Online, mobile and P2P are just the start
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Choosing a bank used to be fairly simple: People typically selected the bank that was closest to home or work.
That was before the Internet. Now there's banking everywhere through smartphones, with First Hawaiian Bank rolling out its app this summer, joining Bank of Hawaii in the race for mobile customers. Hawaii National Bank has a mobile banking product and, like other local banks, hopes to introduce its own app shortly.
Other local banks are enhancing their online offerings. In April, American Savings Bank added to its online services, while Central Pacific Bank began offering person-to-person payments via email, joining American Savings, First Hawaiian and Hawaii National.
But, if you think the banking world has already transformed, you haven't seen anything yet.
For banks, the new ways are about meeting customer demands for more convenience and self-service, while possibly cutting costs in the long run.
First Hawaiian Bank’s new iPhone app.
"You've got customers who probably don't go into the bank anymore," says Dennis Isono, executive VP and COO for Central Pacific Bank. "The consumer is changing habits a lot."
First Hawaiian says it was the first local bank to offer an Internet service back in 1996, but virtually all local financial institutions now offer customers ways to see balances and transfer funds between accounts. Most have bill-paying options online and some are offering person-to-person services akin to those offered by P2P pioneer PayPal. That allows people to send payments to friends, soccer teams or whoever via email or text messages.
About six out of every 10 bank customers access their accounts online, experts say, and they mostly check balances, transfer money and pay bills on the Internet. But the sophistication of online- and mobile-banking customers is about to grow.
"Almost all new accounts and bigger accounts are done in branches. But that's all going to change," says Jim Bruene, a former Seattle banker who is publisher of the Online Banking Report and NetBanker.com. "People are just going to be pretty comfortable getting accounts or loans online. Some are now."
Decades ago it would have been unthinkable to make a check deposit at anywhere other than a teller window. But Bank of Hawaii has installed a dozen ATMs where customers can insert checks to be scanned and deposited.
They may find the ATM through an iPhone app that Bankoh launched last year. It lists the nearest branch or ATM to a customer's location, gives directions and notes which branches are open.
One cutting-edge technology is being used at Hawaii's military bases, where members of USAA Federal Savings Bank can deposit checks by taking pictures with their iPhones, Android or Blackberry phones.
Bank of Hawaii’s check cashing ATM.
USAA, a San Antonio-based bank with limited branches that caters to military personnel who serve worldwide, accepts checks for deposit that are scanned and sent online from home computers. The service started five years ago. In 2009, it launched a mobile-phone version that allowed customers to make deposits from virtually anywhere by taking pictures of the front and back of checks. USAA says it takes roughly two minutes to make a deposit, including the time needed to log into an account, punch in a pin number and enter a check amount before snapping away.
Once USAA confirms receipt of the images, customers should mark the check "electronically presented" or "void" to make sure they don't redeposit it by mistake.
"Our members have the ability to use it from anywhere there's a signal," says USAA spokeswoman Nicole Alley.
South Korea and Japan offer a glimpse of banking's mobile future. Almost all active customers there have access to mobile banking, says a report released last year by the San Francisco Federal Reserve Bank, whereas only 3 percent of U.S. banks offer mobile banking.
In Korea, mobile phones can be used as debit or credit cards once a special chip is inserted. In the Philippines, banks and telecom companies are partnering to offer overseas currency transfers via phones.
In Hawaii, local banks continue to expand their mobile and online services – with the pace dictated by bank size, executive vision, competition, consumer demand and other factors.
Executives at Hawaii's two biggest banks, First Hawaiian and Bank of Hawaii, talk about the products fitting within their overall strategies – building customer relationships and providing more convenience.
"We're just trying to make it easier for them to interact with First Hawaiian Bank," whether it is in branches, on phones or on the Internet, says Bob Harrison, bank president and COO. "Technology is really just a way to enhance that."
"With the introduction of the iPhone app," says David Oyadomari, a Bank of Hawaii senior VP, "we saw a considerable uptick of the mobile-banking usage. It fits with our strategy to employ technology to enhance convenience for customers."
NetBanker's Bruene notes these changes can also save the banks a lot of paper – and money. For instance, digital statements instead of paper ones through the mail can save about $8 to $10 a year per customer, he says.
"The long-term hope is you get rid of the paper," Bruene says. "You get good systems and people can do self-serve."
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