Banks have typically promoted online alerts as a convenient way for people to stay abreast of activity in their accounts, but some are now touting them as a security feature.
The types of alerts vary, and in some cases this shift is simply new marketing of an existing service. However, it is clear that the change reflects consumers' growing fear of online fraud.
"We are exploring more offerings we can have around security," said Gloria Chance, Wachovia Corp.'s director of online service excellence.
Wachovia offers several types of alerts. Some are sent automatically, such as when people change their online banking username or password, or their mailing address. Six months ago the Charlotte company stopped sending these notifications by mail and began sending them by e-mail.
Criminals often change passwords or addresses when taking over a legitimate account. Ms. Chance said Wachovia wanted to make sure that customers knew about these changes as soon as possible.
"We wanted to notify our customers more proactively," she said.
Customers can sign up for optional e-mail alerts, such as when an account balance falls below a certain level or when specific transactions settle. Wachovia recently began promoting its opt-in alerts through mailings.
Alert systems usually inform customers by e-mail when deposits clear, when bills are paid, or when accounts reach a certain balance level. Some companies deliver alerts by cell-phone text messages or as telephone voice messages.
Though automatically telling people their balance has fallen below a certain level has long been positioned as a convenience that could help prevent checks from bouncing, Wells Fargo & Co. is now marketing the same service as a way to warn people that a criminal may have gained access to their account.
Wells announced Aug. 1 that it had expanded its e-mail alert service specifically because of security concerns. Along with many of the standard alert options, the San Francisco company also said it would notify people if there had been three failed attempts to log in to their online banking account.
Wells' alert system used to focus on events such as bill-payment, notifying people if an account received a certain number of transactions in a single day, or warning that a customer was about to run out of paper checks. (The company declined to make an executive available to discuss its alert strategy.)
Bruce Cundiff, a research analyst for Javelin Strategy and Research of Pleasanton, Calif., said banks' emphasis on security in promoting alerts is relatively new. "In the past, e-mail alerts have really been focused on when your balance is below a certain point, or if you have a bill that's due in two days," he said.
Consumers "want to have more of a say in their protection," Mr. Cundiff said. By giving them instant alerts to which they can react, banks are "sort of deputizing the consumer - bringing them into the whole process."
Wells' warning about incorrect login attempts, Mr. Cundiff said, is a response to phishing, in which criminals use fake e-mail messages to get people to reveal their online banking passwords and other information.
Alerts for withdrawals, such as any withdrawal over a certain amount, can also help spot fraudulent transactions immediately.
A sophisticated phisher could try to duplicate Wells' e-mail alert warning of a failed login, but would probably get nowhere because the phisher won't know who has signed up for the feature, Mr. Cundiff said.
"The main difference is it's something that consumers have opted into," he said. The alert is "not something that's coming unsolicited. It's not spam."
George Tubin, a senior analyst at TowerGroup Inc., a unit of MasterCard International, said alerts can be used to retain customers and to increase business. For example, banks could encourage customers to buy additional banking products by offering an alert if interest rates on a home equity loan fall below a certain level.
Banks once saw alerts as a threat to their fee income, especially the low-balance warnings that could eliminate not-sufficient-funds fees for bounced checks, Mr. Tubin said.
Now, he said, they are starting to see them as a way to maintain good relationships with their customers. The new way of thinking: "We'll lose money but we'll gain it on retention and good will and having people use us more."
