From the May 1998 issue of Entrepreneur

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."

Lining Up

The costs of online banking.

Bank One
Initial Costs:
$0
Ongoing Costs: Bill-paying fees

Citibank
Initial Costs:
$0
Ongoing Costs: $0

NationsBank
Initial Costs:
$10
Ongoing Costs: $9.95 per month

Wells Fargo
Initial Costs:
$14.95
Ongoing Costs: $5 per month

Keep Your Balance

A vendor calls you, claiming you haven't paid an invoice. You're certain you paid the bill. What do you do? In today's rapidly changing financial world, you have two choices: Hang up, call your bank and wait for an answer, or take Steve Camblin's approach.

"I had Jackie [Hill, the company bookkeeper,] get on the computer while [the vendor] was still on the phone, and we told him the check had cleared the bank on a particular day," recalls Camblin, president of Premier Roofing Inc., a Spring Valley, California, commercial and industrial roofing contractor. "As it turns out, the vendor had an employee who had embezzled our funds."

What enabled Camblin to quickly produce the needed information? His business utilizes online banking. Camblin and his staff have found the service indispensable and easy to use. "It's a timesaver," says Camblin. "If we're ever in doubt as to what our account balance is, Jackie can go online to see. I also do quite a bit of work on the weekends, and this gives me access to my accounts when the banks are closed."

Perhaps the best testament to how invaluable the service is to the 4-year-old firm is Camblin's attitude toward the system: "If the bank called me tomorrow and said it would cost $50 a month for the service, I would say `Fine.' "

Contact Sources

BankOne, (614) 213-5677

Citibank, (800) 285-1709

NationsBank, (404) 607-5228

Online Banking Report, jim@onlinebankingreport.com, http://www.onlinebankingreport.com

Premier Roofing Inc., 9054 Olive Dr., Spring Valley, CA 91977

Wells Fargo, (415) 222-3858