Online account access may seem a standard feature of 21st century banking, but many small banks still see no need to offer it.
A recent survey by Grant Thornton LLP of Chicago shows that though 81% of community banks let customers view account information online, only 57% of banks with less than $100 million of assets do.
As for online bill payment options, though 82% of suburban community banks offer them, only about half of rural banks do.
In view of the benefits, including lower costs, it is easy to wonder why there are holdouts — especially in rural areas, where some customers travel long distances to their banks.
Some rural banks say their customers are not asking for online access. And some just admit they are behind the curve — and cannot hold out much longer.
Frank L. Bruning, the president of the $114 million-asset Bruning State Bank in Bruning, Neb. (population 300), said it plans to roll out Internet account access and online bill payment this fall.
“My grandkids say, ‘You better get with it,’ ” he said. “The young people are demanding it.”
Mr. Bruning said he is still not sure that online banking is necessary in so small a town. But as more young people become customers, he said, the bank must offer the service to keep them.
Also, if young folks move away, the bank has a better chance of keeping them as customers if it offers online services, Mr. Bruning said. “In a small town we have a rural exodus. That is one of the reasons we are doing it,” he said.
Others, such as the $249 million-asset Patriot Bank in Fredericksburg, Va., feel less pressure.
Bill Oeters, a senior vice president, said that even though a pending upgrade would enable its computers to handle online banking, it is not necessary for the “type of banking we do.”
Patriot’s customers use its drive-through, which is open from 7 a.m. to 7 p.m. six days a week, Mr. Oeters said. “We have found a lot of our customers have not required online banking service.”
Patriot does not even have automatic teller machines, and if customers want to pay their bills online they can use utilities’ and card companies’ Web sites, Mr. Oeters said.
The identity-theft problems at various sites demonstrate another reason to leave well enough alone, he said.
A hacker break-in at a bank site could expose customers’ entire financial lives and threaten the bank’s reputation, Mr. Oeters said. “As soon as there is a problem with online banking, people would move everything. I wouldn’t blame them.”
Mark Lanham, the assistant vice president at the $93 million-asset BCBank Inc. in Philippi, W.Va., said customers in its markets are not asking for online banking. “For the costs of putting it in and having someone here who understands how to run it, it’s not beneficial right now.”
Even rural banks that offer online banking said it is not for everyone.
The $519 million-asset First Dakota National Bank of Yankton, S.D., would not have it if all its branches were all in rural markets, said president and chief executive officer Larry Ness.
Far from objecting to the long drive to the bank, he said, many rural customers view their visits as social events. “They know the tellers, they get free coffee and maybe grab a cookie and stop at the gas station and shoot the breeze with their neighbors.”
But the bank has branches all over southeastern South Dakota, and people in some of the larger towns want online banking, Mr. Ness said.
“They expect it, so everybody gets it,” he said.
