
Arlington, Texas.
Stillwater www.banksnb.com Online presence
National Bank & of Stillwater,
Trust Co. Oklahoma,
bank.
SunTrust www.suntrust.com Atlanta-based
super-regional
bank.

Telebank www.telebank.com Formerly a tele-
phone banking
powerhouse,
Telebank has
more recently
shifted its focus
to serving cus-
tomers over the
Internet.
United Bank www.ubankal.com Home of United
Bank of Atmore,
Alabama.
Wachovia Bank www.wachovia.com Based in
Winston-Salem,
North Carolina.
Walden Federal www.waldenbank.com A Walden, New
York-based com-
munity bank.
Washington www.washingtonmutual. The nation’s
Mutual Savings com largest savings
Bank institution is
based in Seattle.
Wells Fargo Bank www.wellsfargo.com One of the first
larger banks
with a fully
transactional
Web site. Has
successfully
encouraged
many customers
to bank online.
Wingspan Bank www.wingspanbank.com The home of
Bank One’s
Internet-only
bank.
Zions Bank www.zionsbank.com A Salt Lake City,
Utah-based
bank.
220 APPENDIX A
Government Regulators and Agencies

Federal Deposit www.fdic.gov Provides a
Insurance Corp. wealth of infor-
mation, includ-
ing answering
the question, “Is
my bank
insured?” as
well as EDIE, the
Electronic
Deposit
Insurance
Estimator, which
walks consumers
through the
process of calcu-
lating the ade-
quacy of their
deposit insur-
ance coverage.
A top-notch site.
Federal Financial www.ffiec.gov An interagency
Institutions group made up
Examination of the five bank
Council and credit union
regulatory agen-
cies.
Federal Reserve www.bog.frb.fed.us The regulator of
Board of Governors bank holding
companies and
member banks
of the Federal
Reserve System.
Provides a host
of economic
information on
this site as part
of its role in set-
ting economic
and monetary
policies.
Federal Trade www.ftc.gov The Federal
Commission Trade
Commission pro-
vides the Bureau
of Consumer
Protection and
provides con-
sumer informa-
tion at its Web
site.

National Credit www.ncua.gov Home of the
Union Administration agency charged
with regulating
and insuring
federal and
many state-
chartered credit
unions.
Office of the www.occ.treas.gov The OCC is a
Comptroller of division of the
the Currency Treasury
Department and
the regulator of
national banks.
Office of Thrift www.ots.treas.gov Also a division
Supervision of the Treasury
Department, the
OTS is the pri-
mary regulator
of federally
chartered sav-
ings institutions
and savings and
loan holding
companies.
Securities Exchange www.sec.gov The SEC is the
Commission regulator of
stock exchanges
and markets. Its
Web site pro-
vides access to
the filings of
publicly listed
companies
through its
EDGAR data-
base.
Small Business www.sba.gov A good source
Administration of information
for starting or
financing a
small business,
the SBA also
maintains a site
called U.S.
Business Advisor
at www.
business.gov.
222 APPENDIX A
U.S. Treasury www.treas.gov Home of the

Department Treasury that
oversees both
the OCC and the
OTS, which are
financial institu-
tion regulatory
agencies. The
Treasury also
markets savings
bonds over the
Internet through
this site.
Helpful Reference Sites

bankonline.com www.bankonline.com Provides a list of
online banking
providers
around the
world.
Bankrate.com www.bankrate.com Provides a vari-
ety of consumer
information
about banking.
Bankzip.com www.bankzip.com A one-stop
source for infor-
mation about
finding a com-
munity bank in
any region of
the country.
Better Business www.bbbonline.com A Better
Bureaus Business Bureau
program
focusing on
e-commerce.
Gomez Advisors www.gomez.com A consumer
information site
and a consultant
to online banks.
National Fraud www.fraud.org Established by

Internet Center the National
Consumers
League to
address fraud in
telemarketing.
Small Business www.americanexpress. A reference area
Exchange com/small business of American
Express’s Web
site that pro-
vides informa-
tion for small
business owners.
GLOSSARY
Altair Developed in 1974, the Altair was one of the first home
computers.
applet A small browser-based program designed to do a spe-
cific job, typically written in a program language called Java.
automated clearing house (ACH) network A nationwide
batch-oriented electronic payments system that provides for inter-
bank clearing of transactions. The American Clearing House
Association, the Federal Reserve, the Electronic Payments
Network, and Visa act as ACH operators or clearing facilities
through which financial institutions transmit or receive ACH pay-
ments.
bandwidth The transmission capacity of an electronic commu-
nications line, such as a communications network. The greater the
bandwidth of a communications line, such as a telephone line or
cable line, the higher the carrying capacity. Usually referred to in
terms of bits per second.
Bankinfo.com All-around source for banking information on
the Web produced by Thomson Financial Publishing.
Banking Information Technology Secretariat (BITS) The
technology group for The Financial Services Roundtable created
in 1996 to foster growth and development of electronic banking
and commerce in an open environment.
Bankrate.com An online publication, www.bankrate.com,
focusing on personal finance news and consumer information,
including rate information from 4,000 financial institutions in
more than 120 markets in the United States and Puerto Rico.
226 GLOSSARY
batch processing One system for how financial services institu-

tions process customers’ transactions and update their accounts in
which many transactions are “batched,” usually after a full day of
business, before they are posted to individual accounts. In a real-
time processing environment, transactions are posted to cus-
tomers’ accounts throughout the date. See also real-time
processing.
BBBOnline A wholly-owned subsidiary of the Council of
Better Business Bureaus with the mission to promote trust and
confidence on the Internet through the BBBOnline Reliability and
Privacy programs.
bill presentment The electronic delivery of bills either by the
actual biller or by a financial services provider on behalf of the
biller. This is the opposite of electronic bill payment.
bit A binary digit, 0 or 1, used in the representation of a num-
ber, letter, or special character. In most systems today, it takes
eight bits (each containing a 1 or a 0) to represent a single charac-
ter, such as the capital letter A.
baud Bits per second. This term is used to define the bandwidth
of a communications line.
brick-and-mortar A term used to refer to offline businesses,
bank branches, and corner stores, as opposed to an Internet bank
or an e-commerce Web site. A trendy new term entering the bank-
ing lexicon is “click-and-mortar,” an expression used to describe a
bank serving customers through physical branches and through
online banking services.
brochureware A static Web site that simply provides contact
and marketing information but not transactional banking services.
browser A computer program that enables a personal computer
user to retrieve information that has been made publicly available
on the Internet. Netscape Navigator and Microsoft Internet
Explorer are examples of browsers.
calculator A typical feature provided by financial institutions at
their Web sites. A calculator allows customers to enter personal
data to calculate loan terms, such as monthly payments and inter-
est rates, as well as savings outcomes, such as what will it take to
retire as a millionaire.
GLOSSARY 227
ciphertext Encrypted text that appears as gibberish without the

appropriate key to decode the message. See also plaintext.
consumer protection regulations The Federal Reserve Board,
among its authorities, develops rules to protect consumers includ-
ing regulations B (equal credit opportunity); E (electronic funds
transfer); M (consumer leasing); Z (truth in lending); CC (funds
availability and collection of checks); and DD (truth in savings).
cookie A file placed on your computer’s hard drive by a Web
site that you are visiting. This file allows the site being visited to
log the pages you use and to determine if you have visited the site
before.
credit bureaus An agency that collects and distributes credit-
history information of individuals and businesses. The three main
credit bureaus are Equifax, Experian, and Trans Union.
credit scoring A system used by banks and others to determine
whether a customer is a good loan risk, taking into account your
credit history including the number and type of accounts, bill-
paying history, collection actions, late payments, and outstanding
debt.
credit union A cooperative organization chartered by a state or
the federal government that accepts savings from its members and
makes loans to its members. Credit unions are normally formed
among members who are employed by the same company or are
members of the same organization. Example: If you work at The
White House, you can belong to the White House credit union.
cryptography The principles, means, and methods for render-
ing information unintelligible and for restoring encrypted infor-
mation to intelligible form.
decrypt To unscramble a code. See also ciphertext and
plaintext.
direct-dial A computer-to-computer system of exchanging
information. The first home banking systems were direct-dial,
allowing consumers to use a computer with a modem to dial
directly into the bank’s computer system. The more popular
method of home banking today is over the Internet (also called
e-banking). With this method, bank customers connect or dial into
the Internet and access their personal records by going to the
bank’s Web site, not directly to a computer system at the bank.
228 GLOSSARY
e-commerce The buying and selling of goods and services via

the Internet. Also referred to as e-business. A provider of goods
and services via the Internet may be called an e-tailer (rhymes
with retailer).
EDIE (The Electronic Deposit Insurance Estimator) An
online feature of the home page of the Federal Deposit Insurance
Corp. EDIE is an online calculator that helps consumers deter-
mine the adequacy of their deposit insurance coverage at an
FDIC-insured bank. See also Federal Deposit Insurance
Corporation.
electronic bill payment A product or service offered by online
financial services providers, such as banks, that allows you to pay
bills from your computer via the Internet. The provider will either
pay your bills electronically or by cutting a physical check and
mailing it to the payee.
encryption The scrambling of data by a mathematical algo-
rithm to prevent the understanding of the information absent an
unscrambling code. The maximum level of encryption allowed in
the United States is 128 bits.
ethernet A type of local area network originally developed by
Xerox. Communication takes place by means of radio frequency
signals carried over coaxial cable.
European Union EU, an institutional framework, created after
World War II, for the construction of a united Europe designed to
promote harmony among those nations.
FAQs Frequently asked questions. FAQs are featured on most
Web sites as quick references for novice users of the site.
Federal Deposit Insurance Corporation (FDIC) Created in
1933 by Congress to restore public confidence in the nation’s
banking system by insuring deposits (www.fdic.gov).
Federal Financial Institutions Examination Council An inter-
agency group made up of representatives of the five bank and
credit union regulatory agencies. The FFIEC prescribes uniform
principles, standards, and report forms for the federal examination
of financial institutions and makes recommendations to promote
uniformity among all of the federal bank and credit union regula-
tory agencies.
GLOSSARY 229
Federal Reserve System Made up of the Federal Reserve

Board, the 12 regional Federal Reserve Banks, federally-chartered
commercial banks and state-chartered commercial banks that
elect to be members. The Federal Reserve System serves as a cen-
tral credit facility for member commercial banks and controls the
nation’s money supply (www.federalreserv.gov).
Federal Trade Commission (FTC) The FTC enforces a variety
of federal antitrust and consumer protection laws and seeks to
ensure that the nation’s markets function competitively and are
vigorous, efficient, and free of undue restrictions. The agency also
works to eliminate acts or practices that are unfair or deceptive.
Financecenter.com A cooperative venture that provides online
personal finance tools.
financial services center A business that has developed into a
one-stop-shop for financial products such as banking services,
insurance, and stocks.
financial suite Software, such as Intuit’s Quicken or
Microsoft’s Money, that allows you to manage your finances on
your computer. Many are able to access information from Internet
online banking sites.
firewall The combination of hardware and software that creates
a boundary between two or more computer networks.
Gomez Advisors An e-commerce advisor to businesses and an
online consumer information site (www.gomez.com). The organi-
zation is well-known for its online scorecards.
hacker An unauthorized user of a computer site. Also referred
to as a cracker or vandal.
Hertz The frequency of electrical cycles per second. One Hertz
equals one cycle per second. One MegaHertz (MHz) is equivalent
to one million cycles per second. MHz is often seen as an expres-
sion of a personal computer’s central processor, such as a 133
MHz CPU.
insufficient fund charges A fee assessed to a banking customer
who fails to have adequate funds to cover transactions against a
checking account. This is also known as an overdraft charge.
230 GLOSSARY
Internet bank A bank that has established a presence on the

World Wide Web to enable customers to perform certain func-
tions, including viewing accounts and transferring funds. Some
Internet banks are pure-players, meaning they only exist on the
Web and have no brick-and-mortar branches. Similar terms
include online bank, Web bank, and e-bank.
Internet Fraud Watch A consumer online site run by the
National Fraud Internet Center (www.fraud.org).
Internet Service Provider (ISP) A company that provides
access to the Internet, generally for a fee.
Internet Explorer Microsoft’s Web browser, often cited as a
secure browser choice. Its major competitor is Netscape
Navigator.
InterNetworking Group Established in 1972 to bring standards
to the Internet. The organization’s first chairman was Vinton Cerf,
who is considered the father of the Internet.
Intuit Incorporated Developer of financial management soft-
ware products, including Quicken, QuickBooks, and TurboTax.
Java A compact, concise computer programming language,
developed by Sun Microsystems. Java is perfect for the little
applets that run on Web sites.
Jupiter Communications Established in 1986 in New York,
this organization provides research on Internet commerce.
key A code that unscrambles encrypted data.
modem A device that enables a computer to transmit data or
information over an electronic communications line, such as a
telephone line.
Money Yes, it does make the world go around, but here we’re
referring to the personal financial management software produced
by Microsoft.
MoneyCentral Microsoft’s comprehensive financial services
page.
National Credit Union Administration The federal agency
that supervises and insures more than 6,700 federal credit unions
and 4,100 state-chartered credit unions.
GLOSSARY 231
Netscape Communicator A package of Web software products

that includes the Web browser software Netscape Navigator.
Netscape Navigator Web browser software, often cited as a
secure choice. Its major competitor is Microsoft’s Internet
Explorer.
non-bank A business that offers banking services, but as an
adjunct to its core products and services.
Office of Comptroller of the Currency Created in 1863, this
bureau of the Treasury Department charters, regulates and exam-
ines national banks (www.occ.treas.gov).
Office of Thrift Supervision (OTS) Established in 1989 as a
bureau of the Department of Treasury, the OTS serves as the pri-
mary regulator of all federal and many state-chartered savings
institutions (www.ots.treas.gov).
online bank See Internet bank.
overdraft charge See insufficient fund charges.
Personal identification number (PIN) A PIN is often used as
a password to obtain access to a secure portion of a Web site.
plaintext A text message before it has been encrypted or after it
has been decrypted or decoded. See also ciphertext.
portal A Web site that offers access to the Web and an array of
other services, including email and search engines.
privacy policy A statement from an institution on how it will
use the information it has gathered on you and whether it will sell
your information to another company or use it to market products
to you based on your personal profile. Privacy and the sharing of
information about consumers is becoming a contentious issue
among financial institutions, the government, and consumer
groups.
proprietary systems Computer software developed by banks so
that customers could directly communicate with them and con-
duct banking transactions via a home computer equipped with a
modem. See direct-dial.
pure-player An Internet-only bank, one without brick-and-mor-
tar branches.
232 GLOSSARY
Quicken Personal financial management software produced by

Intuit.
real-time processing A transaction processing system in which
bank transactions are posted to customers’ account as they occur.
See also batch processing.
remote banking Banking transactions conducted apart from the
physical premises of an institution, such as via the Internet, tele-
phone, or a direct-dial system.
search engine A software program capable of locating specified
information or Web sites on the Internet. Examples are Yahoo!,
AskJeeves, and Google.
Secure Sockets Layer (SSL) A protocol for providing data
security during transmission using data encryption, server authen-
tication, and message integrity.
security Broadly put, the protection of data against unautho-
rized access. Security can be ensured by several layers of technol-
ogy, including firewalls and encryption, to protect the
confidentiality of transactions over the Internet.
Small Business Administration (SBA) Established in 1953, the
SBA provides financial, technical, and management assistance to
help Americans start, run, and grow their businesses
(www.sba.gov).
snail mail Mail delivered by the U.S. Postal Service or some
other offline carrier.
sweep accounts An account service provided by a bank in
which a business’ checking account funds are swept each night
into an interest-bearing account. This system maneuvers around
the prohibition of banks’ paying interest on business accounts
(Regulation Q).
teaser rate An attractive offer by a credit card company that
will last only for an introductory period before the interest rate
rises significantly. Consumers should beware of these low rates
that turn into far less competitive, higher rates.
GLOSSARY 233
TCP/IP This acronym stands for transmission control

protocol/Internet protocol, which makes possible communication
via the Internet among different computers operating on different
software platforms. The invention of TCP/IP is credited to Vinton
Cerf and Bob Kahn.
terms and conditions In online banking, a contract that
includes the services, fees, rates, and guarantees associated with
an institution and an account.
third-party provider A company that provides a service on
behalf of your bank or financial institution. In many cases, a
bank’s third-party relationship is transparent to consumers, mean-
ing that the consumers think they are getting a particular service
from their bank.
transactional site A Web site where customers can perform
functions, instead of just getting information. For example, a bank
site offering customers the ability to view account histories, pay
bills, transfer funds, and order checks is a transactional site.
Transport Layer Security (TLS) A new Internet security pro-
tocol that is backward compatible with the SSL standard. See
Secure Sockets Layer.
TravelersProperty Casualty A company that provides remote
banking insurance called SafeWeb and insures against unautho-
rized transactions in online accounts. CompuBank was one of the
first online banks to provide this protection.
Truste Founded in 1997, this is a privacy seal program offered
by an independent organization dedicated to building consumer
trust and confidence in the Internet (www.truste.org).
VeriSign Founded in 1995, this organization provides public
key infrastructure and digital certificate solutions to enable trusted
commerce and communications over private and public networks.
World Wide Web The WWW, or the Web, is actually a subnet-
work of the Internet through which information is exchanged in
text, graphic, audio, and video formats. World Wide Web is often
used as a synonym for the Internet.
INDEX
Symbols B
10 reasons to bank online, 14-16 BadBanks.com Web site, 203-204
128-bit encryption, 149-150 bandwidth, 42
1st Source Bank (South Bend, Indiana) bank failures, 61-62
Web site, 63, 216 Bank of America Web site, 27, 39, 106,
24-hour phone access (banking sites), 122, 192, 215
188, 200-201 Bank of Hawaii Web site, 199, 215
40-bit encryption, 149 Bank of the West Web site, 123, 215
Bank One Web site, 191, 215
Bank Rate Monitor, 114
A Bank United Web site, 201, 215
BankBoston Web site, 215
accounts Bankinfo.com Web site, 196, 209
analysis, 128 Banking Information Technology
downloading account information, Secretariat (BITS), 136
78-79 banking regulators, filing complaints with,
fund transfers, 77-78 202-203
opening online, 73-74 banking sites, 198-202
registers, 54 10 reasons to bank online, 14-16
statements, 54 account statements, viewing, 74-75
viewing, 74-75 ATM location maps, 81
transactions, viewing, 75 batch processing, 78
viewing features, 23-24 branch location maps, 80
accrued interest, 60 checks, ordering, 82
ACH (Automated Clearing House) net- cleared checks, viewing, 76
work, 74, 89 community banks, 119
Aetna Financial Services Web site, 19 connecting to, 40-42
aggregators, 207 customer statistics, 14
Allen, Catherine, 136, 144-145 demos, 8
Altair, 10 download speed, 183
Amazon.com Web site, 206 downloading account information,
American Express 78-79
Membership B@nking Web site, email, sending, 82
196-197 FDIC insured sites, finding, 62,
Small Business Exchange Web site, 64-65
130 features, 184-188, 197-202
amortization, 102 24-hour phone access, 188,
AOL’s banking center, 57 200-201
applets (Java applets), 152 ATM rebates, 187
applying for loans, 55 bill payment, 187
ATMs (automation teller machines), 81 demonstrations, 199
foreign ATMs, 187 FAQs (Frequently Asked
location maps, 81 Questions), 198-199
rebates, 27, 187 free services, 186-187
news releases, 201 bankonline.com Web site, 53, 222

posted privacy policies, 185 Bankrate.com Web site, 72, 114, 116, 222
real-time processing, 185 banks (traditional banks), decline of,
search bars, 202 194, 197
site directories, 201 Bankzip.com Web site, 119, 222
solid security systems, 184 batch processing, 78, 185
fully-transactional sites, 12 baud (modems), 40
fund transfers, 77-78 Bay-Vanguard Federal Savings Bank,
Gomez Advisors’ Top 10 Internet 57-58
Banks, 189-191 Web site, 31, 51-52, 215
history of, 11-13 BBBOnline privacy seal, 164-165
informational sites, 20 Bernstein, Jodie, 160
opening accounts, 73-74 Better Business Bureaus Web site, 222
privacy, 173-175 privacy seal programs, 168
problem-solving, 202-203 bills, paying online, 25, 55, 85-95, 187
real-time processing, 78, 183 Automated Clearing House (ACH)
risks of using, 32-33 network, 89
security, see security bill payment summaries, 90-91
selecting, 47, 72 bill presentment, 93
broad searches, 48-50 Chase Manhattan Bank Web site, 88
features to consider, 54-56 Citibank Web site, 87, 90-91, 95
focused searches, 50-54 CompuBank Web site, 94-95
for business banking ser- First Internet Bank of Indiana Web
vices, 127-128 site, 89
in-house demos, 53 First Internet Bank Web site, 86
SmartMoney’s Top 10 Internet First Tennessee Bank Web site, 95
Banks, 189, 192 Flagstar Bank Web site, 94
third-party technology providers, guarantees, 93
137-138 Hibernia Bank Web site, 94
transactional Web banking, 21-32 non-sufficient funds, 89-90
24-hour access to real Ohio Savings Bank Web site,
bankers, 30 86-87, 95
account viewing features, overdraft protection, 89-90
23-24 processing dates, 88-90
ATM rebates, 27 site fees, comparing, 94-95
brokerage services, 30 Washington Mutual Savings Web
certificates of deposit, 27 site, 95
credit card applications, 28 Wells Fargo Web site, 86, 95
custom Web pages, 25 Wingspan Bank Web site, 95
financial planning services, BITS (Banking Information Technology
28-29 Secretariat), 136
insurance sales options, 29 Financial Services Security
interest-paying checking Laboratory, 178
accounts, 26 bits per second, 40, 42
Internet access, 31 bonds
mortgage applications, 27-28 savings bonds, buying online,
paying bills, 25 108-109
shopping centers, 26 stocks and bonds, investing online,
software, interfacing with, 30 105-106
tax information, 31 branch location maps, 80
transferring funds, 24 brokerage services, 30
transactions, viewing, 75 Brown, Peter A., 142
user agreements, 73 browsers, secure browsers, 177
user statistics, 83
INDEX 237
brute force password cracking, 154 complaints, filing with banking regulators,
Bureau of Public Debt Web site, 109 202-203
Busey Bank Web site, 138-140, 215 CompuBank Web site, 74-78, 167,
business banking services, 121-126 187-192, 216
cash management, 124-125 bill payment feature, 94-95
checking and savings accounts, computers, 9-10
122-123 future of online banking, 208-209
comparing to consumer services, connecting to banking sites, 40-42
126 consumer protection regulations, 66-67
financing services, 121-122 cookies, 175, 206
information resources, 130-131 credit cards
integrated banking, 123 applying for, 28, 103-104
security issues, 128-129 teaser rates, 103
selecting online banks, 127-128 credit reporting agencies, 102-103
Business Gateway (Wells Fargo Bank Web credit reports, 102-103
site), 123 credit scoring, 98
Busing, Lynn, 9 credit unions
bytes per second (bandwidth), 42 insured credit unions, finding, 65
loans, 98-99
shares, 60
C Crestar Bank Web site, 23-24, 192, 216
cryptography, 148-149
Cable Modem Help Web site, 42 custom Web pages (banking sites), 25
cable modems, 41-42 customer relationship management, 159
calculators (online calculators), 117-118 customer statistics (online banking), 14
Carolina First Bank Web site, 216 customer-specific marketing, 206-208
cash management (business banking ser-
vices), 124-125
Centurion Bank Web site, 216 D
Cerf, Vinton, 10
certificates of deposit, 27 Data Encryption Standard (DES), 151
Chase Manhattan Bank Web site, 81, 119, data security, 148
216 decline of the traditional bank, 194, 197
bill payment feature, 88 Deluxe Corp. Web site, 82
checking accounts demographics of online bank
business checking accounts, 122-123 customers, 14
integrated banking, 123 demonstrations (banking sites), 8, 199
interest-paying checking Department of Treasury Web site, 108
accounts, 26 deposit insurance, 60-62
checks DES (Data Encryption Standard), 151
cleared checks, viewing, 76 Diceware Web site, 153-154
ordering online, 82 Digital Insight, 83
Chittenden Bank of Burlington Web site, direct-dial banking, 37
125 directories (site directories), 201
Chittenden Bank Web site, 216 downloading
ciphertext, 148 account information, 78-79
Citibank Web site, 7, 24, 73, 103-104, download speed, 183
191-192, 216
bill payment feature, 87, 90-91, 95
cleared checks, viewing, 76 E
commercial banking, 128
e-commerce, 26
community banks, 119
E-Loan Web site, 100-103
Compare Online Banks feature (Gomez
ebank.com Web site, 193
Advisors Web site), 113
Electronic Deposit Insurance Estimator financing services (business banking ser-

(EDIE), 60 vices), 121-122
electronic signatures, 73 finding
email, sending through banking sites, 82 insured banking sites, 62-65
encryption, 9-10, 148-151 insured credit unions, 65
128-bit encryption, 149-150 online banks
40-bit encryption, 149 broad searches, 48-50
Data Encryption Standard (DES), focused searches, 50-54
151 firewalls, 9-10, 151
Enigma machine, 152 First Federal Savings Bank of Florida Web
public keys, 149 site, 21
secret keys, 149 First Internet Bank of Indiana Web site,
Secure Sockets Layer protocol 28, 47, 166, 189, 191, 216
(SSL), 149 bill payment feature, 89
Transport Layer Security (TLS) pro- First Internet Bank Web site, 86
tocol, 151 First National Bank & Trust of Pipestone
Enigma machine, 152 Web site, 142, 216
Equifax (credit bureau), 102 First Tennessee Bank Web site, 217
Exchange Bank & Trust Web site, 216 bill payment feature, 95
Exchange Bank of Perry, 20 First Union Web site, 217
Experian (credit bureau), 102 Firstar Web site, 198
Flagstar Bank Web site, 217
bill payment feature, 94
F float period, 188
foreign ATMs, 187
failed banks, 61-62 Forrester e-commerce consulting firm, 9
FAQs (Frequently Asked Questions), Frequently Asked Questions (FAQs),
198-199 198-199
FDIC (Federal Deposit Insurance FTC Consumer Response Center, 203
Corporation), 60-65 fully-transactional banking sites, 12
insured banking sites, finding, 62-65 fund transfers, 77-78
purchase and assumption, 61-62 future of online banking, 206-210
Web site, 61-65, 175-176, 203, 220 computer hardware, 208-209
federal banking regulatory agencies, 65-66 customer-specific marketing,
Federal Financial Institutions Examination 206-208
Council Web site, 66, 220 products and services, 209-210
Federal Reserve, 65
consumer protection regulations,
66-67 G
Federal Reserve Board of Governors Web
site, 220 General Accounting Office (GAO), 33
Federal Trade Commission, 66 Gomez Advisors Web site, 72, 111-114,
Web site, 203, 220 183, 222
filing complaints with banking regulators, Compare Online Banks feature, 113
202-203 Internet Banker Scorecard, 112-113
Financenter.com Web site, 116 Gomez Advisors’ Top 10 Internet Banks,
online calculator, 117-118 189-191
financial management software, 42-45 Google.com Web site, 48, 152
financial planning services, 28-29 government’s role in online security,
financial services modernization law, 144-145
162-163 GrandBank of Maryland Web site, 125
financial suites, 35 GrandBank Web site, 217
INDEX 239
H loans, 98-103
amortization, 102
hertz (bandwidth), 42 applying for, 55
Hibernia Bank Web site, 217 credit reports, 102-103
bill payment feature, 94 credit scoring, 98
history of online banking, 11-13, 35-37 E-Loan Web site, 100-103
Huntington Web site, 191 from online banks, 99-102
from online credit unions, 98-99
ZipDecision software, 98
I lost passwords, 156
Lyndonville Savings Bank Web site,
identity theft, 161
138, 217
informational sites, 20
Insurance Answer Center, The, 107
insurance sales options, 29
insurance, buying online, 107-108
M
insured banking sites, finding, 62-65 maps
insured credit unions, finding, 65 ATM locations, 81
integrated banking for businesses, 123 branch locations, 80
interest, accrued interest, 60 marketing, customer-specific marketing,
interest-paying checking accounts, 26 206-208
Internet Mellon Bank Web site, 189
development of, 10 Membership B@nking Web site, 196-197
security, See security Microsoft, 42-45
Internet Banker Scorecard (Gomez microwave bank, 208
Advisors Web site), 112-113 modems, 40-42
Internet service providers (ISPs), Money (Microsoft), 43-44
31, 57-58 money market accounts, 54
InterNetworking Group (INWG), 10 MoneyCentral (MSN.com), 19, 43,
Intuit, 42-45 195-196
Quicken, 43-44 mortgage applications, 27-28
investing in stocks and bonds online,
105-106
INWG (InterNetworking Group), 10 N
ISPs (Internet service providers),
31, 57-58 National Credit Union Administration
(NCUA) Web site, 65-66, 221
National Fraud Information Center Web
J-K site, 178, 223
NCR Knowledge Lab, 208
Java applets, 152 Net.B@nk Web site, 13, 105,
Jupiter Communications, 85 191-192, 217
NetBank.com Web site, 56
Key Bank Web site, 25, 192, 217
news releases, 201
Komansky, David, 163
non-banks, 194-197
Membership B@nking, 196-197
MoneyCentral (MSN.com), 195-196
L PayMyBills.com, 195
Lawlor, Matthew P. (CEO of Online non-sufficient funds (paying bills online),
Resources & Communications 89-90
Corporation), 206
Little Orphan Annie, 140
O processing dates, 88-90

site fees, comparing, 94-95
Office of the Comptroller of the Currency, Washington Mutual Savings Web
62, 65 site, 95
risks of online banking, 32 Wells Fargo Web site, 86, 95
Web site, 65, 221 Wingspan Bank Web site, 95
Office of Thrift Supervision Web site, PayMyBills.com Web site, 195
66, 221 PC banking, 38
Ohio Savings Bank Web site, 200, 217 PCs, 9-10
bill payment feature, 86-87, 95 Pennsylvania Business Bank Web site,
one-way connections (cable modems), 41 126, 217
online banking personal financial management software,
history of, 35-37 38, 42-43, 45
learning about, 39 personalized Web pages (banking
over the Internet, 38 sites), 25
personal financial management plaintext, 148
software, 38 PNC Bank Web site, 108, 217
proprietary online services, 36 Polygraphiae libri ses (“Six Books of
proprietary software, 38 Polygraphy”), 149
online banking sites, see banking sites portals to banking and finance, 56
online calculators, 117-118 Presidential Savings Bank Web site,
Online Privacy Alliance Web site, 165 200, 218
opening accounts online, 73-74 privacy, 159-175
ordering checks online, 82 10 privacy consumer tips, 173-175
overdraft protection, 89-90 financial services modernization law,
162-163
identity theft, 161
P industry standards, 160
Online Privacy Alliance Web site,
Parsons, Ed, 42
165
passwords, 153-154
privacy policies, 164-165, 185
brute force password cracking, 154
CompuBank, 167
Diceware Web site, 153-154
First Internet Bank of
lost passwords, 156
Indiana, 166
paying bills online, 25, 55, 85-95, 187
important components,
Automated Clearing House (ACH)
170-171
network, 89
Security First Network Bank,
bill payment summaries, 90-91
165
bill presentment, 93
Wingspan Bank, 167
Chase Manhattan Bank Web site, 88
privacy seals, 163-165, 168-169
Citibank Web site, 87, 90-91, 95
BBBOnline privacy seal,
CompuBank Web site, 94-95
164-165
First Internet Bank of Indiana
Better Business Bureau seal
Web site, 89
programs, 168
First Internet Bank Web site, 86
TravelersProperty Casualty,
First Tennessee Bank Web site, 95
169
Flagstar Bank Web site, 94
Truste privacy seal, 168
guarantees, 93
VeriSign, 169
Hibernia Bank Web site, 94
processing dates (paying bills online),
non-sufficient funds, 89-90
88-90
Ohio Savings Bank Web site,
proprietary online services, 36
86-87, 95
proprietary software, 38
overdraft protection, 89-90
INDEX 241
public keys (encryption), 149 security, 136, 147-156, 175-178

purchase and assumption, 61-62 10 security consumer tips, 175-178
pure-play Internet banks, 26 bank site explanations of security,
138-142
business banking services, 128-129
Q-R consumer responsibility, 145-146
cryptography, 148-149
QuickBooks, 129 data security, 148
Quicken, 43-44 encryption, 9-10, 148-151
Web site, 43, 79 128-bit encryption, 149-150
Rackley, Tripp, 16 40-bit encryption, 149
real-time processing, 78, 183-185 Data Encryption Standard
rebates (ATM rebates), 187 (DES), 151
Regulation CC (consumer protection regu- Enigma machine, 152
lations), 67 public keys, 149
Regulation E (consumer protection regula- secret keys, 149
tions), 67 Secure Sockets Layer (SSL)
Regulation Q, 125 protocol, 149
regulators, filing complaints with, 202-203 Transport Layer Security
regulatory agencies, 59 (TLS) protocol, 151
FDIC (Federal Deposit Insurance firewalls, 9-10, 151
Corporation), 60 government’s role in online security,
federal banking regulatory agencies, 144-145
65-66 passwords, 153-154
purchase and assumption, 61-62 brute force password crack-
Richmond County Savings Bank Web site, ing, 154
129, 218 Diceware Web site, 153-154
risks of online banking, 32-33 lost passwords, 156
Rocky Mountain Bank Web site, protective measures taken by online
80, 99-100, 218 banks, 142-144
Roosevelt, Franklin D., 60 security systems, 184
steps to protect security, 155-156
third-party technology providers,
S 137-138
Security First Network Bank Web site,
Salem Five Cents Savings Bank Web site, 12, 36, 165, 190-192, 218
188, 218 Security One Federal Credit Union Web
savings accounts, business savings site, 99, 218
accounts, 122-123 selecting online banks, 47
savings bonds, buying online, 108-109 features to consider, 54-56
Sax, Harvey (president of HomeCom in-house demos, 53
Communications), 206 search process
search bars, 202 broad searches, 48-50
searching focused searches, 50-54
insured banking sites, 62-65 sending email through banking sites, 82
insured credit unions, 65 servers, 149
online banks shares, 60
broad searches, 48-50 shopping centers (banking sites), 26
focused searches, 50-54 shopping malls (virtual shopping malls),
secret keys (encryption), 149 118-119
secure browsers, 177 site directories, 201
Secure Sockets Layer (SSL) protocol, 149 Small Business Administration Web site,
Securities Exchange Commission, 66 130, 221
Web site, 221
small business banking services, 121-126 Trans-Union (credit bureau), 102

cash management, 124-125 transactional sites, 186
checking and savings accounts, transactional Web banking, 21-32
122-123 24-hour access to real bankers, 30
comparing to consumer services, 126 account viewing features, 23-24
financing services, 121-122 ATM rebates, 27
information resources, 130-131 brokerage services, 30
integrated banking, 123 certificates of deposit, 27
security issues, 128-129 credit card applications, 28
selecting online banks, 127-128 custom Web pages, 25
Small Business Exchange Web site, financial planning services, 28-29
130, 223 insurance sales options, 29
SmartMoney’s Top 10 Internet Banks, 189, interest-paying checking
192 accounts, 26
software Internet access, 31
personal financial management soft- mortgage applications, 27-28
ware, 38, 42-45 paying bills, 25
proprietary software, 38 shopping centers, 26
speed (download speed), 183 software, interfacing with, 30
SSL (Secure Sockets Layer) protocol, 149 tax information, 31
static Web pages, 20 transferring funds, 24
statistics of online bank customers, 14 transactions, viewing, 75
Steganographia (“Covered Writing”), 149 transferring funds, 24, 77-78
steganography, 150 Transport Layer Security (TLS) protocol,
Stillwater National Bank & Trust 151
Company Web site, 139-141, 218 TravelersProperty Casualty privacy seal,
stocks and bonds, investing online, 169
105-106 Treasury Department Web site, 222
SunTrust Bank Web site, 129, 218 Trithemius, Johannes, 149-150
sweep accounts, 121 trust, 135
Truste privacy seal, 168
two-way connections (cable modems), 41
T
tax information, 31 U-V
teaser rates (credit cards), 103
technology, 8-11 U.S. Business Advisor Web site, 130
Internet, development of, 10 U.S. Department of Treasury Web site,
PCs, 9-10 108
security developments, 10 U.S. General Accounting Office
technology providers, 137-138 (GAO), 33
Telebank Web site, 22, 29, 100-102, 107, U.S Treasury Department Web site, 222
192, 219 United Bank Web site, 21, 219
telephone help (banking sites), 200-201 US Access Bank Web site, 191
telephone modems, 40 USAccess Web site, 192
third-party technology providers, 137-138 user agreements, 73
thrifts, 99 user statistics (online banking), 83
Tinker Federal Credit Union Web site, 82
VeriSign privacy seal, 169
TLS (Transport Layer Security) protocol,
virtual shopping malls, 118-119
151
traditional banks, decline of, 194, 197
INDEX 243
W ebank.com, 193
Exchange Bank & Trust, 216
Wachovia Web site, 7, 28, 192, 219 FDIC (Federal Deposit Insurance
Walden Federal Web site, 186, 219 Corporation), 61-65, 175-176,
Washington Mutual Savings Bank Web 203, 220
site, 28, 219 checking insured banks, 63
bill payment feature, 95 finding insured banks, 65
Web browsers, secure browsers, 177 Federal Financial Institutions
Web sites Examination Council, 66, 220
First Union, 217 Federal Reserve, 65
1st Source Bank (South Bend, Federal Reserve Board of Governors,
Indiana), 63, 216 220
Aetna Financial Services, 19 Federal Trade Commission, 203, 220
Amazon.com, 206 Financenter.com, 116-118
American Express Small Business First Federal Savings Bank of
Exchange, 130 Florida, 21
BadBanks.com, 203-204 First Internet Bank, 86
Bank of America, 27, 39, 106, 122, First Internet Bank of Indiana, 28,
192, 215 47, 166, 189, 191, 216
Bank of Hawaii, 199, 215 bill payment feature, 89
Bank of the West, 123, 215 First National Bank & Trust of
Bank One, 191, 215 Pipestone, 142, 216
Bank United, 201, 215 First Tennessee Bank, 217
BankBoston, 215 bill payment feature, 95
Bankinfo.com, 196, 209 Firstar, 198
bankonline.com, 53, 222 Flagstar Bank, 217
Bankrate.com, 72, 114, 116, 222 bill payment feature, 94
Bankzip.com, 119, 222 Gomez Advisors, 72, 111-114,
Bay-Vanguard Federal Savings 183, 222
Bank, 31, 51-52, 215 Compare Online Banks fea-
Better Business Bureau, 222 ture, 113
privacy seal programs, 168 Internet Banker Scorecard,
Bureau of Public Debt, 109 112-113
Busey Bank, 138-140, 215 Google.com, 48, 152
Cable Modem Help, 42 GrandBank, 217
Carolina First Bank, 216 GrandBank of Maryland, 125
Centurion Bank, 216 Hibernia Bank, 217
Chase Manhattan Bank, 81, 119, 216 bill payment feature, 94
bill payment feature, 88 Huntington, 191
Chittenden Bank, 216 Key Bank, 25, 192, 217
Chittenden Bank of Burlington, 125 Lyndonville Savings Bank, 138, 217
Citibank, 7, 24, 73, 103-104, Mellon Bank, 189
191-192, 216 Membership B@nking, 196-197
bill payment feature, MSN.com MoneyCentral, 19, 43,
87, 90-91, 95 195-196
CompuBank, 74-78, 167, National Credit Union
187-192, 216 Administration, 66, 221
bill payment feature, 94-95 National Fraud Information Center,
Crestar Bank, 23-24, 192, 216 178, 223
Deluxe Corp., 82 Net.B@nk, 13, 105, 191-192, 217
Department of Treasury, 108 NetBank.com, 56
Diceware, 153-154 Office of the Comptroller of the
E-Loan, 100-103 Currency, 65, 221
Office of Thrift Supervision, 66, 221 X-Z

Ohio Savings Bank, 200, 217
bill payment feature, Yahoo’s banking page, 57
86-87, 95
Zions Bank Web site, 122, 219
Online Privacy Alliance, 165
ZipDecision software, 98
PayMyBills.com, 195
Pennsylvania Business Bank,
126, 217
PNC Bank, 108, 217
Presidential Savings Bank, 200, 218
Quicken, 43, 79
Richmond County Savings Bank,
129, 218
Rocky Mountain Bank,
80, 99-100, 218
Salem Five Cents Savings Bank,
188, 218
Securities Exchange Commission,
221
Security First Network Bank, 12, 36,
165, 190-192, 218
Security One Federal Credit Union,
99, 218
Small Business Administration,
130, 221
Small Business Exchange, 223
Stillwater National Bank & Trust
Company, 139-141, 218
SunTrust Bank, 129, 218
Telebank, 22, 29, 100-102, 107,
192, 219
Tinker Federal Credit Union, 82
U.S. Business Advisor, 130
U.S. Treasury Department, 222
United Bank, 21, 219
US Access Bank, 191
USAccess, 192
Wachovia, 7, 28, 192, 219
Walden Federal, 186, 219
Washington Mutual Savings Bank,
28, 219
Wells Fargo Bank, 12, 123, 145,
177, 184, 191-192, 219
bill payment feature, 86, 95
Business Gateway, 123
Wingspan Bank, 25, 29, 73, 105,
167, 187, 191, 205, 219
Zions Bank, 122, 219

BANK and BANKING E-Banking Managing Your Money and Transactions Online

Uploaded by

Copyright:

Available Formats

BANK and BANKING E-Banking Managing Your Money and Transactions Online

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BANK and BANKING E-Banking Managing Your Money and Transactions Online

Uploaded by

Copyright:

Available Formats

What is the book about?

What is the book about?

What information is contained on pages 4 and 5?

What information is contained on pages 4 and 5?

Teach Yourself

201 West 103rd Street, Indianapolis, Indiana 46290

For Arthur Dixon and Arthur Nixon, our great dads.

Part I Getting Started

1 The Revolution Is Upon Us 7

2 What Online Banking Means to You 19

3 What You’ll Need for Online Banking 35

4 Choosing Your Bank 47

5 Ready, Set, Stop: Do Your Due Diligence 59

Part II Using Online Banking Products and Services

6 Begin with the Basics: Opening an Account and

7 No Postage Necessary: Paying Bills Online 85

8 Beyond the Basics: Cool Add-On Products and

9 Shortcuts to the Best Deals 111

10 Attention All Small Business Owners 121

Part III The Facts About Security and Privacy

11 Trust Is More Than a Word 135

12 The Dark Arts: Cryptography and Encryption 147

13 Privacy Please! How to Protect Your Privacy

14 Your Privacy and Security Checklist 173

15 What Customers Like Best About Their Online

16 The Bottom Line on Sanity and Banking Online 193

17 Welcome to the Future: What’s Next for Online

A Banking Sites in This Book 215

A book of this scope is not written and produced in a vacuum by two

banks, such MSN.com and Charles Schwab, who are gradually

Inexpensive and Worth It

Figure 1: You can

Figure 2: You can

What technology is changing the way we bank?

The Online Requirement

Encryption and Firewalls Mean Security

The military started using encryption first, but now businesses—

Banks Jump Online

This is Wells Fargo

Following the May 1995 Wells Fargo milestone on the Internet,

In 1999, Net.B@nk became the first profitable Internet-only bank.

By 1999, more than 5,100 federally-insured depository institu-

brick-and-mortar branches and employees. According to Booz,

First Come the Banks, Then Come the Customers

Why You Should Join the Online Crowd

1. You never will have to wait in a teller line again—You sim-

2. Your bank is never closed—ATM machines brought us this

other banking transactions 24 hours a day. With e-banking,

3. You have direct access to your accounts—It’s a hassle to go

4. If you have children away at college, you can better manage

5. You can bank from anywhere in the world as long as you

6. It won’t matter if you run out of checks or stamps—You find

number of bills each month with no charge. Think about the

7. You can bank conveniently even if you are disabled, sick, or

8. You can bank at home even if you’re in the military

9. You can get more options and perhaps better deals—Online

10. You can naturally embrace new technologies—If you give

Get Your Bank Online

What You Should Know Now

• Technology has advanced enough to make banking online