Despite initial skepticism, online banks are here to stay. All of the major bricks-and-mortar banks have online versions for personal and business customer accounts and several online-only banks have emerged in recent years. While the online banks appear to offer the same advantages such as the ability to manage bills, see checks and transfer funds from other sources, there are significant differences between them. And if you’re thinking about dipping your motherboard into the electronic fiscal waters, there are several options to consider before making your choice.

www.wellsfargo.com

Wellsfargo.com is the biggest of the US internet bankers and established their site in 1997. Their current home page looks confident, and they offer the usual range of services, including the ability to see your balance, transfer funds from other accounts and to see checks. A recent addition, adopted by all the major online banks, concerns banking through a designated cell phone. Wellsfargo.com offers an integrated and streamlined package, permitting the user to access account and funding information, as well as perform transfers and pay bills.

Crucially, wellsfargo.com require a minimum balance of $5000 to qualify for free banking with their Bill Pay online banking, otherwise they charge $6.95 a month. They also make a small charge where money is transferred from Microsoft Money and Quicken®, but most online banks operate a similar policy. The wellsfargo.com home page looks clean, confident and inviting, permitting a wide range of operations from this introductory page. Some online banks specify certain PC and browser configurations but wellsfargo.com offers a comprehensive listing of browser configurations, including Windows and Macintosh, Internet Explorer, Netscape, Firefox and Safari.

Realizing the competition is extremely active, Wellsfargo.com have an aggressive customer campaign which irritates one of their customers, who received a phone call recently. "They called the other day and asked me to take a phone survey, noting I had bought something in a specific shop at the mall with my debit card" said Laura from Oregon, a photographer and composer. "I refused to take their survey and felt uncomfortable about them using my shopping habits".

www.bankofamerica.com

This website was first established in 1998 and has since built up a considerable customer base. They are one of the few banks to offer genuine free banking online, with no hidden charges. One of their strengths is security protocol, a crucial element in attracting and maintaining online users. One very useful tool in the war against hackers is Safe Pass, an additional security code sent via cellphone to allow extra security when accessing your account. Family Nurse Practitioner Jean from Texas is a convert to bankofamerica.com's online services and finds it extremely useful. She says "I had an existing account with Bank of America for years, so when they started on-line banking my husband set it up, and encouraged me to start paying bills online. I balked initially, but eventually got the hang of it, now I love it and hate to write out and hand mail anything." Apart from the convenience of banking from home, Jean loves the money saved in avoiding a lengthy trip to her local branch. Remote online banking is so convenient and saves her time and money - "I save a postage stamp for each bill I pay on line, which is a bonus!", she enthusiastically states. The bank's security measures also receive praise from Jean: "We have a site key which is a personal picture that we label. It does take a little extra time to finally get down to business with the added security feature of the "site key", but it is well worth it." Another very satisfied bankofamerica.com customer is Environmental Consultant Cynthia from Massachusetts. She also finds the site extremely useful, stating that the "convenience means quite a lot to me - I can easily manage moneys between accounts no matter where I am in the world. With lots of international travel, this aspect really makes my life easier."

While the bankofamerica.com's website appearance looks attractive, one cannot say the same for their online demonstrations. These feature a video clip of a lady who lists the main features of the bank, hardly a very interactive experience (and especially when compared to some of the other online banks). The bank does offer 24-7 telephone support. One very useful feature offered by other banks, but missing in the Bankofamerica.com's online features, is the ability to see a check.

Another missing feature is the ability to transfer money from other banks; for potential customers who exploit a variety of other banks and accounts, this might be an important issue.

www.citibank.com

The longest-established of the online banks is www.citibank.com, according to waybackmachine.com's listing from December 1996. Their site has come a long way in almost ten years (see comparative pictures) and the bank offers a wide range of services. However, while their current home page is probably the best designed of the online banks discussed, you do need to maintain a healthy balance in your checking account (mininum balance of $1500) or get charged for transactions and administrative services (online savings accounts are free). They do offer an accompanying cash card and very good customer services; it is also easy and free to transfer money from non-citibank accounts. Be warned that they charge a fee if your ATM card is used in other bank's ATM machines.

The bank is one of a few offering a rewards scheme where customers gain points for cash prizes, gift cards and merchandise.

www.wachovia.com

Although www.citibank.com is listed as the longest established online banking site, www.wachovia.com is listed by waybackmachine only a few days later on 29 December 1996. They offer the same type of services found in their competitor's websites and also strongly feature their telephone banking as an enhancement to an online account. Like www.wellsfargo.com they state they do not charge fees, except when transferring via Microsoft® Money and Quicken®. Their slick video demonstration offers ease of use, control and access to all your accounts. They do state you can only use them without charge in Wachovia's own ATM machines. Customer experience reveals a different story. Checking customer Peggy from Texas, a retired special needs assistantant and recent convert to online banking, paints a different picture. "I used to do bill pay online but found it to be too much hassle and the bank took 4-5 business days to write the checks making my payments late", she states. She also had issues with the reliability of the bank to show transactions promptly. "It would sometimes take four days to post a purchase made with your ATM card", she said. Another issue she had with Wachovia was their overdraft charging: "They charge $35.00 for an overdraft and took the money from my savings account without asking", she mentioned. More bank inefficiency resulted in another complaint from Peggy: "Wachovia let you overdraft several times on your ATM card charging you 35$ everytime. It takes 3 days for the mailing to get to you that you overdrafted, so if you use your card a lot you racked up a lot of charges. You had to ask them to not let the card authorize if there is not enough money."

Even if Wells Fargo takes over Wachovia in the next few weeks (by the end of October 2008), it is unlikely this will affect the operation of its online banking; conversely, I expect Wells Fargo to strengthen this successful area of Wachovia.

www.jpmorganchase.com/www.chase.com

Coming from a long established tradition of merchant banking, JPMorgan Chase's online bank www.jpmorganchase.com has a somewhat different ethos to other online banks. This could be due to the fact that their personal customers often had previous experience of JPM through a company business account. Their bank for personal banking, Chase, [www.chase.com], presents a far better image than the parent site but still lacks some visual clarity and attractiveness of its competitors.

As you might expect from such an established bank, their telephone customer support is excellent. It operates 24/7; should you incorrectly enter your password three times and become blocked out of your account (standard online banking protocol), their telephone operatives will offer immediate assistance at any time of the day or night. My own online bank has a rather annoying policy of accumulating my login errors over a period of time, so JPMC's policy is very refreshing to me! Most online banks allow three attempts to login correctly with three successive failures result in a blocked account, requiring you to contact your bank to reconfirm security details, receive a new code or other appropriate security measures. My online bank operates the same policy, but counts my login errors over a period. Thus, I could login today and make one error but succeed on my second attempt. Tomorrow I cold do the same but on a third separate visit they would block access to my account, and not acknowledge the fact that I had succeeded in accessing my account after just one error. I find this deeply annoying but Chase's telephone operator assured me that they do not operate such a policy.

They also offer telephone banking (as well as telephone support) and an ATM debit card; services are free except where the debit card is used in a non-JPMC ATM machine. They are are one of the few banks to offer immediate online access without having a previous account.

I do have some issues with their website however. It is not as attractive as others; there is no obvious pathway to account services through helpful images; instead, users need to select pull-down menus from the outset. In fact, one of the few image links visible on this site rather negatively states "E-mail fraud and phishing".

JPM Chase have no FAQ section, one of the few online operations without one. On the positive side, they probably have the best online banking demonstration. As well as pre-recorded video instruction, it is also possible to click links and get a sense of their website layout (the operating side of the Chase online system looks far better than the banks' home page). JPMC set the standard to online banking user demonstrations and building user confidence; curiously, they do not have a link to the demonstration from their home page.

There is relatively little difference between the facilities offered by these banks; the greatest being the imposition of a minimum balance by some online banks (www.wellsfargo.com, www.citibank.com's checking account). Another deciding factor is the availability of your bank's ATM machines where you live and work, particularly if you're going to have a considerable charge to use a rival's ATM machine. For those who feel less confident using online technology, the availability of telephone support is useful (www.wellsfargo.com appear to be one of the few banks to omit telephone support). Interest accrued does vary somewhat between these online banks, but then you need to assess your typical usage before deciding (for example, how many times you might use a rival bank's ATM and the charge incurred).

Online banking advantages

The most useful perks offered by all online banks concern convenience of access. Not only does the customer save money but time also; most online banking transactions can be done 24-7. All of the aforementioned banks offer cellphone support where you receive a text alert when your balance falls below a critical level; most also offer an alternative or complimentary e-mail notification service.

Disadvantages of online accounts

The main issue of online banking is not, as you might have guessed, security, but is the delay in lodging checks to your account. Where previously people went in person to a branch where the check was then cleared in a day or two, online banks require you to post your check, thus leaving you open to the performance of USPS. With most people opting to have their salary paid directly into their bank, money flow is not such an issue. Additionally, the ability to transfer funds from other banks results in more flexibility (except wwwbankofamerica.com); despite this many online customers also maintain their local bricks-and-mortar bank account, simply to lodge checks.

Online banking security

Most online banks place the onus on you to protect your passwords and security protocol. However, if you prove that you have been hacked, many online banks will guarantee your money against theft. They are desperate to keep good customer goodwill, particularly when so much money is at stake. Even for the non-technically minded, online banks employ safety features such as automatic timeouts, where you are logged out after a period of inactivity (typically five minutes, so don't login and then have a coffee). Once you complete login on most online bank websites, you are shown the date and time of your last login. This may be useful if your account was hacked and unauthorized people accessed it without your knowledge. It is good practice to choose a strong password but change it periodically; I have written a hub concerning easy-to-use password changes (see link below).

Most customers opting for online banking do so with their existing bank. This is why banks treat customer loyalty so seriously, and go to great lengths to get regular customers from an early age. What else did you think when you were offered those financial incentives as a teenager?