Online Banking Hits Home

Some things are just natural fits for homebased entrepreneurs: comfy slippers, office supply superstores, sunshine spilling through your window with not an artificial light within miles of your desk, online banking. . .

Yep, you heard me right. I said, online banking.

In case you've been trapped inside your rolltop desk for the past few years, online banking is an Internet-based banking service that can save homebased business owners time and money. Want to transfer money to your checking account? Need to verify an account balance? Wondering if your direct deposit has posted yet? Forget to document who you paid a check to? And the granddaddy question of them all-did that client's check hit your account yet?

Homebased banking packages answer all these questions and more. With most accounts, online banking provides you with a secure connection to your bank, giving you access to all your accounts 24/7 from any PC with an Internet connection, usually with no special software required. Costwise, online bank fees are usually lower, and earned interest rates on CDs and checking accounts higher. That's because online banks don't have to hire an army of tellers and managers to service your account like they do at the brick-and-mortar locations. Reduced paperwork and mail costs add to the savings banks enjoy by going online.

Already well-established in Europe, online banking is rapidly becoming a standard offering in the United States. According to a recent report by Tower Group, 15 million households, or 12 percent of the market, will be using online banking services by 2002, and banks are gearing up for the challenge. With customer retention in mind, the number of banks offering online services by 2003 is expected to increase 13-fold from 1998 figures.

The Choices

Which banks are best? We've compiled the following list to help you choose which online banking system is right for you:

• eCount. Offering the convenience and manageability of credit cards with the freedom and privacy of cash on the Web, eCount enables users to complete purchases at any online merchant and instantly transfer funds to any individual online via a prepaid debit account, with no security headaches.

• Net.B@nk. Billed as the "Internet's best online bank" by Worth Magazine, Net.B@nk also claims to be the world's largest Internet-only bank (its 100,000-plus accounts exceed the number at E*TRADE Bank and others). It now offers brokerage accounts, too, along with free online bill payment, free ATM cards and interest-bearing checking. Alliances with insurance.com, Ameritrade and Intuit only add to its cachet.

• Security First Network Bank. Bucking the trends of other banks, SFNB started out as the first Internet-only bank-and opened a branch office. If you don't live in Atlanta-the location of that branch office-and prefer Web surfing to drive-up windows when it comes to banking, SFNB rolled out a revamped online banking site last September. Featuring brokerage, insurance, personal financial planning, mutual fund services and advice, as well as traditional banking services, the bank also offers a cash reward (about $50) if you hog-tie a friend or family member and get them to sign up.

• E*TRADE Bank. Formerly Telebank, E*TRADE Bank is the first e-bank to hit $4 billion in deposits and boasts the largest nationwide ATM-affiliation network. From its humble roots as a telephone-only bank, E*TRADE Bank has grown into a major industry player. Due to its high asset base, E*TRADE Bank may be the best of the lot when it comes to trimming fees and boosting interest rate returns.

• Wells Fargo. One of the oldest names in banking has hitched its stagecoach to the Web, offering online banking and brokerage services, including a full menu of services for SOHOs.

• CheckFree. While it's not really an online bank, CheckFree can pay for itself as it reduces your postage stamp expenses and makes life a bit less stressful. CheckFree provides electronic bill payment processing services to more than 350 financial institutions, including 40 of the top 50, and nearly 400 banks and businesses use CheckFree's reconciliation products and services.

Down the road a bit, some interesting trends may emerge from the online banking world.

Merrill Lynch & Co., a newcomer to online brokerage firms, plans to offer banking services over the Internet as well. And forget toaster giveaways: Some banks-like LoanGiant.com-are giving away free PCs to new account holders. Also look for wireless banking coming to a digital phone near you; banks like FleetBoston already have this option in the works.

Brian O'Connell is a Framingham, Massachusetts-based freelance business writer. His most recent book, B2B.com (Bob Adams Media), is available this September. His earlier books, Generation E: How Young Entrepreneurs are Changing the Corporate Landscapeand The 401(k) Millionaire, are available in bookstores. A frequent contributor to many national business magazines, he can be reached at Bwrite111@aol.com.