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Not only do many of us get cash from the ATM machine rather than waiting in line for a teller, we do all sorts of banking electronically. A new report says half of all Americans haven’t set foot inside a bank branch in the last month. Between depositing checks via cell phone and paying bills online, technology has transformed our relationship with our money. Tech Tuesday considers the changing tools that allow customers to conduct their banking business on their own terms.
- Ant Ozok Professor, Department of Information Systems at University of Maryland, Baltimore County; visiting Associate Professor, Johns Hopkins University
- Lisa Gerstner Associate editor, Kiplinger's Personal Finance
- L. Cary Whaley, III Vice President for Payments and Technology Policy, Independent Community Bankers of America
MR. KOJO NNAMDI...banking, mobile technology and other money related topics. Lisa, good to see you.
MS. LISA GERSTNERThanks for having me.
NNAMDIAnd joining us from studios in Orlando, Florida is Cary Whaley, Vice President for Payments and Technology Policy with the Independent Community Bankers of America. Cary Whaley, thank you for joining us.
L. CARY WHALEYThanks for having me, Kojo.
NNAMDIYou, too, can join the conversation on this "Tech Tuesday." Give us a call. 800-433-8850. How do you conduct your personal banking? What tools would make managing your personal finances even easier? 800-433-8850. You can send us an email to email@example.com. A tweet @kojoshow. Or go to our website, kojoshow.org and ask a question or make a comment there. Lisa, some people want to use the latest tech to do their banking, while others still want to see a teller standing or sitting in front of them, and have that teller count out their cash.
NNAMDIHow big a divide is there between those customers and how well are banks serving both?
GERSTNERWell, you know, I think that there is -- there's a little bit of an age difference. You know, I think younger people do tend to kind of embrace that mobile technology and really use that a lot. At the same time, you know, only about a third of people with a smart phone are even using their mobile apps, so there is kind of a lot of differences going on. But I think banks are kind of working toward both. They're using a lot of different technological options. Enhanced ATMs, things like remote check deposit on your mobile phone.
GERSTNERIt is true that branches are even dwindling, though. There are fewer branches today than there were in the last several years. They just keep closing them. And they're kind of changing those branches to use more of that technology. So, there is kind of a lot of different things going on there.
NNAMDICary Whaley, same question to you.
WHALEYSo, in the banking industry, I think we've transcended the bankers' hours, and we've moved into more of a 24/7 mindset. So, it started with ATMs and it moved on to online banking. And now we have something that you don't even have to go back home and -- or to your office and check. But it's -- mobile technology's with you everywhere you go. So, there's a lot more functionality and a lot more 24/7 functionality.
NNAMDII'm gonna direct this question to all of you, starting with you, Cary. You work with smaller, local banks. How well positioned are they to meet customer needs in comparison to the bigger, national and international players?
WHALEYWell, I think they're well positioned, because of their nimbleness. They can follow very fast, and sometimes faster than larger institutions can bring to market. But they've got tough decisions to make. You take -- you mentioned this seldom used check that -- seldom received check. Well, for mobile RDC, how much do you roll out a product for customers that generally get four or five checks a year? Yet, at the same time, it's a wow application. So, you may want to roll that out simply to show, hey, we can do this.
WHALEYSo, some of the smaller institutions have tough decisions to make, but a lot of them are, you know, they're all looking at the mobile channel. It's just the question of how to use it.
MR. ANT OZOKYeah, I would agree with that. Also, keep in mind that building software, maintaining software costs money and if you're a big bank, that's probably not a problem. And users want to see a reliable website where you can go, which is up, whenever you need it. And if you are a smaller bank, again, it might -- those, that extra cost to maintain your mobile applications, maintain your servers, write new software whenever there is this old/new application or new feature to be taken care of.
MR. ANT OZOKThose cost money. And for a big bank, maybe that's not a problem, but for smaller banks, again, that might be a significant cost.
NNAMDIBut Lisa, it might be the very convenience that some of your customers want.
GERSTNERYeah, you know, I think that convenience is a big deal, and that's -- I agree that that's something that the smaller banks really have to look at and make a decision. Is this going to be worth it for us? The bigger banks may have more of that funding and resources behind them. But I also think that, you know, the smaller banks are kind of known for having more of that personal touch. You know, it's a community bank and that's something that they should, you know, that's something that people value, too. So, if you're going for a smaller bank or a community bank, maybe that's something that you're expecting.
NNAMDIIn case you're just joining us, this is a "Tech Tuesday" conversation about personal banking technology. We're talking with Lisa Gerstner, Associate Editor for Kiplinger's Personal Finance where she covers credit, banking, mobile technology and other money related topics. Cary Whaley is Vice President for Payments and Technology Policy with the Independent Community Bankers of America. And Ant Ozok is a professor in the Department of Information Systems at the University of Maryland, Baltimore County. And a visiting professor at Johns Hopkins University.
NNAMDIYou can call us. 800-433-8850. Are there certain transactions that you would never conduct online? Or that you only conduct that way? 800-433-8850. Ant, more broadly, your specialty is in human-computer interaction. What sparked your interest in how we bank, in particular?
OZOKYes. Kojo, in any service that the customers would like to do online, there is this component where they need to be able to conduct their transactions efficiently, but also satisfactorily. So, that's not always easy. You -- we all have our experiences where we went on this very badly designed website where we could not really do what we wanted to do. Or it took us much longer than we wanted it to, and we eventually decided to just grab the phone and leave the website, right?
OZOKSo, that's especially important in banking as well, because it deals with money and things should not go wrong. There is a higher urgency to prevent things from going wrong. You would not want to make a bill payment off ten thousand dollars instead of a thousand dollars. Or a hundred dollars, right? So, human factors and human computer interaction deals with making sure that that happens through experimentation on users, collecting user data in their own environments or in controlled environments.
OZOKSo, my job is really to make sure that users have the ultimate experience on the websites, including the banking. So, in banking, again, banking is a little different, in my opinion, than retail. In retail, you browse through products, whereas in banking, you have basically a set of pre-defined actions, such as bill pay, loan application, you know, viewing your -- the images of checks and a bunch of them are now moved onto the mobile arena. So, banks need to make -- take the precautions that are necessary that users do what they need to do in an efficient way, at the time that they think they should complete it.
OZOKAnd they should leave their -- your banking website with a smiling face, so that they will come back and do the same thing again the next day.
NNAMDICary, for customers' questions about which tech tools we use for banking may come down to one central debate. Risk versus convenience. How have data breaches, like the Target one that generated so many headlines, influenced our choices?
WHALEYWell, I think what it really does is it influences what the bank does, what services the bank offers and how they offer them going forward? Because in the Target breach, there were people using debit cards at Target the day after the breach was announced. And the reason why they did it was because they have banks guarantee those funds and will refund fraudulent transactions. And that's part of, part of the card brand rules. And there's consumer protections there. So, in some ways, that helps alleviate consumer hesitation, but the banks have to figure out how not to take losses on those transactions.
NNAMDISame question to you, Lisa.
GERSTNERYeah, well, I think fraud prevention is something that banks are really doing a lot, and especially a lot of the bigger banks, they're doing a lot of data crunching to make sure that they're providing the best possible prevention and notification to customers. You know, I had a credit card and I was really impressed when they figured out that some transaction in Phoenix was false. It wasn't mine. They called me right away.
NNAMDII gotta tell you, I had a similar experience. I lost, mistakenly left my credit cards in a Whole Foods, and went about my business. And I was at a function someplace else. I heard this buzzing on my cell phone, and it was the card -- it was the bank.
NNAMDITelling me that this was an unusual transaction that had been made using my card. And, as it turned out, I'd lost it and somebody picked it up and made that transaction.
GERSTNERYeah. They're using, kind of, sophisticated data analysis to figure this out. You know, I was impressed, because I do travel a fair amount around the US, and I've never been called for any of my personal trips where I actually was using that card. But they figured out, oh, this isn't right. So, there is a lot going on there behind the scenes.
WHALEYYeah, even the smallest banks will use global neural networks to gauge customer patterns and see what's normal for that customer, what's not normal for that customer. And then they can push it to customer using text alerts.
OZOKI can maybe talk a little bit about the user aspect of that. And, I'm sure you have all received that email about that your quote end quote bank wanting to contact you because there have been some quote end quote again, unauthorized transactions on you. And you're supposed to go to that website and enter your login and other kinds of information to make sure that, you know, that it doesn't happen again. Or stuff like that. So, you see, Kojo...
NNAMDII don't do that when I'm asked to do that.
OZOKYes. Good for you. There is -- the fraud is definitely a big deal, and a lot of people try and do these spams -- these scam emails, trying to contact you and getting your personal information. Well, look, banks will never ask for any personal or account related information of you on email. If there is a fraudulent -- suspicious transaction going on, most banks, their fraud departments will contact you via phone. So, I recommend, usually, people to never click on any link that's on email, that's supposedly coming from their bank, and emails coming from banks will usually be about your monthly statements.
OZOKAnd a couple of the newest products that they have, and that's it. Banks coming from your email will almost never require you to take any action. So, that's something to keep in mind.
NNAMDIOn to the telephones, now. We will start with John in Chevy Chase, Maryland. John, you're on the air. Go ahead, please.
JOHNWell, as I told the person who took the call, I think a very substantial portion of the problems exist between the keyboard and the chair. There are just some people who never will learn how to use a computer to make any kind of a transaction online.
NNAMDIAnd you think that -- I'm not sure I understand. If they can't learn how to use it to make a transaction online, are you saying they're either A. prone to making mistakes, or B. they just won't do it at all?
JOHNUsing a computer requires a small set of problem solving abilities. Not everybody in the population has that ability.
NNAMDIIt is my understanding that much of the interface that is typically designed on these, either websites or, for that matter, ATMs, are supposed to be up to the ability of anyone with a sixth grade education. Correct me if I'm wrong, Ant.
OZOKYes. That is correct, Kojo.
JOHNWell, what do you think the typical -- I mean, there is some significant fraction of the population whose education doesn't function at the sixth grade level.
JOHNSo, the institutions need to take that into account, and they need to provide some sort of services to help those people.
NNAMDIWhat do you say, Cary Whaley?
WHALEYOnline banking is not for everybody. It's one of a myriad of channels, several channels that a bank can use to relate to a customer. So, that's really where the branch interaction can step in, and particularly like a community bank interaction, can step in and assist that customer, meet that customer where they're at. You know, one thing about online banking. We think of it as a ubiquitous service, but ICBA research shows that while all banks offer it, only 50 percent of the customers have signed up for it. So, they use other channels, and one of which is the branch.
NNAMDISo John, they have other options.
JOHNI understand that. And I just -- you see, on the healthcare thing, a tremendous fuss was made out of the fact that the website was not functioning. Well, every public transaction needs to provide alternatives to that. And they need to be well thought out ahead of time. You know, I think I've made my point.
NNAMDIAnd you have indeed. That's what the banks seem to be doing. We'll be taking a short break. If you have called, stay on the line. We will get to your call. If you'd like to call, the number is 800-433-8850. We're discussing personal banking technology on this "Tech Tuesday." Would you like to be able to pay with your cell phone in more brick and mortar stores? Give us a call. 800-433-8850. Send us a tweet @kojoshow or email to firstname.lastname@example.org. I'm Kojo Nnamdi.
NNAMDIWelcome back to our "Tech Tuesday" conversation about personal banking technology. We're talking with Lisa Gerstner, Associate Editor for Kiplinger's Personal Finance, where she covers credit, banking, mobile technology and other money related topics. Cary Whaley is Vice President for Payments and Technology Policy with the Independent Community Bankers of America. And Ant Ozok is a professor in the Department of Information Systems at the University of Maryland, Baltimore County. Visiting Professor at Johns Hopkins University.
NNAMDIWe got a tweet from Jeffrey, who says ever since the data breach at Target, I have paid only with paper checks for my purchases there. Is that safer than debit cards? Can you respond to that, Lisa?
GERSTNERThat's interesting. I think a lot of people have been -- become more interested in cash since that Target breach. So, you know, I think there's different security issues with different methods that you use. You know, if you're paying with a check or cash, well, you could lose it. You know, if you lose your debit card, you can get another one. So, there's kind of different problems with each, you know? The debit card, of course, you are more vulnerable to such breaches at Target. So, you have to think of them in terms of, well, which am I willing to risk more?
NNAMDIAnd same question to you, Ant. Paper checks or debit cards? What's safer?
OZOKWell, data breaches will keep happening, in my opinion. So, there is -- they won't end any time soon. In my opinion, think of it this way. There has -- when a data breach happens, millions of credit card numbers are stolen. By the time the thieves will get to your credit card, to use it, probably, you will have canceled it, so really, these data breaches don't really phase me that much when it comes to using my credit card. Again, especially in the United States, we are fairly safe with the laws. You know, when you dispute the transaction, usually, the bank says, OK, you are right.
OZOKAnd you just don't lose the money. So, I still don't have a problem using my credit card, but I would agree that the confirmation process for the checks is, indeed, a bit safer than that of the credit cards.
NNAMDICary Whaley, I'll ask you the question in another way. Kathleen in D.C. emails, some people are hesitant to transfer from paper based banking to electronic banking, because they're worried about the security of their information. How much more or less safe is online banking, in actuality?
WHALEYWell, I think online banking, or it could go back to the credit card versus check. When you hand me a check, and Kojo, if you hand me a check, what you're handing is not only your account number, the bank's routing number, your name, your address. It is an identity thief's mother load of information. So, we want to move past that, as far as security. There's a lot of information on a check. And while the transactions security is a little different, we want to -- we certainly want to move past the amount of information.
WHALEYWhat I want to do when I pay somebody is just give them the money, not give them my life story and my financial life story.
NNAMDIOK. Then, continuing along this line, here is Leslie in Silver Spring, Maryland. Leslie, you're on the air. Go ahead, please.
LESLIEHi. Thanks very much for taking my call. I was wondering, so much of our online banking now can be done on our smart phones, on our Androids, our iPhones, and even applications for doing online banking. And I was wondering if you could talk about the security of online banking on your phone. Particularly, you had mentioned, Kojo, that what happens -- they call you if they suspect a suspectful (sic) transaction. How do you manage the security when you're using a smart phone?
OZOKFrom an infrastructure perspective, I don't think there is much of a difference. The encryption that's used on mobile devices are just as good as the encryption that's being used on laptops or desktops. What I think the problem can be is on the users' sides. Again, where, you know, when you are entering some sort of sensitive information. Someone standing next to you might be able to copy that information, because, you know, they are physically close to you. Or, if you lose your cell phone, and if you have neglected to make it password protected, some information on the cell phone can be reached and that can be sensitive payment related banking information.
OZOKSo, from an infrastructure perspective, I don't see that much of a difference at the security levels, using a mobile phone or a mobile device versus a stationary device. Again, the problems might occur because you are carrying your mobile phone everywhere with you.
NNAMDIThank you very much for your call. At the other end of that spectrum is Brian in Alexandria, Virginia. Brian, your turn.
BRIANGood afternoon, Kojo. Thanks for taking my call. This is somewhat of a response to the other caller who called in about the sixth grade education people. I'm a college educated professional. I own my own business. And I still pay all my bills, both my business expenses and my personal expenses all by traditional check. You know, I have not found any compelling reason, to date, to switch. I mean, I just, other people make it seem like it's so difficult with the old checks. I just sit down, write a check, and send it in. I mean, it's not -- I didn't have to set anything up in advance.
BRIANI know with the online checking, in order to get that -- people talk about how simple it is. After you've got it all set up with your bank and the various venders. And I don't have to do any of that. I just write down who I'm sending the check to, on there. It's done. To me, it almost seems quicker than doing it online, although, obviously, I've never done it online. So, I just -- from that perspective, it's not because I'm uneducated and I don't know how to do it. I just don't see any compelling reason to switch, at this time. Maybe that may change a year or so down the road.
BRIANAnd I just had one other quick question. They talked about the, you know, with Target -- the problem was with debit cards, and that you're host there has been sort of interchanging debit card versus credit card. I have never used a debit card. I have a single, well, I have a couple of credit cards, but I use one or two, exclusively. I don't have tons of credit cards. I've never had a problem with that. The few times I've ever had a questionable bill, the credit card's taken care of it. The card company has taken care of it. So, I don't understand all these people who are using debit cards. Why aren't they just using credit cards and you wouldn't have any of that problem?
BRIANBut again, between a credit card and a check, I'm covered, and I've been covered for years. And I don't see any particular reason to change.
NNAMDII'll ask Lisa Gerstner to respond to one at a time, because it has been my experience that it frankly takes me a much shorter time to pay my bills online than it used to take me to write out checks to pay each one of my bills. Is that one of the reasons that people find online more convenient? It's just faster, even though Brian says, as far as he's concerned, it's not.
GERSTNERYeah, I think this is one of those aspects of personal finance where it does come down to preference. You know, if speed is the issue, online banking and bill payment can be faster for you, but some people kind of like the physical aspect. They like being able to file those papers and see the checks going out. And it's easier for them to stay organized. So, in a lot of areas, that can be the case. You know, using a credit card or a debit card. Well, some people love credit cards, because you can get rewards points and all kinds of things.
GERSTNERBut, at the same time, if you can't stay within your budget on a credit card, which is a problem for people, use your debit card instead. You know, there's not always a right or wrong answer there. It's really what works for you.
NNAMDIAnt, with the debit card, you're taking it directly out of your account.
NNAMDIAnd with the credit card, you're postponing payment.
OZOKYes. In both cases, you know, there is a certain level of risk. According to my knowledge, either way, you can just dispute your -- that part of your transaction and eventually the bank does a small investigation about it. And if you were telling the truth, chances are that you will be fine. About the convenience issue, there are some statistics about the average balance transfer, for example, taking four to six minutes in a branch and, whereas taking under a minute online.
OZOKAnd there is also this other aspect of innovation, where, you know, it started this -- the online banking started, Kojo, in the late 90s, as just checking your balances online. Now, you can do, you know, view and deposit your checks, as we talked about. Even do loan applications and buy investment options. So, there is this aspect that is not very fast, but continuously somewhat improving and getting better. And offering more and more to the consumers. That might be one aspect that is attractive to the users. But, I think we are also forgetting the banks' point of view.
OZOKFrom the banks' perspective, you are looking at just around 10 dollars per transaction in a branch, that that costs the bank, whereas it costs less than two dollars if you do the exact same identical transaction online.
NNAMDIOn therefore, to Doug in Washington, D.C. Doug, it's your turn. Go ahead, please.
DOUGThank you, Kojo. I appreciate your taking my call. I don't understand. Nobody has been able to explain why US banks don't have chips in their debit and/or credit cards, when in point of fact, I was a US bank customer overseas, when I lived there, and both my cards, with the bank, had chips in it. So, I don't understand when the technology exists, why we haven't employed it in this country, where it's so universal everywhere else.
NNAMDIWhat, exactly, do those chips do, Doug?
DOUGWell, I think they are much more secure in the sense that they identify the -- I'm not fully cognizant of the technology, but I know that for safety, and for security, chips embedded in cards are much more secure. But your guests are the experts on that.
NNAMDICary Whaley, I'll start with you.
WHALEYOK. On the chip, what the chip accomplishes is one, it secures the data. The mag stripe is about 40 year old technology that's a piece of -- really a piece of mag tape stripped attached to the back on a card. With the chip, what it does, is one, it encrypts the card number and the customer data so that you can't make a counterfeit card from it. But, also, what it does, is in the transaction, that data, if intercepted, is totally worthless. So, the question, then is, why haven't the banks -- why aren't the banks there yet?
WHALEYWell, we're at the beginning of the adoption curve. The major card brands have announced EMV, which is the standard for chip based payments, they've announced strategies and liability shifts. And I think within the next three to five years, you're going to see those chips on all the cards.
NNAMDIDoug, thank you very much for your call. Ant, there's generally a lot of small print involved in signing up for, oh, a new account, or when conducting other bigger banking beyond the run of the mill withdrawal or deposit. And we know that people seldom read the fine print online, so, are customers at a disadvantage when it comes to more complicated transactions?
OZOKOh, absolutely, Kojo. You see, there is a lot to read whenever you sign up for a checking account, for any kind of account for a credit card, even. And research shows that especially when it comes to online sign ups, it's usually 90 to 95 percent of the users don't even read the first sentence of that fine print. So, I recommend that, you know, whenever it's time for you to sign up for anything, and that's not even related to banking, in my opinion. That goes into many different types of online transactions.
OZOKOne common one is, for example, to download and install online software. You know, I recommend everyone to just go through these and you will see that some of them will have some statements that you will not necessarily agree with. For example, sharing some part of your information, for example. Now, in some agreements, they will ask you to allow you to share your address so that they can sell your -- that kind of information.
NNAMDIBut that's never in the first sentence, is it?
OZOKNo. Absolutely not. That's probably in the last sentence. So, you know, I recommend everyone to read it really careful. Those are read very, very seldom, and it's, of course, not a good thing.
NNAMDILisa, when it comes to practical advice for consumers to protect their accounts, apart from trying to read those very long agreements, what do you recommend?
GERSTNERWell, you know, especially on the mobile angle that we talked a little bit ago about. You know, trying to keep your phone secure, along with password protecting your phone's home screen, you also want to password protect any apps within it. So, if you're using your bank's app, there should be some option to put in a pin or something like that. Making sure that your information is protected as possible, especially when it's mobile. Anytime you're using any websites, check for the secure sites that should say, https at the beginning.
GERSTNERYou know, you never want to make any sensitive transactions on a site that does not have that, and your bank should always have that. So, there are kind of different checks you can do just to make sure that you're staying as safe as you can.
NNAMDIAny recommendations along that line, Cary Whaley?
WHALEYI think the only one I would add to Lisa's is that when you lose your phone, you don't always think of calling your bank, but you really, if you have a mobile app on that, you should call their bank -- and call the bank so that they can make -- monitor for any transactions that come from that app. You should also, if you lose your phone, cancel that phone immediately, and that service.
NNAMDIOn to Eileen in Silver Spring, Maryland. Eileen, you're on the air. Go ahead, please.
EILEENThank you. This is more a comment. I actually own a business where I teach computer literacy to adults, and, you know, adults over 55, who may not be as comfortable with computers as younger people. And my experience is not that they're not educated. It's that they don't understand it. They're afraid of the computer. And once I explain that the security, when they're banking online, in the security of their computer, it's the same security that the bank's use. They seem to understand a bit little more, and I explain what encryption is. And so once they understand more about that, they're just more comfortable using it. So, that's my comment.
NNAMDIThank you very much for raising that issue. I'd like to go to an email from Ileana. There's an alert circulating on the internet about vulnerabilities of credit cards, or ATM cards, that have a Wi-Fi symbol on them. Have your guests heard of this, and can they verify if it's true, or otherwise elaborate? Ant?
OZOKHonestly, I have not heard it. It might be one of those fun, fake kinds of warnings. So, I would probably bet my money on it being fake.
NNAMDIHeard anything about that, Lisa?
GERSTNERYou know, I believe I did hear about that, and I would also agree that if this were, you know, a legitimate problem, I think it would come across our radars by now. So, so yeah. I...
NNAMDISame for you, Cary.
WHALEYYeah, I've seen the email. I would file it under fake.
NNAMDIOnce, they were very futuristic, but now, ATMs have become quite ubiquitous. My understanding is that they've not grown a whole lot in numbers, in recent years, but a lot of banks have added new functions to their machines. What are we seeing that's new, or might be coming to a cash point near us soon, starting with you, Cary.
WHALEYI think the newest thing is to allow -- to deposit checks or cash without even putting an envelope in. Traditionally, we put an envelope in. You had to put a deposit ticket in. The whole process took about a minute, two minutes. For me, it probably took three minutes. And now, all you have to do is press the deposit key. Not only are you depositing the checks and the cash as is, but it's actually showing you an image of the checks. And many banks are moving towards that. So, that's one key change.
WHALEYThe other change is they're using their ATMs more like a kiosk in opening up other -- being able to open up other services via the ATM. But the major change has been the remote -- the checkless non-envelope deposit.
NNAMDIUsed to drive me crazy when I did that, and you'd go there and somebody had stolen all the envelopes. God knows what they were doing with them.
NNAMDIThere would be no envelopes. Ant?
OZOKOne thing I've seen is at the end of your transaction, ATMs would give you a paper receipt. Now, the ATMs are asking you, would you like to receive an email notification instead of the paper. Saves on the paper and you can also just make it your default option, so whenever you do a transaction on the ATM, you don't get any receipt, but you just have it immediately emailed to you.
NNAMDIAnd there are some cases in which you are asked whether or not you desire a receipt, but there's no option for having it emailed to you. How unsafe is it for customers to simply refuse to accept receipts?
OZOKWell, for ATM transactions, I don't think that's much critical. (sic) I see the receipts from ATM transactions as something that you want to keep for your own records. One reason that I'm thinking of it that way is you can just flip up your cell phone or just go home and turn on your computer and just see that transaction immediately and check if it was correct or not on your computer.
NNAMDISo, Lisa, if you check and it is not correct and you have no receipt, you can simply challenge it with your bank?
GERSTNERYeah. You know, go straight to the bank and find out what the problem is. I found that they're usually pretty amenable if they don't have a reason to think that you're lying about something, that they will kind of look into that, especially if there's some really strange, huge transaction. You know, you don't normally take $600 out, and suddenly there is. Well, you know, they're going to wonder what's wrong there.
NNAMDIOr it doesn't take $150 to fill your gas tank, for instance.
NNAMDIWe're going to take a short break. When we come back, we'll continue our Tech Tuesday conversation on personal banking technology. But you can keep calling right now, 800-433-8850. When was the last time you wrote a physical check out? Do you still carry a checkbook with you at all? 800-433-8850 or send us a tweet, @kojoshow, email to email@example.com. I'm Kojo Nnamdi.
NNAMDIWelcome back. It's Tech Tuesday, and we're talking personal banking technology with Cary Whaley, vice president for Payments and Technology Policy with the Independent Community Bankers of America. Ant Ozok is a professor in the Department of Information Systems at the University of Maryland, Baltimore County, and a visiting professor at Johns Hopkins University.
NNAMDIAnd Lisa Gerstner is associate editor for Kiplinger's Personal Finance where she covers credit, banking, mobile technology, and other money-related topics. Ant, as more transactions are done online or at teller machines, are we seeing a steep drop in the number of branches and tellers staffing those branches or changes to the typical banker's hours to be available when customers are?
OZOKYes, Kojo. I have seen that quite a bit actually. Again, it is also a cost issue for banks. And since online transactions mostly cost significantly less than teller transactions, yes, there has been a trend downward in the number of tellers that banks employ. Now, I just want to give you an example of you might remember that, say, 20 years ago, you would walk into a shopping mall, and you would see one whole row of travel agencies, which are all gone now.
OZOKThe question is, of course, will we see the same thing with the banks? I don't think that's going to happen any time soon, maybe 10, 20 years from now. The shrinkage in teller-supported transactions will continue. But will we ever see physical banks going extinct? I don't see that happening in the near future, again, due to the reasons of that human touch that we have talked about.
NNAMDISame question to you, Cary Whaley.
MR. L. CARY WHALEY IIISo the research I have is branch use is declining, but modestly. And customers who use digital transactions still use branches for some transactions. The plus to the 24/7 mentality is that bankers' hours sometimes mirror our own working hours. So things like remote deposit capture, ATMs assist the customer during those gaps.
MR. L. CARY WHALEY IIISo I don't think you're going to see branches go away. But I think you will see them be redefined to be more of a service center and more of a way to -- an opportunity for additional cross-selling and to gain, if you come in for a loan. It's a chance to interact with the bank and them to get to know you, but you to get to know them as well.
NNAMDIHere are -- is Laura in Washington, D.C. Laura, you're on the air. Go ahead, please.
LAURAHi. So I had a question. I use a lot of PayPal and, like, sort of the peer-to-peer banking kind of transactions. And I was wondering if there was any secure way for the banks to sort of offer that kind of service. Like, I was shocked to find out that when I pay my bills electronically, the bank prints a check and sends it to my, you know, to my student loan company and things like that.
NNAMDIAny idea, Lisa?
GERSTNERWell, if you're talking about peer-to-peer services and if you're thinking of PayPal and things like that, some banks are doing some things like that. You know, I think there's one called Popmoney where certain banks are involved. You always have to watch out for fees. That would be my main thing, is to just always check on that.
GERSTNERThere can always be hidden fees involved, and especially, you know, using services like PayPal, you may be charged a certain percentage of each transaction that you use, depending on how you do it. But, yeah, as far as banks go, I think they are doing more of that. And there certainly are ways to transfer money to other people.
NNAMDILaura, thank you very much for your call. Cary, you were about to say?
IIIIf I can answer that.
IIIFrom a bank's perspective and from many consumers that I talk to, what they like about things like PayPal and Popmoney is that it's pushing the funds to that merchant without giving over any of your account information, not giving all that information that we talked exists on the check. So the goal for banks -- there's a lot of different silos and a lot of different apps that -- like, Popmoney, iPay, and there's one almost created every time.
IIIBut it's coming up with the infrastructure that ties is all together so that any consumer can send money to any other consumer or any business and not have to sign up to receive the money. It just becomes ubiquitous. And one bank and one consumer can just send money seamlessly to another one. And as a banking industry, we're working on that. And I think in the next three to five years, you're going to see some real changes in that.
NNAMDIHere now is Talia in Silver Spring, Md. Talia, your turn.
TALIAHi. Hi, Kojo.
TALIASo I -- just back to the point around banks -- physical banks probably not disappearing any time soon, I wanted to share I'm on the extreme end. I am 36. I'm married. My husband and I both work. But I handle all of the finances. We have a toddler at home. I am in pain any time I have to sit down and physically write a check. I do all of our banking online.
TALIAI transfer balances on my phone. I pay bills. We do everything mobile. The one time that I've physically been into our bank branch in the last five years was when we bought our house, and I had to go in to get our cashier's check for the down payment. We didn't have a choice. I had to go in to get the check.
TALIABut I think that is the one -- the single scenario in which, even if there had been an option for me to somehow get that cashier's check or, like, talk about my mortgage with my banking professionals not in person, I don't think I would have chosen it. I would have gone in physically. Like, I needed to have someone there to talk me through that process. So I just wanted to share that I think -- I also don't see bank branches going away because anything related to my home or my mortgage, I want to talk with somebody in person.
NNAMDIAnt Ozok, is that what we're likely to be seeing in the future?
OZOKYes, probably it depends on how complex the transaction that you would like to do and how much, again, you want that particular human touch. So simple things, like the caller pointed out, as a really easy and timesaving doing online, whereas things like deciding on which investment options to buy or, again, a loan application, I would think that few people would like to apply for a large home loan online or on their mobile phone, right? So, again, it's a balance between the convenience and that human touch, and therefore I think that branches will be around for a while.
NNAMDIThank you very much for your call. Cary Whaley, we got an email from Mike in Baltimore, Md. who said, "Screen-based teleservice is misery for many customers. Besides removing the only human face, a real face, at a bank, the ergonomics are horrible. Audio quality is also horrible and not private at all. People with disabilities who cannot look at LED screens because the screens -- always cheap models -- trigger a migraine or other medical attack are struggling with this horrible idea." Care to comment, Cary?
IIIIn the screen-based teleservice, that's almost a part of -- apart from the normal operating -- so sometimes there's an intermediary service working, so that may be where some of the disconnect happens. And so I think, yeah, the goal is to make that more seamless and make that experience, and that's what I'm hearing. But that -- that's going to vary from bank to bank.
NNAMDIOn to Alexandra in Montgomery Village, Md. Alexandra, you're on the air. Go ahead, please.
ALEXANDRAHi. Thank you for taking my call. My question actually is, if a person is incapacitated in the hospital or has passed away, how do your guests suggest that people who are helping out in that situation, how can a person previously set up things so that their accounts can be accessed in an emergency -- excuse me, in an emergency?
NNAMDILisa Gerstner, any advice on that?
GERSTNERWell, yeah, I think this is one of those cases where if you know something like they're coming down the road or you're close to certain people, you know, power of attorneys can be really helpful in making sure that you can manage someone else's transactions and speak for them. So I think that's really important.
NNAMDITo set those kinds of things up in advance?
GERSTNERYeah, and especially if you can do it in advance. You know, you can't always anticipate an emergency. And that's why I think it's even more important to just be ahead of the game on things like that.
IIIAnd once all of that is set up, that's the ideal time for a branch visit, to work with the financial institution, make sure that you're added to the account. And the account may be -- you may want to close the account and start up a new account. And that's the perfect time for the human interaction of trying to reconstruct the banking relationship with the care providers involved.
NNAMDIAlexandra, does that answer your question?
ALEXANDRAYes. Thank you.
NNAMDIThank you very much for your call. Ant, social media sites and review sites like Yelp have changed the game for a lot of businesses. When it comes to customer service, banks are navigating those waters under strict sets of rules. How difficult is it for banks to navigate this social media landscape?
OZOKYes, Kojo. You will see that the big banks or the small banks have not had so far as big a social media presence as some other companies, such as retailers. Mainly, I'm seeing banks using these social media outlets as a marketing tool. In my opinion, there's two reasons for that.
OZOKOne is banks do not sell a traditional product and don't have the same variety as some other service and product providers and retailers, such as Amazon where, you know, you have literally hundreds of thousands of products for every taste, where you are limited to, you know, less than maybe 10 different products and services that you can offer. And these can be marketed using the social media outlets, but, again, that's what I have seen them doing.
OZOKAnother one is probably the fear for fraud where there can be a fake bank Facebook page that you will think that it is your Facebook -- your bank's page. You would go, and then you would start getting messages or postings on that that might look suspicious. That might be another reason where banks have not shown that much of a presence in social media outlets as some other types of businesses.
NNAMDICary Whaley, banks reluctance to participate on social media websites?
IIIWell, all banks have a social media presence. Some is intentional, what they send out. And some is unintentional, what is said about them in Yelp, Facebook.
IIIAnd a bank has to manage both. They have to know what their employees are saying about them. They have to know what the reputation is being represented of that institution. And even if they choose not to tweet, they still have to manage, what is the public perception of the bank? And are there spoof sites being created in the bank's name? So even if you choose not to participate in social, you still have to manage the risks that are created by social media.
NNAMDILisa, care to respond to that at all, banks, social media?
GERSTNERYeah. Well, you know, I think from the standpoint of the customer, too, there needs to be some reason for them to want to interact with a bank. You know, why would you go to social media to do that? I think social media a lot of times is a venue for complaining. You know, as Cary had mentioned, they have to keep an eye on what people are saying because if you have a dissatisfied customer, a lot of times, the first place they'll go is Twitter or Facebook and put a rant out there.
GERSTNERSo, yeah, I think that banks are kind of trying to figure that out. You know, how can we put value out there? Why would people want to interact with us in a positive way?
NNAMDIMel in Vienna, Va. Mel, you're on the air. Go ahead, please.
MELYes. As many of you will know, you can take a picture of a check with your phone and deposit it with many banking institutions. I'd like to know why I can't send the bank a picture of a check via a fax and achieve the same result.
IIII think there's a number of things. First, the fax technology is not as secure as the imaging technology that you use. Second is the actual image resolution degrades, so by the time that it's scanned into the check imaging system, a lot of times it's unreadable. And it's just non-negotiable. So it's better to use these direct camera technologies than passing it through an additional technology.
NNAMDIMel, thank you very much for your call. Lisa, we're almost out of time. But the idea of a digital or e-wallet is one that has been in various stages of reality for a while. How broadly has it been adopted? And what will it take to make it more widely available?
GERSTNERWell, I don't think mobile wallets have become big yet, and I think there are a couple of reasons for it. One is that people don't necessarily feel like they need one. You know, they're fine with pulling debit card or a credit card out of their regular wallet and swiping it, and it's not hard for them. So mobile wallets need to figure out how can they add value? You know, maybe every fifth time, you get a cup of coffee, you get a discount. These are the kinds of things that will make people really interested in mobile wallets. And also, just an issue of adoption, you know, the user needs to have, say, an NSC phone if they want to use Google Wallet and tap it at the register. So...
NNAMDILisa Gerstner, associate editor for Kiplinger's Personal Finance where she covers credit, banking, mobile technology, and other money-related topics. Ant Ozok is a professor in the Department of Information Systems at the University of Maryland, Baltimore County, and a visiting professor at Johns Hopkins University. And Cary Whaley is vice president for Payments and Technology Policy with the Independent Community Bankers of America. Thank you all for joining us. And thank you all for listening. I'm Kojo Nnamdi.
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