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Jewish World Review March 28, 2001 / 4 Nissan 5761

Bill Brewer

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Consumer Reports

Alternative banking keeps evolving -- Online banking or bricks-and-mortar branches - it's a choice for the ages, younger vs. older.

With information technology ushering in a new generation of conveniences, banks are faced with developing split personalities. How do they weigh the needs of older customers, who rely on contact with tellers as they shun computers, and younger ones who demand Internet accounts and electronic checking?

That question has already been answered repeatedly, say those in banking.

Remember the ATM?

"If you had written this story in 1978, everyone would have said nobody would use a machine to get money," said Ron Rector, a senior vice president at First Tennessee Bank. "The ATM is just a norm now. It was one of the original alternatives."

Rector said today's young people can't remember a time when automated teller machines didn't exist.

It seems each generation for the past 120 years has witnessed some form of alternative banking. Early banks were suspect to those who questioned why anyone would trust money to a stranger. Decades later, branch banking was a newfangled way for lenders to reach out to customers in suburbia. The evolution continues.

As competition heightens, financial services companies are hunting new ways to attract and accommodate customers and create revenue sources.

"That's why banks are providing more convenient ways to access your money - because customers expect it," said John Hall, a spokesman for the American Bankers Association. "In this fast-paced world people have a higher expectation of service."

Bank customers range from college students and young professionals to a growing number of retirees, and banks have had to adapt to changing lifestyles, Hall said.

A mobile work force and a growing army of soccer moms have made in-store branches more popular. A larger contingent of tech employees prefer online banking.

Free online banking is apparently a trend as banks opt for a no-fee approach to lure users. First Tennessee is currently marketing free online banking to its customers to build that base. Rector said his company is seeing some growth from that venture.

Rector said a key factor behind the expansion of in-store branches is their low cost -about 8 percent to 10 percent of the cost of a free-standing site, which can run from $3 million to $5 million.

Electronic checking has become widely used, with banks aggressively marketing debit cards as a preferred transaction tool over paper checking.

Between 75 percent and 87 percent of all U.S. banks have weekend hours, according to the bankers' association, which also reported that nearly half of all banks with assets under $300 million offer telephone banking. That number rises to 70 percent for banks with assets of $300 million to $999 million and 80 percent for those with more than $1 billion in assets.

International Banking Technologies, provider of in-store banking programs, estimates that 8,100 in-store branches are in operation across the nation.

Bill Brewer writes for the Knoxville News Sentinel in Tennessee. Comment by clicking here.


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