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Last writes for checks? Online banking and debit-card use continue to grow. (Banking).

Check writing is beginning to dwindle. Because of online bill payment as well as the increasing use of debit cards and other electronic payment options, the number of checks processed by the Federal Reserve System decreased in 2001 for the second consecutive year, dropping by about 100 million to 16.9 billion.

"The decline is check-writing is industry-wide," says Alan Boggs, senior vice president of retail banking at Old National Bank in Evansville ( Lie cites recent news from The American Banker: "The Federal Reserve System laid off employees in check-processing centers last year because of a reduction in paper-check usage," he says.

Meanwhile, says Boggs, "we've seen quite a bit of growth in our online banking services over the past 12 to 18 months. I think customers are becoming more comfortable with their computers. Banks are also selling the product more, because it is an added convenience for customers."

The benefits go beyond convenience, adds Maurice Spagnoletti, president and CEO of Fifth Third Bank of Central Indiana ( "Today, customers want to control their money more than ever, from college students to CFOs."

Indeed, online services offers benefits to both retail and commercial customers alike. Paying bills online is something both individuals and businesses can appreciate, Spagnoletti says, and capabilities are more flexible than ever, with the ability to set due dates and establish automatic recurring payments. Doing so saves time and stamps, but even more important, "I feel it's more secure compared to writing checks and mailing them," he says. "It's a more secure environment. Information on a check can be stolen from your mailbox."

Fifth Third Bank advertises online banking through radio and television. Product tie-ins are also promoted. For example, the bank's capital-management account is similar to a money-market account that offers the option of combining checking with a brokerage account. "With online banking, you can look at brokerage information and checking information all on one screen" explains Carol Dienhart, senior vice president of administration at Fifth Third Bank in Indianapolis.

Moreover, the bank has no customer fees associated with online banking. "I believe no fees is a trend in the industry in order to effectively promote the service," Dienhart says. "Once customers begin online banking, they tend to stay with it."

Business customers take advantage of additional online services such as Automated Clearing House business-to-business payments, direct-deposit and wire-transfer capabilities, even a variety of services geared toward companies involved in international business. Online access also can give businesses a real-time look at their balances. Title companies, for example, can watch for the arrival of funds as a loan closing approaches. "A year ago I wouldn't have guessed we'd be doing half the things we are," Spagnoletti says.

Irwin Union Bank in Columbus ( introduced online banking about seven years ago, and has found it especially popular among commercial customers, according to Bill Beitler, senior vice president and director of marketing/business development. While it has been somewhat slow to catch on among retail depositors, "we've done significantly better on the commercial side, particularly among our depositing customers," Beitler says. "Satisfaction has been tremendous."

Cash-management functions include transfers, payments, payroll and initiation of stop payment. "Customers have more autonomy in managing their accounts," Beitler observes. "And over the past year, I've heard much more optimism from banks about consumer acceptance of online banking."

Erin Morgan, vice president of treasury management sales at LaSalle Bank in Indianapolis (, says four-fifths of LaSalle's commercial customers use online banking services. "You can access prior-day and same-day balance information, make electronic payments, view lockbox remittent detail (including imaging of envelopes and any correspondence), and on the payable side control disbursement and see imaging," Morgan says. Repurchase agreements, foreign exchange and loans can also now be handled online.

The Indianapolis office of LaSalle Bank serves primarily commercial customers, and Morgan says strong online services are important for serving such regional markets. "From a customer's perspective, you don't necessarily have the 'touch and feel' of a larger market. So the ability to provide excellent service and detailed information reporting online is fantastic."

Small businesses represent one of the hot growth areas in online banking, says Boggs at Old National. Cash-management services allow a business to maximize checking account funds by sweeping funds into overnight investments. In addition, "our Web site can link small businesses to different suppliers for office products and legal services, for instance."

For paying bills and account transfers, in particular, "online banking is certainly a secure means to complete a financial transaction" says Bryan Fluke, assistant vice president of marketing operations at Financial Center in Indianapolis ( He predicts that eventually most day-to-day transactions will be accomplished online.

"In all of our advertisements we mention our Web site," says Fluke. "We also have a contact center that customers can call for assistance on how to set up online banking." Fluke estimates that 25 percent of his mostly retail customers currently use online banking. As more people become aware of the capabilities, Fluke anticipates continued growth.

"Banks have reached a point where they are missing something if they don't offer online capability," says Andrea Spanburg, vice president and director of marketing at Mercantile National Bank of Indiana in Hammond ( For those who make payments online, "it's nice not having to carry a bulky checkbook around and all your forms of identification. Whether you're a small or big bank, you need to be doing everything you can to serve the needs of your customers.

At Mercantile National, clients can open accounts and apply for loans online. "We were also the first bank in northwest Indiana to introduce check imaging on our Web site about two years ago," Spanburg says. Check imaging allows online users to access individual checks by simply clicking on the check number on the screen. Both the front and back of a check are viewable.

Banks vary in their approaches of marketing online services. Some view online offerings as added services that can generate fees and revenues, while others use them as a draw for new customers. "Our original approach to online banking was to offer it as an additional delivery service," says Spanburg. "But it is becoming a strong marketing tool. Over the past year, we have basically tripled the number of customers who do online transactions."

Currently, about 22 percent of customers visit the bank's Web site and 10 percent actually conduct business there. The bank plans to add services for business customers later this year. "We are in the test phase of our business online module," Spanburg says.

Fort Wayne-based STAR Financial ( primarily promotes online banking through its 40 branches from central to northeast Indiana. "We have demo PCs set up in all of our offices," says Ralph Marcuccilli, senior vice president of operations. This is especially helpful when setting up a new account. "We provide online banking free to deliver real-time information to our customers. People then get used to the benefits of online banking and don't want to give that up.

As online banking advances, it's starting to move beyond the World Wide Web. For example, within the next 12 months, LaSalle Bank expects to launch a "freedom-based" service. "Instead of clients having to go online to surf for certain information, we will present that information to our clients," Morgan says. For example, either through email or a pager or a mobile phone, a customer will be notified of an arriving wire transfer or a maturing investment. "The goal is to not tie people to their desks."

Likewise, instead of a client having to log onto an Internet site to access a bank statement and copies of checks, STAR Financial Bank provides such information in an email. "Over 25 percent of our customers receive their bank statement through email," Marcuccilli says, referring to consumer accounts. About a fifth of the bank's commercial customers are taking advantage of email delivery and other electronic account notices, he says. The in-branch demo helps sells customers on the service. "A representative can show the customer how the electronic statement will look if that person chooses email delivery."

During the next year, STAR Financial will provide a customer's entire financial picture online, including the ability to trade stocks. Says Marcuccilli, "Credit-card activity and investment accounts will be consolidated into one site."
Indiana's Largest Banks


National City Bank of Indiana Indianapolis 47,331,864
Old National Bank Evansville 9,432,256
Fifth Third Bank, Indiana Indianapolis 8,335,528
Irwin Union Bank and Trust Co. Columbus 4,567,878
1st Source Bank South Bend 3,323,049
Integra Bank NA Evansville 2,849,140
Wells Fargo Bank Indiana NA Fort Wayne 2,192,459
First Indiana Bank NA Indianapolis 2,112,754
First National Bank & Trust Kokomo 1,489,426
Terre Haute First National Bank Terre Haute 1,304,161
Star Financial Bank, Anderson Anderson 1,274,587
Lake City Bank Warsaw 1,242,739
Centier Bank Whiting 1,229,058
Bank Calumet NA Hammond 1,016,022
Home Federal Savings Bank Columbus 884,982
Lafayette Bank and Trust Co. Lafayette 868,863
Salin Bank and Trust Co. Indianapolis 862,330
Sand Ridge Bank Highland 824,959
MainSource Bank Greensburg 822,948
First Merchants Bank NA Muncie 799,444
Mercantile National Bank of Indiana Hammond 732,709
The National Bank of Indianapolis Indianapolis 726,119
Horizon Bank NA Michigan City 718,345
First National Bank, Valparaiso Valparaiso 575,992
First Bank Richmond NA Richmond 575,205

Source: Federal Deposit Insurance Corp.; information as of December 31,

Indiana's Largest Savings Institutions


Union Federal Bank of Indianapolis Indianapolis 3,366,324
Citizens Financial Services FSB Munster 1,563,435
Mutual Federal Savings Bank Muncie 772,795
Lincoln Federal Savings Bank Plainfield 523,065
Peoples Bank SB Munster 488,002
Ameriana Bank and Trust SB New Castle 456,061
MFB Financial (The "Savings Bank") Mishawaka 413,592
Peoples Federal Savings Bank of Auburn 379,847
 DeKalb County
First Federal Savings Bank Rochester 368,519
Lafayette Savings Bank FSB Lafayette 320,026
Irwin Union Bank FSB Columbus 314,957
First Harrison Bank Corydon 308,608
Union Federal Savings and Loan of Crawfordsville 270,110
The La Porte Savings Bank LaPorte 254,450
United Community Bank Lawrenceburg 248,633
First Federal Savings Bank of Wabash Wabash 231,174
First Savings Bank FSB Clarksville 226,084
First Federal Savings Bank Huntington 224,658
River Valley Financial Bank Madison 223,985
HFS Bank FSB Hobart 219,293
Security Federal Bank & Trust Saint John 196,197
Home Bank SB Martinsville 186,755
Security Federal Savings Bank Logansport 179,431
First Federal Savings Bank Evansville 178,097
Terre Haute Savings Bank Terre Haute 151,893

Source: Federal Deposit Insurance Corp.; information as of December 31,

Indiana's Largest Credit Unions


Teachers Credit Union South Bend 1,162,224
Indiana Members Credit Union Indianapolis 720,043
Forum Credit Union Indianapolis 636,296
Eli Lilly Employees Federal Indianapolis 534,574
Credit Union
Beacon Credit Union Wabash 475,763
Centra Credit Union Columbus 452,264
Indiana University Employees Bloomington 421,114
 Fed. Credit Union
Evansville Teachers Federal Evansville 378,764
 Credit Union
Three Rivers Federal Credit Union Fort Wayne 378,506
Purdue Employees Federal Credit Union West Lafayette 364,191
Elkhart County Farm Bureau Credit Union Goshen 321,744
Financial Center Federal Credit Union Indianapolis 299,491
Midwest America Federal Credit Union Fort Wayne 298,050
Notre Dame Federal Credit Union Notre Dame 280,365
Heritage Federal Credit Union Newburgh 226,224
Professional Federal Credit Union Fort Wayne 217,825
Philips Electronics Federal Fort Wayne 211,485
 Credit Union
Tech Credit Union Crown Point 211,071
Bayer Federal Credit Union Elkhart 180,471
Hoosier Hills Credit Union Bedford 170,011

Source: Indiana Credit Union League; information as of December 2002
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Comment:Last writes for checks? Online banking and debit-card use continue to grow. (Banking).
Author:Kronemyer, Bob
Publication:Indiana Business Magazine
Geographic Code:1USA
Date:Apr 1, 2003
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