Businesses come online with banking

Companies are clicking their way to more efficient financial management

Online banking is growing in popularity among small businesses. A 2005 study performed by Edgar Dunn & Co. reported that 58 percent of small businesses use online banking. In Clark County, banks report a growing interest in online banking by small businesses. For example, Scott Miller, senior vice president of marketing at Riverview Community Bank, reported that just under 40 percent of Riverview’s business customers use online banking, and the percentage is higher – closer to half – of Riverview’s larger business customers use it.

Tom Unger, a spokesman for Wells Fargo Bank, reported that Wells Fargo has, nationwide, 643,000 active online small business customers, up from 510,000 a year ago – an increase of about 26 percent. While Unger couldn’t say how many of those customers were located in Clark County, its likely that utilization of online banking here is growing at approximately the same rate.

Online banking has been around a while – Wells Fargo was the first bank to offer it, in 1995. Local banks quickly jumped on the bandwagon. Riverview began offering online banking to business customers in 2000; First Independent Bank followed suit in 2001. Like any new technology, it has taken a few years for online banking to come into its own. But new features, including security and personalization, are now making online banking an attractive financial tool for small businesses.

Bonnie Hamilton, controller at Silicon Forest Electronics Inc., said her firm has been using online banking, through First Independent Bank, for three years. Although she doesn’t use the bill pay feature, she does extensively use features that allow her to transfer money between accounts and view checks online. She cited the convenience and speed of transactions as the greatest benefits of online banking.

"It allows me to close the books in three days," said Hamilton, whereas before they started using online banking, it often took as many as 12 days to close the books at the end of the month.

Bryan Halbert, vice president of Schlecht Construction, said his company has been using online banking (through Bank of Clark County) for four or five years.

"We’ve always been a company that embraces new technology, and this was an area where we could better serve our clients and manage our financial resources better."

It is this latter aspect of online banking – a financial management tool – that Miller says is the best selling point of online banking services. With online banking, business owners can stay in touch with their company’s financial transactions, even when they are on vacation. In addition, customers can set up personalized permissions for each account, where certain employees have full access (including financial transactions), but other people – for example, a CPA – can view the account history, but cannot initiate transactions.

"Online banking makes consumers more self-sufficient and knowledgeable," said Miller. "It helps them meet their business goals – and their financial success is our success."

And, a self-sufficient customer, said Diana Fitzpatrick, cash management officer at First Independent Bank, means cost-efficiency for the bank.

"Online banking results in less paperwork and requires fewer employees at the bank," said Fitzpatrick.

Still, there is room for improvement. For example, Jill Gardner, controller at Schlecht Construction, reported that although she does payroll online via automatic deposit, and she pays some bills, such as rent and insurance, online, she does not pay many other bills that way. Why? Because she would have to key in the data twice – once into the online system, and again into Schlecht’s accounting system. Although it is quite common for consumer online banking statements and information to be easily downloaded into an application such as QuickBooks or Quicken, it is much more rare for online business banking information to be readily interoperable with the wide variety of business accounting systems.

Gardner also said that online banking is "too easy sometimes. You become paralyzed if the computer isn’t working – you forget you can call the bank!" In addition, she said, online banking took some of the personal touch out of banking.

But despite these drawbacks to online banking, the statistics show that more and more businesses are trying online banking.

"People will use it more each year," said Fitzpatrick.

And once a business tries online banking, going back to the "old way" of banking is unimaginable.

"I wouldn’t go to a bank," said Hamilton, "that didn’t have online banking."
Securely speaking
No matter how advanced a bank’s security system is, said Scott Miller, senior vice president of marketing at Riverview Community Bank, businesses must take steps to ensure they hold up their end of the security equation.

Miller said the most common security mistakes made by online banking customers were

• writing the password on a sticky note and attaching it to the computer monitor;

• failing to shred documents properly; and

• failing to change passwords after an employee terminates his or her position.

Most banks use 128-bit encryption (developed by the Department of Defense), state-of-the-art firewalls, and complex password algorithms to protect their online banking customers. Other common security features include a system that locks up after a certain number of failed login attempts and automated clearing house (ACH) blockers, where a customer provides a list of approved ACHs for transactions and transactions from other sources are blocked.

"I have 100 percent confidence in the security of our information," said Miller.

Local online banking customers seem to feel similarly secure.

"I feel safe and secure with it," said Bonnie Hamilton, controller at Silicon Forest Electronics, Inc.

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