Banks are getting a clue

An article in this morning’s Wall Street Journal (10/21/06) by Jane J Kim discussed how more banks are “chasing credit-hungry consumers” online. Why is this important? Who knows why banks are just now using the internet on a wider scale. My opinion is that banks are sometimes slow to come around. The internet has been cutting into their business for years, they’re now feeling the pinch and recognizing that the “internet thing” is not a passing fad. It’s here to stay.

Use of the latest technology can help speed up business, which in most cases, keeps costs low. The less human interaction during a banking transaction, the better. At least that’s my opinion. I don’t see why I need to go sit in front of a banker and ask for a loan when I can get on the internet, apply, be approved in seconds, and have the funds in my account in 24 hours or less. Internet banks and traditional brick-and-mortar banks who have figured this out are ahead of the curve. There are still a few people who value the human touch – I’m not one of them when it comes to things that can be better served with technology.

Competition keeps prices reasonable. For several years now, there have been many online financial institutions offering their products through the internet only. That business model allows them to keep operating costs down (no brick-and-mortar location) and pass those savings on to customers in the form of higher yields on savings products and lower interest rates on loans. In some cases, the difference in rates between online banks and traditional banks may not be much. In today’s world where consumers are able to send their money to any financial institution almost effortlessly, that money tends to follow the best rates offered – anywhere.