E-Banking's New Era

Sunday Business Post - Computers in Business Magazine - Dec 03 2006

More and more businesses are moving the majority of their banking functions online for three reasons: cost savings, convenience and real-time information and reporting. The primary motivation, as with most investments in information technology, is to save money.

“When you add in stamp costs and administration time we reckon the typical cheque would cost €1.20 and the typical online transaction would cost 29c,” said Dermot Nolan, head of business marketing with Bank of Ireland. “If you are writing 150 cheques a quarter, which for most businesses would not be excessive, you would pay your monthly online banking charge immediately.”

The second advantage associated with online e-banking services is convenience. The internet doesn't go home at 5pm, never takes holidays and is always open for business.

“You could be sitting in your kitchen on a Saturday night doing staff payments or making transfers, and obviously the bank isn't open then,” said Nolan.

The third issue where online banking facilities can make a real impact on the efficiency of business processes is in providing businesses with quality information and reliable data, such as account balances, outstanding creditors and overdue debtors, which is right up to date.

“If you only monitor your accounts by monthly statements, 30 days is a long time in the life of a business. The luxury of being able to look up a balance once a week, once a day or ten times a day is seen by a lot of businesses to be cost effective in terms of managing their cash flow better,” said Nolan.

All businesses, ranging from the sole trader to the large multinational, have good reasons to look to e-banking solutions. This includes everyone from self employed individuals logging on a few times a week to check their balances or pay their phone bill, to SMEs using the internet to pay suppliers and staff on a regular basis, to huge organisations trading overseas who have foreign exchange and treasury requirements.

All the major Irish banks and building societies now offer online banking to their business and personal customers.

The names given to the different bank's services are very similar, and there is not a great deal of difference between the different services and facilities either. All the e-banking services have evolved quickly in recent years from basic online account management to more complex services, with features such as international currency dealing and payroll applications.

Real time banking is standard in the e-banking market.

The basic facilities that all the packages available offer the ability to view balances and histories of different accounts (including those in other banks), transfer funds between your accounts, order statements, credit cards or chequebooks, conduct cheque searches and transaction searches, set up standing orders and direct debits and make domestic and international payments.

Most packages also now include more advanced functions. These include exporting information to other applications on the user's PC such as Microsoft Excel, or different more specialised accounts packages and the ability to create payment templates for regular payments which can be put in place once and then react automatically and schedule forward payments up to 90 days in advance.

Another basic level of functionality in the bank's online business offerings is the ability to give different levels of access and authority to employees at different levels.

“You can have as many users as you want, with various levels of access to what they can do'‘, said Barry Manning, senior cash manager with National Irish Bank.

“You can have users who can just view accounts only, other users can go in and create payments, and then other users who can go in and authorise those payments.”

The ability to integrate a business’ e-banking function with various internal accounting and financial packages within a company is also widespread.

This means that as you use the online application to pay bills and receive payments, your internal accounts can be notified and updated in real time, which helps businesses keep track of their cash flow as and when it happens.

“You can generate invoices or files in your accounting system, and directly upload those to the bank from your own desk without having to generate files or fill out any paperwork etc,” said Sean Jevons, head of e-channel development at AIB.

Irish businesses commonly use the internet to pay staff salaries. Most of the payroll software packages on the market at present can be made compatible with the online banking mechanisms.

“A lot of our customers from small, medium and large-scale enterprises would upload payroll files from their own systems directly onto the system,” said Jevons.

“There is no need to re-key them or anything like that. I will upload the file and maybe someone else will check that it is fine, and then it is released to AIB and we will action it for the customer.”

This can have a definite advantage in that the banks can view this salary function as one transaction, with a single cost, but there are maybe 100 credits to accounts, either held by your bank or wherever your staff have their account.

There are a number of individual features which provide a certain amount of differentiation within the Irish e-banking for business market.

The different packages available from the different banks each have their particular extra add-on facilities.

National Irish Bank's ‘Business eBanking' service allows online trading in securities and currencies, get live updates on your currency positions and market value of currencies in your account and see real time news and analysis which may impact on your trading decisions.

“We give every user access to market and currency information. So they look at share prices online and see the current exchange rates. They can also access Reuters online information for free,” said NIB's Manning.

NIB's online offering is also more individually designed.

The facility is divided into different modules that the customer can pick and choose from depending on their particular requirements. NIB uses the same e-banking system as its parent Danske Bank, which is in use Europe wide.

“It is more of a consultation process that takes into consideration what their specific requirements are, we go out and sit down with the customer and design a specific solution for their needs. Then we only charge customers for the modules which they use,” said Manning.

There is also a level of differentiation between the bank's individual packages in relation to cost. Each bank offers a certain basic service for free.

The next NIB package starts at €10 a month and works up depending on requirements. The BOI offerings range €15 up to €70 a month.

AIB charge a flat fee of €200 to all online business customers.

Transaction costs across the banks are generally cheaper if you do it online, however for full breakdown of exact differences you should contact the bank directly.

Signing up and training

All of the banks are eager to get their customers online, as there are also efficiencies and cost savings from their point of view. It is relatively easy to sign up through your own business manager, by visiting a branch, or via the bank's website.

Anyone with an up to date version of their internet Browser (eg Internet Explorer, Firefox or Safari) should have no problems accessing the online banking webpages. Some websites will require particular software patches - for example an updated version of Java - which will be downloadable for free. Windows 98 or later versions is also generally required.

Broadband connections are also a good idea, as waiting for a page to load via dial-up is not an option when you are making important financial transactions. The e-banking packages on offer are not overly complex, and anyone with competency using the internet or basic IT applications should not have too much difficulty banking online. The banks all provide initial training services to customers free of charge and have dedicated support staff contactable by email or phone who can provide assistance if things do go askew.

Security issues are stalling internet banking. A survey of the Irish market, carried out earlier this year by Behaviour & Attitudes for international IT consultancy CA, found that of the 1.4 million Irish adults who use the internet, almost 10 per cent (125,000 people) claim that they do not carry out transactions online due to worries over identity theft.

All banks take e-banking security issues seriously. There is a detailed set-up process, which generally involves both online and offline elements.

Each user will have a set of personal authorisations (ie username IDs and passwords) which will allow only the level of access which the individual is permitted.

With this login users can typically access some parts of the facility, but will not be able to move large amounts of money around. Further, stricter, measures are put in place such as extra software installed on your individual PC.

“To go and make a transaction you need a digital certificate, which sits on your PC, so if a customer was foolish enough to give their username and password to somebody else that person would be able to view the account online, but unless they were actually using the PC that has been allocated to make transactions they actually can't do any damage in terms of withdrawing any money,” said BoI's Nolan.

AIB have recently introduced an extra measure to heighten the security of their iBusiness Banking (iBB) package. Each user gets a new piece of hardware, which looks like a calculator, which sits on their desk and produces a unique code or token which is traceable to them each time they carry out a transaction.

A lot of the negative publicity around internet banking has focused on phishing. This is a scam used to gather information from unsuspecting customers, usually in the form of an e-mail redirecting recipients to a fake website where they are asked to enter bank details.

Users should never confirm account details in an unsolicited email. They should also ensure that all transactions take place on a secure server where the web address is https://, and a padlock icon is visible in the corner of the browser frame.

All the banks are well aware of the perils of phishing.

“We have our own security software called E-safe Key which is built into the system.

“We recently upgraded it specifically around the phishing issue which has become more prevalent recently,” said Manning.

None of the banks can see any huge advances in e-banking options, as almost everything you can do in a branch you can now do online.

The innovation is going to come in informing and explaining to businesses how they can extract most value from the existing e-banking solutions.

“We have a module in our system called Collection Service which is used at present mainly for direct debit collection, but it also has the ability to be able to outsource invoicing to the bank so that customers, rather than printing off reams of invoices, enveloping them, putting stamps on them and posting them out, can avail of that functionality into NIB,” said Manning.

Using your e-banking solution to gather and collate data is another possibility for businesses. Full integration with your internal accounting systems can reap many potential benefits.