Though Internet banking has been a standard offering at most large banks for several years, some smaller institutions are just getting started online.
One is Emigrant Savings Bank, a 150-year-old New York thrift that introduced its EmigrantOnline service last month.
Emigrant, which has $8.5 billion of assets and 36 branches in the New York area, said it had to introduce EmigrantOnline to keep customers from straying to competitors.
We have felt for some time we need to have an online banking capability, said Ted Morehouse, who is the chief marketing officer and a senior vice president of the Emigrant Bancorp Inc. subsidiary. You need it for defensive reasons and for offensive reasons. We want to make certain any customers who want to use it as the primary means of banking can get it from us, so they dont feel the need to go somewhere else.
Online banking is also necessary to compete with everyone else for new customers, he Mr. Morehouse said.
EmigrantOnline, which is free for the thrifts customers, enables them to look at real-time account balances and statements, transfer funds between accounts, make loan payments, and communicate with the thrift through e-mail. Customers can also use it to pay some of their bills online and to set up personalized Web pages for their information.
About 20 customers a day are signing up for EmigrantOnline, which has accumulated between 600 and 700 customers since it was launched, Mr. Morehouse said early last week.
Emigrant has been marketing only through pamphlets in its branches and a link at its Web site, www.emigrant.com. A print and radio marketing campaign will begin soon, Mr. Morehouse said.
InteliData Technologies Corp. of Reston, Va., is supplying the technology for the service. Tim Ruhe, its vice president of sales and marketing, said online banking is certainly a requirement at this point for institutions to retain customers or attract new ones.
Consumers are becoming increasingly sensitive to the online offerings, Mr. Ruhe said. More and more midsize banks are saying they want to have a solution that isnt just a check-the-box but does things people really need.
One of the most attractive Web features, for banks as well as consumers, is online bill payment, Mr. Ruhe said. Bill payment can be an extremely sticky service for banks. Once consumers sign up and start using it, they are much more likely to have more accounts with the bank, higher account balances, and are less likely to leave the bank.
Mr. Morehouse agreed. Not only are customers likelier to stay with a bank if they use its online banking service, he said, but if they are using bill payment, that goes up by a factor of three or four.
Paul Jamieson, the director of banking and payment services at the Internet consulting firm Gomez Advisors of Waltham, Mass., said that community banks and small credit unions that do not offer online services increase their chances of losing customers thereby, even if customer satisfaction is generally higher than at large banks.
Meanwhile the devaluation of the technology sector has made it easier for small banks to get on the Internet, because it has brought down the costs mostly the labor for constructing an Internet site, Mr. Jamieson said.
Credit unions, small community banks, and regional players are all migrating online, he said. Consumers are moving online, and they have to be there to meet them. Gomez research indicated that consumers will eventually move to a competing bank that offers online financial services if their own bank does not.
