Online Banking's Latest Pitch
If you tried online banking more than a year ago and promptly gave up on it, it might be worth giving it another chance. As banks increasingly look to the small-business market as a new source of revenue, they are beefing up online banking programs -- a trend driven in part by the growing recognition that entrepreneurs are typically more loyal that large outfits.
Online banking programs for small business are now easier to use, uniformly Web-based, and can be increasingly customized according to the size of your business, says Christine Barry, a banking analyst at Celent Communications, a Boston-based researcher for financial-services outfits. In a new report, Barry forecasts that 21% of small businesses will be banking online by 2005 – up from just 3% in 2001 and 12% this year.
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For software vendors selling online banking programs, the uptick in demand has sparked stiff competition. In the May report, Ranking the Vendors of Small Business Banking: Segmenting the Client Base, Celent ranks 11 online banking products based on things like depth of features, ease of use, and ability to customize. Earning the top ranking was Digital Insight (customers include City National Bank, Trust Company of New Jersey and United Commercial Bank of San Francisco), followed by S1 (which serves PNC Bank and Local Oklahoma). In third place was Magnet Communications.
The first online-banking programs targeted at small businesses were modified versions of ones designed either for individual users or large corporations – neither of which worked well for most small businesses, says Barry. "Now they realize they can't have just one small-business solution," she adds. "They have to meet the needs of all different types of small businesses." Checking out your banks latest online offering just may prove well worth the effort.
By Amey Stone in New York