President
& CEO Bruce Cleveland answered your question on Quote.com
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September
5, 2000
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Other Quote.com
Online Chat Sessions
September 7, 2000
September 19, 2000
September 20, 2000
How
do banks prevent a "flooding" of the server?
Do you need a paper statement if you have an online account?
Are people hesitant to sign up for virtual banking because
of the lack of personal touch?
When are online transactions posted?
What happens if the bank's systems are upgraded?
How are FDIC regulations affected by completely online banks?
How are online banks able to offer no fees for banking?
Will there be any restrictions or fees in the future as online
banking continues to grow?
How soon will online banking be the main way people bank?
Will I be double charged when make deposits and withdrawals?
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What
about flooding the server? A couple of months ago, many sites such as
Yahoo!, E*Trade, etc. where hacked by flooding the server. What types
of deterrents are there in place for banks against this type of hacking?
I want to ensure that if I need to transfer money, the system won't be
down!
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Good question. Apparently,
you are referring to SYN flooding. The reason this kind of attack locks up the
site is that the servers try to establish contact with each separate incoming
"user" in the attack, and leave open a connection for each such fake "user" waiting
for it to respond, until the maximum user connection capacity of the servers is
reached. At this point, no other users can get in. At PresidentialBank.com our
firewall and load balancing equipment are programmed to quickly dump each non-responding
"user", to defeat this kind of attack. Many of the sites that have been successfully
attacked chose not to utilize this kind of protection, except after an attack
is already under way, in a tradeoff for slightly improved server performance.
At Presidential we have a policy of keeping this protection on at all times, for
enhanced security.
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If
you have an online account, is it still a good idea to get a paper statement?
Do most banks still send out a paper monthly statement?
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Under Federal Reserve Regulation E
(Electronic Funds Transfers), any bank that offers depositors the ability to do
electronic transactions, such as ATM withdrawals, or direct deposits and direct
debits (which means most banks), must send its customers a monthly statement in
any month during which there is electronic funds transfer activity, and at least
a quarterly statement, even if there is no electronic funds transfer activity.
Therefore, virtually all banks do send paper statements. At PresidentialBank.com,
we provide both current and historical bank statements online, and we are just
now launching online front and back images of canceled checks. Therefore, we would
have the ability to completely eliminate paper statements for customers no longer
desiring to receive them, since all the same information is available online,
both currently and in a historical archive. However, at this time Regulation E
requires that we send statements anyway.
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Have
you found that many people are hesitant to sign up for virtual banking
because they can't communicate with a real person? I am a Bank One customer
and my local branch has tellers that are a TV screen and they communicate
to you via phone. I hate it...convince me that online banking won't be
just as cold.
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Your feeling is understandable. At
PresidentialBank.com we try to offer both the convenience of Internet access to
your account and in-person service through a friendly call center, where you can
talk to a human and even ask to speak to the same person again the next time you
call. We post our "800" number and other contact information on our home page.
We understand that the Internet has not eliminated the need for a human touch.
Our goal is for our customers to feel they can develop a personal relationship
with one or more of our people, if they want to, even if they begin their relationship
with us through our web site.
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Are
transactions posted as soon as they are sent through the online system
or are they still done manually? ATMs are electronic, but the transactions
aren't posted till the next day.
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Different online banks may have different
systems. At PresidentialBank.com, if you conduct an online transaction using our
web site, then it is posted in real time. These transactions are completely automated.
However, at the present time the national and international ATM networks do not
operate in real time. ATMs throughout the system normally work from a balance
file that is transmitted to them by each bank in the system once a day, usually
after the bank's close of business. This feature of the ATM system is beyond the
control of any individual bank.
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What
happens if the bank's software and systems are upgraded and older computers
can't access it? I mean, since free upgrades are given for browsers, it's
unlikely such would happen, but you have to plan for it.
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At PresidentialBank.com we have already
a policy of not designing to the capabilities of the most advanced browser available.
We recognize that our customers will be using a variety of browsers and browser
versions. Our goal is to be accessible online to almost everybody, not to utilize
every advanced feature that the latest browser might offer. I f the time ever
came that browser software were no longer free, then we would make it a point
to retain compatibility with the free browsers already widely in use, as well
as with newer versions. In any event, since software designers normally try to
maintain "backward compatibility" with prior software versions, it is unlikely
that newer browsers would be unable to access web sites designed for current browsers.
Finally, since it is possible to program a web site to detect the kind of browser
each user is using, it would be possible to tailor each web page to work on the
kind of browser each user is using.
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How
are FDIC regulations affected by completely online banks? They obviously
still apply, but are they harder to enforce? What does the Federal Reserve
have to say about this?
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FDIC regulations are basically the
same for both online and traditional banks. Deposit insurance coverage to $100,000
depends upon account ownership. If the account is in your name or in joint names,
etc., the coverage will be exactly the same, regardless of whether the account
was opened online or in person. Federal banking regulators require banks to maintain
accurate records of the names in which accounts are held, regardless of how they
were opened, in order to have clear information about the beneficiaries of FDIC
insurance. It may even be that the automated nature of online banking gives greater
assurance that an account will be titled exactly as the customer wishes. Since
online banks and traditional banks are regulated in the same way, they are held
to the same record keeping standards. In addition, the federal banking regulators,
including the Federal Reserve and the other banking agencies, have adopted various
programs to monitor the use of technology by banks and to require corrective action,
if significant technological risks are found.
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Why
is it that banks are offering no fees for online banking? Is there that
much savings in not having a paper trail and face time? Also you mentioned
that Presidential has a 6% APY incentive, is that common?
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Presidential's offer of 6% APY on unlimited
checking accounts for balances up to $25,000, with no specified time limit, is
extremely rare. In fact, it may not be possible to find a similar account anywhere.
Presidential has a long history of high account yields and very low fees, even
before online banking began. We have found that it is not really necessary to
charge fees on accounts above a relatively low minimum balance, so long as you
keep costs down. It all depends on whether a bank runs a high overhead or a low
overhead operation. Online banking saves having lots of bricks and mortar branches,
which are quite expensive to operate, helping to keep costs down. At Presidential,
our business model is to earn our money by lending to borrowers who pay us interest,
not by charging fees to our deposit customers who provide the money we lend.
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ATMs
started implementing fees once the general population started using them
in large numbers. Will similar restrictions come with online banking?
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Banks are able to charge fees on ATM
transactions, because of their location. If you happen to need money where the
ATM is, then you will probably pay the fee, even though it is aggravating. Since
the Internet is everywhere, if one bank charges you fees for online banking, it
is easy to switch to another bank that does not. We think that competition will
keep Internet banking fees down.
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How
soon do you think online banking will be the main way people bank? I think
it'll take off in the next couple of years.
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Every year, more and more people choose
to bank over the Internet. This trend can only accelerate for some time to come.
At the same time, there will always be people who would like to do business in
person, at least once in a while. Mutual funds, many of which started doing business
solely via "800" numbers, have now opened physical branches in select locations.
The same goes for discount brokers. Banks will provide the options that their
customers want. Certainly more and more people will want to bank over the Internet,
but there will probably always be some people who like the availability of other
access means as well. ATMs have been available for decades, but there are still
some people who will withdraw cash at a teller window, at least some of the time.
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What
is going on with the double charging of fees? Most of the online banks
aren't one of the national "big guys." Will I be charged to make deposits
and withdrawals?
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I can only speak for Presidential.
In our entire 15-year history, we have never charged customers to make deposits
or withdrawals or for ATM transactions. With the Internet further lowering the
cost of servicing our customers, we do not intend to start charging these fees
now. We can't help what other banks do.
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