12 July 2008

Online Banking

Growing accustomed to not seeing the teller. ATMs prepared boomers well for the shift to online banking. We learned our account numbers. We memorized a few keystrokes. And we found our own heuristics for getting cash: use the ATM in the grocery story in the morning, use a drive-through ATM only in mid-afternoon, avoid the costly withdrawals of non-member machines. We saw that ATMs didn't make errors and rarely ran out of cash. And we definitely noticed the convenience of hours (27/4, after all) and the lack of lines (assuming you developed the right heuristics for your town).

The next step: Online banking was the natural next step, with automatic payroll deposit leading us. And it developed with a high level of standardization among employers and banking institutions. That standardization permitted fast adoption, not just because it was efficient but because large segments of the work force began at the same time. If the other 600 people in your workplace were getting their paychecks the same way, you didn't have to make much of a decision. And, in fact, employers quickly shifted from offering choice in how you received your pay to mandatory automatic payment. In my last employment (2001 to 2008), that was the case as a state university cut checks upon request and then eliminated that choice. Among the folks I knew, the greatest impact was on graduate assistants who never got around to providing the bank routing number—until there was no option and they had to in order to get paid.

E-bills: Online bill paying has not taken hold as successfully. That may be because of the differences among banks. Frankly, some banks set up more user-friendly systems. My first experience was clunky and writing/mailing checks was definitely a better use of my time. But my current bank is better and is gradually introducing improvements (and "gradual" helps me to adapt to the improvements without too many differences month to month). In this happier experience, it still has taken more than 4 years for me to transfer everything to either automatic withdrawal or online e-bill.

On a personal note: I still walk into the brick-and-mortar investment company. (And it really is made of brick and mortar, perhaps to communicate strength and stability.) But that's only once every few years. Otherwise, I log onto fidelity.com for the very occasional check on changes. I also log onto Vanguard a couple of times a year to look at a smallish lifestyle fund; its monthly contribution is accomplished through automatic transfer from the household account. That household account is with a local bank that I can drive-through to deposit the occasional rebate check but otherwise manage completely online, covering automatic and directed transfers for utilities, a car payment, and mortgage. A second account with the same bank serves as my business account: linked but with my bookkeeping very separate. I have another banking location—but I have no idea where. Where in the world is ING? For me, it's strictly that very orange webpage to which I can move money from the household account in order to earn a little more interest. I segregate cash into two accounts there: Cash Reserve and Saving for Taxes. This particular bank lets me name the accounts myself. If I count PayPal, too, because it performs a banking function for me, I'm up to 7 accounts where I track money. And that reminds of George Miller's research into the magical properties of 7. Of greatest pertinence: we humans can handle 7 anythings pretty well. When the number climbs to 8 and beyond, we can't.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

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