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More Power To You

Online banking is quick. It's easy. So what are you waiting for?

On the one hand, the numbers are impressive. Survey results published in the September 1997 issue of the newsletter Online Banking Report indicate that 87 percent of small businesses use PCs, 71 percent manage their finances with a PC, and 60 percent have access to a modem.

But it's a different story when it comes to online banking. With only 8 percent of small businesses and 3 percent to 4 percent of the general population using such services, banking industry officials are trying to figure out in which direction to go.

"One reason I think small businesses don't use online banking services is because it's too new," speculates Jim Bruene, founder and managing editor of Online Banking Report. "The hype is tremendous, which makes it seem as if it's been around forever, but it really hasn't."

According to Bruene, in the summer of 1995, only 225,000 people used online banking; today that figure has escalated to almost 5 million. Initially, the cost of using such services was fairly high, Bruene says, but that's changing. Now the learning curve remains one of the technology's major stumbling blocks.

The initial start-up process can also be somewhat involved. Institutions such as BankBoston, which recently launched an online banking program targeting small businesses, are trying to find the right formula to draw in large numbers of entrepreneurs. BankBoston's formula? Offering both online transfer of funds between accounts and bill payment, says Jennifer DePetrillo, product manager for the bank's online small-business financial services.

BankBoston chose to utilize a commercially available software program as one way to shorten the learning curve, and it's stepping up efforts to educate business owners about the benefits of online banking. "Customers are looking for simplicity. They don't want to think when they access their balance," says DePetrillo. "If we can overcome these barriers, the flood gates will open."

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This article was originally published in the May 1998 print edition of Entrepreneur with the headline: More Power To You.

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