Home Banking Services Offer New Sophistication

HI I'm Bill. Please punch in your account number and we can get down to business!''

The recorded voice on the other end of the phone line sounds a little too enthusiastic about the task at hand: paying monthly bills. But electronic helpers such as Bill, while they may not make it fun to part with your money, do make it easier.

Bill, the front man for a $4-a-month service from US Bank, is just one player in the burgeoning game of home banking, by which consumers can pay bills, monitor account balances, or even track investments using a telephone or personal computer.

For those tired of sitting down every month for a check-writing, stamp-licking session, the services are worth a look. If you mail 10 checks each month, the money you save in postage, checks, and envelopes would likely pay for telephone bill-paying. But banks are still working to develop services that will be big-time winners with consumers.

``What this business needs is a success story,'' says Gary Arlen, president of Arlen Communications Inc., a research firm in Bethesda, Md. Mr. Arlen estimates that currently only about 400,000 Americans are electronic home bankers.

``I don't think that we've found that answer yet,'' agrees Tom Tremain, vice president of electronic banking at First Chicago Corporation in Chicago. Banks are hunting for the right combination of low price and high-quality service, he says.

The biggest player so far is not a bank at all: About one-half of current electronic bill payers use the service of Checkfree, a Columbus, Ohio, company, Arlen reckons.

Checkfree's name is slightly puzzling, since the service costs $9.95 a month for the first 20 checks. Personal computer users send information to Checkfree, which then either zaps payments to merchants electronically or puts checks in the mail to businesses that don't accept electronic payment.

Two basic choices for home-banking

While many options are being developed, today's home-banking choices fall into two basic camps: phone- and computer-based. Some banks, such as US Bank, offer both; others offer neither. Asking local banks for details will help you decide whether a service is right for you.

The fullest services are designed for PCs and typically cost $10 or more each month. Touch-tone phone services come cheaper, but are minus some nice features such as having records stored digitally so you can quickly check how much you've paid for utilities so far this year, or compare this year's phone bill with last year's.

A no-fee option for computer users utilizes financial software such as Intuit's Quicken to print up checks to drop in the mail. You get the ease of automation and the ability to chart your budget patterns, while avoiding fees other than postage.

To pay bills by phone, a user dials into a bank, punches in an access number and password, and then gives a two- or three-digit code for each merchant he wants to pay, followed by the amount to be paid and the date the payment should be sent. Automatic payments can be set up, such as a mortgage check that is the same each month.

Some don't accept electronic payments

Seafirst, a BankAmerica subsidiary that competes with US Bank in the Seattle market, offers this service for $3 a month. One drawback: Unlike Checkfree, not all merchants can be paid this way. At US Bank, a merchant makes the list if at least three bank customers have asked to send bills electronically.

When US Bank began offering the service last year, ``we had thousands and thousands of responses'' just from one announcement inserted into customer's statements, says Jim Bruene, the bank's product manager for emerging delivery services. Today, around 1 percent of the bank's customers use the service, while many fewer (2,300) are using a PC-based service offered in partnership with Microsoft Corporation. Microsoft puts home banking functions into its Money financial software.

Mr. Breune says the PC services are ideal for people who run small businesses. For about $8 a month, they can access up-to-date bank records electronically and transfer funds around, such as paying off a credit line the minute money arrives in another account. Bill-paying costs another $7 a month. First Chicago is one of a number of banks around the country offering this system in conjunction with Microsoft.

To reach a noncomputer audience, Arlen says ``smart'' telephones with little picture screens hold promise.

A survey released in May by the Yankee Group in Boston found that, if Americans were paying bills electronically, almost as many would choose screen-based phones (42.6 percent) as personal computers (44.3 percent). But the PC has more potential for upscale services: It was the platform of choice for monitoring investments, preparing taxes, and keeping household records, according to the survey.

``The jury is still out'' on whether the screen phones or PCs will take the lead in home banking, says Yankee Group analyst Berge Ayvazian.

Last week, Visa International announced a partnership with smart-phone supplier US Order of Herndon, Va. Visa and MasterCard, whose huge credit-card organizations already give them close ties to banks, are both developing electronic banking services that banks can adapt for their own customers. These services are promising, bankers say, because they would standardize basic features (lowering costs for a bank to introduce the services). Another advantage: The services would run on many ``platforms'' (PCs, screen phones, touch-tone phones, and TVs).