Internet Only Bank Criticism: Is It Justified?

Internet only banks conduct all business online and through the mail.  They also have established customer service lines to help serve their clients. In contrast, there are established banking institutions that have a "brick and motar" presence, or, a physical location to complete all banking needs. Online banks have taken much criticism over the last few years, is it justified criticism?

Criticism

Online institutions have been largely criticized for a number of reasons:

    * Deposits lost in the mail
    * Deposits taking too long to post once they are received
    * Account being “locked” for security reasons

Deposits

Making money available to the client should be a top priority of every bank. Internet only banks accept overnight mail for deposits, as well as bank wires and all major money transfer systems. The problem with the deposit, is the cost. The average person doesn’t want to spend $15.00, or more, every time they need to make a deposit.

There was an attempt by the now defunct Netbank, which was an internet only bank, some years ago to put into place a system in which customers could make deposits at an ATM. The problem with the deposits was the lack of a nationwide presence. Many customers were still unable to use ATMs for deposits. Today, there is no system in place that will permit ATM deposits for online banks.

Account Locking

Account locking is a practice that goes on a lot across the internet and mainstream banks. The internet payment service Paypal uses this practice as well when suspicious activity occurs. This practice was put into place to protect from theft or hackers. The problem, however, is that the locking can cause severe inconveniences for the customer.

All banks need to establish better identification measures to make the "lock" process easier and quicker. Most banks use methods like secret questions, verification of tax ID numbers and social security numbers. The process can be streamlined by adding personnel that does nothing other than provide access for "locked" customers.

Is the Criticism Justified?

Much of the criticism remains unresolved and is therefore justifiable. With our technological advances, there must be more that can be done to provide better service. Also, banks need to form a co-op system, where ATM deposits are possible from anywhere, similar to the ACH system.