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

• Author: Kronemyer, Bob
• Position: 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 (www.oldnational.com). 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 (www.53.com). "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...