Many banks now offer customized software programs or support popular money-management applications such as Intuit's Quicken, so individuals with personal computers can pay their bills or track personal accounts online. Since the mid-1980s, banks have also provided their large corporate customers with PC banking programs to track payments in real time. So what's available for small-business customers?
The good news: Experts predict that's likely to change in the near future. Bill Burnham, an associate with New York City-based management consulting firm Booz Allen & Hamilton and leader of the company's recent Internet banking survey, says banks are beginning to provide online banking services to companies, including small businesses.
"Online banking services are probably better suited to business owners than to consumers because businesses need a real-time way to manage payments and keep track of their financial situation," says Burnham. "We think [the banks'] focus is going to change dramatically as [bankers] start to recognize small business's true potential."
In the past, online banking has been available primarily through dedicated software programs installed on individual users' computers. But Burnham predicts most of the industry's future growth will be in another area: the Internet. In fact, the Booz Allen & Hamilton study found that more than 30 banks expect to have Internet banking sites by early next year, and more than 500 say they will have such sites by the end of the decade.
Since May, Wells Fargo Bank customers have been able to transfer funds between their Wells Fargo consumer accounts, as well as pay their Wells Fargo credit balances, through the Internet (http://wellsfargo.com). It expects customers will be able to make payments over the Internet to other vendors in the near future. In addition, First Union's corporate trade customers can apply for commercial letters of credit online through its new service on the World Wide Web, called Cyberbank LC, which is accessible from First Union's home page (http://www.firstunion.com). Likewise, First Union expects to offer fund transfers and bill payments over the Internet by year-end.
Still, most Internet banking services leave something to be desired. Almost 90 percent, however, have aggressive plans for improving the size and functionality of their Internet banking offerings. Within three years, 69 percent of the banks surveyed plan to offer advanced services such as account balance inquiries and bill payments over the Internet.
Just how will Internet banking help small business? In the coming years, Burnham anticipates small-business owners will be able to apply for bank loans; check their deposits, balances and payments; review their financial histories; and even discuss account activity with an account manager via videoconferencing over the Internet.
"In the next five years," says Burnham, "you'll be able to conduct banking business remotely at any time of the day from your home, your office, and maybe even your car. From a small-business owner's perspective, this is going to be a great benefit."