(Source: The Daily News of Newburyport)
By Ian Berry, The Daily News of Newburyport, Mass.
Mar. 10--NEWBURYPORT -- The business of banking is quickly becoming an online experience, forcing local banks to either evolve or be left behind.
In the past year, local banks have redirected significant resources to their online products, realizing it will be the only way to compete with bigger, national banks. Local bank leaders say they won't survive without it.
"If we didn't offer these products, our customers would go somewhere else," said Sheila Goodwin, vice president of information technology at the Newburyport Five Cents Savings Bank.
A survey conducted by Web developer Digital Insight, which built the Web site for the Newburyport Five, found that 80 percent of Massachusetts residents prefer to manage all their finances through their bank or credit union's online banking site. The survey also found that one in five Massachusetts citizens said they would be "somewhat likely" to leave their current financial institution for one that offers more online financial management tools.
"The days of storing checks in shoeboxes is over," said Gary Coltin, senior vice president of The Provident Bank.
As local banks have increased the power of their Web sites, their online programs have been met with high adoption rates in the area.
The Five Cents Savings Bank has seen a 35 percent increase of customers who use online banking since 2008. Now, the bank estimates 50 percent of customers use the service.
The adoption of online banking has given small banks a fighting chance against their larger competitors. The Provident Bank estimates 60 percent of its customers actively use online banking. The number of enrolled users is higher.
"Online banking allows us to be on the same playing field of Bank of America," said Charlie Cullen, president and CEO of The Provident Bank. "Old-style banking cannot survive anymore."
Some banks have begun to offer incentives for using the cost-efficient online services, such as small cash back rewards for each transaction. Small businesses can even enroll in payroll services.
"At the beginning, we had an initial group of people that were eager to use it, and some people were wary of it," said Kimberly Rock, senior vice president of retail banking at the Institution for Savings. "It's a popular product now."
Online banking does have limits. The necessity of cash transactions, loan applications and direct customer service ensure the continued presence of brick-and-mortar bank branches. But the change of the landscape of banking is undeniable.
From 2000 to 2008, The Provident Bank reported per checking account, the average number of paper check transactions decreased by 23 percent, while the average number of electronic transactions tripled.
"My father never did this, and my son doesn't walk into a bank anymore." Cullen said. "Now I hardly write a check, except if someone comes to the door to sell me Girl Scout cookies."
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