Online safe deposit boxes seemed like a worthwhile service back in the golly-gee days of the Internet, but they have not shown much staying power.
Several banks that offered this product which lets customers store digital documents such as wills, trusts, and other personal papers in an online receptacle are now dumping it.
It just never caught on, said D.R. Grimes, the president of NetBank Inc., which began offering the boxes in late 1999 and is now phasing them out. He would not say how many customers had signed up for the product.
Online storage technology has advanced considerably since NetBank got involved, so it no longer makes sense to try to compete with the markets larger players, Mr. Grimes said. The bank plans to steer interested consumers to SafeDepositBox.com of Atlanta, whose technology NetBank had cobranded. Mr. Grimes is a board member of SafeDepositBox.com, which has shifted its focus from consumers to the business-to-business market.
New Century Bank in Chicago has scrapped the online boxes it offered through FreeDrive Inc., a Chicago company that lets consumers store and share data on the Internet. FreeDrives technology is licensed and cobranded by companies that offer it on their Web sites.
New Century opened in 1999 and began offering FreeDrives technology the following year. Marc Pershan, a senior vice president at the bank, said the boxes attracted only about a dozen of the companys 2,000 customers. He echoed Mr. Grimes in saying that competition played a role in the banks decision to drop the product, but he added that consumers fear about online security was also an obstacle.
Theres been much more information regarding privacy and identity fraud than there has been about convenience and ease of using the Internet for things like storage, he said. We still cant convince somebody that the information thats out there is truly secure.
Alison Gibbs, a spokeswoman for FleetBoston Financial Corp., said it is abandoning its online safe deposit product, fileTrust, but not because of a lack of consumer interest. Introduced in October 2000, fileTrust attracted 5,800 users 60% of them Fleet employees and the rest Fleet customers, Ms. Gibbs said.
The product was developed in-house with a number of technology partners, including Microsoft Consulting and Compaq Computer Corp., and was part of an e-catalyst initiative Fleet started two years ago to integrate electronic commerce into various business lines. Fleet ultimately decided that it would make more sense to sell fileTrust to a company that could develop it further, Ms. Gibbs said. The company sold the technology this month to Mangosoft Inc. of Westborough, Mass.
The boxes were successful, and they were not dumped over a lack of interest or shifting spending priorities, Ms. Gibbs said. However, when asked if fileTrust generated much revenue for Fleet, she said, No comment.
Christopher Musto, the vice president of research at Gomez Inc., a Waltham, Mass., consulting firm, said he was not surprised that online safe deposit boxes have not taken off. Financial institutions erred in thinking that physical deposit boxes could be replicated on the Internet, he said.
The analogy breaks down, because the kind of things you store offline arent the same kinds of things youd store online, he said. It seemed to fit on a superficial level with what banks offered, but on a practical level it did nothing to enhance their value proposition or to serve customers.
Such offerings clutter up financial institutions Web sites and distract employees and customers from the things banks do best, Mr. Musto said. Banks have to figure out what does work and what doesnt work, help the customers take advantage of what does work, and be rigorous about getting rid of the rest.
But Ian Rubin, the director of online financial services for IDC, a consulting firm in Framingham, Mass., said that even though online safe deposit boxes will not replace physical ones, they will provide a valuable service in an increasingly digitized world.
Financial institutions did not market online storage well enough to generate consumer interest and drive adoption, he said. Like a lot of things, you have to demonstrate the value. People arent just going to interpret it as being very helpful, but once they get into it, they think its indispensable.
