Internet banking: It's closer than you might think

By Zatni Arbi

JAKARTA (JP): One of the hottest issues in our letters column lately has been the unfairly huge commissions claimed by local banks that offer savings accounts in U.S. dollars.

Just last week a letter on the same issue also appeared in the Kompas daily.

Complaints varied from inconsistent policies to arrogant customer service staff and branch managers.

The bottom line is the question whether it is worth putting our hard-earned U.S. dollars in a savings account in an Indonesian bank after all.

Based on reports that people have given us, it is clear that we need to leave our money in their vaults for a long time before we ever see it grow.

If we deposit our funds in the account and withdraw them only two or three months later, we will end up losing money instead of earning any interest -- thanks to the exorbitant and arbitrary charges.

Well, like in so many other things in this country, we are not given much choice.

Obviously these banks think that, since they are big and we are small, they can dictate any rule.

The unfortunate thing is that rarely do these rules ever benefit us, their customers.

Take the bank statement that embassies usually require before issuing you a visa to enter their country.

The branch of the bank where I have my savings account, for instance, charges me Rp 25,000 to get this statement.

I find it rather unfair, because everything is automated and there is very little human effort required to produce that simple piece of paper.

Yet I have no choice, because that is the bank's policy.

But, take heart, folks.

Banks are all about services and it won't be long until you can choose your bank based on how well they serve you. When the free-trade era arrives and most services get truly deregulated, you will have the choice of foreign banks that do not reside in Indonesia to put your money in.

Even today a lot of banks already provide Internet-based services.

Just this week I got a note from Bank of Hawaii.

I was informed that they were establishing an electronic banking system that I would be able to access through their own Web site. Since I still maintain a small checking account with them, I went straight to visit www.boh.com and see it myself.

Easy access

When I left Honolulu in 1992, I maintained a small amount of money in a basic checking account at this bank just in case I would need to write a check once in a while when ordering books or software from the U.S.

I am glad I did. In the past six years this checking account has been very useful. Each time the balance becomes dangerously low, I'll just buy a money order from the local American Express and mail it to Bank of Hawaii.

They will deposit it for me. It's so simple.

But now with the on-line services that they are going to provide, banking with Bank of Hawaii will become much more convenient.

When the service starts next month, I will be able to check my balance in real time.

I will no longer have to wait for my monthly statement to arrive--usually three to four weeks later.

Being a rather sloppy person, I really like this capability as it will help me avoid bounced checks.

I will also be able to open a savings account and transfer funds from one account to the other on-line.

If I should suddenly strike a fortune and become a millionaire, I could even invest in Bankoh money market accounts.

In the long run, I will even be able to obtain loans from this bank without having to show my face to them.

If you had a Bankoh Visa or MasterCard, you would also be able to keep track of your available credits.

If payments were due, you'd be automatically reminded -- as you can see in the accompanying picture. You can even invest in their Certificate of Deposits, and you'll know when your CDs will mature.

Furthermore, if you had bills to pay, you could make the payments from your home PC.

For most of us, paying bills is a task as abhorred as renewing our driver's license.

Just imagine how convenient it would be once we bank on-line: No more stamps, no more envelope licking, no more trip to the post office.

Keep in mind that the checking, savings and time deposits statements you see in the picture are part of the demo screen. Cyber banks

They are not real, and, more importantly, they are not mine. The demo screen is a glimpse of how we will bank in the future.

The best news of all is it will no longer matter where the bank is physically located. Some banks even do not have any headquarters as they exist entirely in Cyberspace.

If we click on the Statements button, the screen will display details of all the deposits made to our account within the time period and the dates they were made.

It also reports the amounts of checks drawn against it, complete with dates when the bank received the returned checks.

It also tells us all other charges against the account, such as the monthly service charge, a stop payment or printing of personalized checks.

And, of course, it will tell us our current balance.

Indeed, on-line banking has been around for some time and not many of us are aware of them.

According to Online Banking Report, in early 1996 there were only about 250,000 people in the U.S. who accessed on-line banking services. Today it is 2.5 million.

When I used AltaVista to collect all the documents containing the words "on-line" and "banking" from the Web, I got a whopping list of 11.5 million items.

Some of the materials -- I only browsed through a few of them-- were pretty informative.

There were publications that specifically deal with problems and prospects of this type of electronic business activities, such as the Online Banking Report (www.onlinebankingreport.com).

Another large institution that also provides Internet-based banking services is Wells Fargo, the 10th largest bank holding company in the U.S.

This bank has close to 2,000 branches in 10 Western states.

Incidentally, if you're interested in history, you can go into Wells Fargo's site (http://wellsfargo.com) and read intriguing stories about its past since its founding in 1852..

Wells Fargo, which will also be providing customers electronic cash stored in chip cards that they call Mondex, seems to be quite keen in using technology to leverage their Internet offerings.

They are one of the first few who have jumped on the WebTV bandwagon. You can find extensive demos on their Web site.

You can go over these demos to get a feel of on-line banking, and if you're interested you can open an account with them.

Secure?

Unfortunately, to open a credit card account you are still required to have a U.S. Social Security number and a driver's license number.

One major concern in the minds of most of us each time we hear the term "Internet banking" has obviously been security. How secure is on-line banking?

Bank of Hawaii claims that it is as secure as depositing money in the bank branch near your house.

They use advanced encryption techniques to make sure that no third party can intercept the data that is being pumped back and forth between our browser and their system. They also have built Firewalls that fortify their internal networks from the Internet.

A Firewall is a system of servers that stand between the internal network and the Internet.

When we communicate with their system, actually we are communicating with the Firewall, which will then be communicating with the system we want to speak to.

You must also have heard of software such as MS Money and Quicken.

These are software programs that you can use to organize your personal and family financial matters.

Many banks cooperate with Microsoft and Intuit in developing these packages, so that data can be copied from the banks directly into Money or Quicken.

So, guys, if local banks keeps on robbing you by taking too much commission from you, perhaps you can start looking at the option of on-line banking.

At least you know that in the near future they will become as commonplace as the ATMs in your neighborhood shopping centers. Internet banking will also enable you to bank across the Pacific Ocean -- Bank of Hawaii and Wells Fargo are just two examples.

So far, I think, the only problem you may face in the future is that you cannot get cash as fast as you might wish in case of an emergency.

Suppose I had a lot of dollars deposited in my Bank of Hawaii's accounts, it will take about one week and two or three wire transfers before I can see them here in Jakarta.

But, then again, your credit cards allow you to use some cash advances, and credit cards are more universally accepted.

Clearly, in the not so distant future, there will be less and less reason to put up with the arrogance of our local banking institutions.