In the last decade, more Americans have taken to the Internet to complete their to day-to-day activities, from window shopping to electronic check deposits. The progression toward online products and services has increased in the banking industry so much that some institutions have decided to abandon brick-and-mortar locations in response to customer wants and needs.
Banks of all sizes are scaling back on the number of active branches available to their customers. According to research firm SNL Financial, 2,267 branches were closed in 2012.
However, not everyone is willing – or able – to jump on board the online-only way of life. Those most adversely affected by bank closures are customers who not only lack connectivity to the Internet due to financial constraints, but also those who distrust digital banking or don't understand how to do it.
Earning the trust of conventional bankgoers requires more than a reassurance from financial institutions that online banking is efficient, less cost-prohibitive and more convenient. Instead, the power other traditional outreach methods, like word-of-mouth, can help shift the opinion of those wary of digital banking.
Consumers who have questions and are uncertain about transitioning to an online bank can find resources through online training. These courses often include topics such as learning how to browse the web, create an online account or perform basic transactions like fund transfers, online bill pay and setting up fraud alerts.
But before activating an account with an online bank, depositors should navigate through this checklist:
1. Verify the bank is FDIC-Insured. The first thing customers should do before opening an account through an online bank involves addressing the issue of distrust. Reputable online banks are backed by the Federal Deposit Insurance Corporation. Similar to brick-and-mortar banks, the FDIC provides protection to customers in the event of a bank failure. Depositor funds are insured up to $250,000 per depositor, per insured bank. Insured online bank websites will include phrases like "Member FDIC," or "FDIC-Insured" and have the corporation's logo visible on the page.
2. Select a complex password. It's imperative that new users create a secure password for their new online bank account. Some institutions have character minimums, or request that account holders include numbers or capitalization in their passwords, which makes it harder for fraudsters to infiltrate an account without authorization.
3. Don't close primary accounts yet. Depositors who expect to overhaul their banking practices and move to an online bank should refrain from closing out their primary bank account immediately. It's important to maintain primary accounts and keep a small amount of cash on deposit for about one month. This measure ensures any checks that might have been written before opening the online account are cleared.
Being uncertain about banking online is a natural reaction for those unfamiliar with the Internet and the customer protections that already exist, but these easy steps can give you a greater peace of mind when using an online bank.
Jennifer Calonia writes for GoBankingRates.com, a source for online banking, CD rates, savings account rates, personal finance news and more.