Consumers are surfing to the virtual teller, but there are low-tech hitches

By Hiawatha Bray, Globe Staff, 02/11/99

Peter T. Szymonik's mailbox gets stuffed with bills, just like everybody else's. But unlike most of us, Szymonik doesn't haul out his checkbook and a roll of postage stamps to make his payments. For Szymonik, a 35-year-old manager at Romac Emerging Technologies, a consulting and outplacement firm in Manchester, Conn., going to the bank means going to his home computer and logging onto the Internet.

''I've been using on-line banking for almost three years now,'' says Szymonik, ''and would never go back to manual checks.''

According to the American Bankers Association, about 625 of the nation's 9,000 consumer banks presently offer some form of on-line banking, which allows customers to carry out many common transactions over the Internet, or by dialing into the bank's private network.

BankBoston, where Szymonik banks, was one of the first in the nation to embrace on-line banking back in 1995. Bob Shay, executive director of global electronic banking for BankBoston, says that 375,000 of his bank's 1.8 million customer accounts - about 21 percent - use some kind of on-line banking system. That customer base, he says, is growing by 50 percent a year ''We're really being lifted by the consumer move to the Internet,'' he says.

Most of the early on-line banking systems required dialing into a private network run by the bank. But today, as millions of Americans hop onto the Internet, many are finding it is simple to interrupt an evening's Web surfing to drop by the bank. New York City market researcher Jupiter Communications estimates that 18 million US households will be banking on-line by 2002.

Money and computers go together well. For one thing, computers, designed for record-keeping and number-crunching, are ideal for keeping track of one's cash. But perhaps more important, money is largely a computerized concept to begin with. For many years, most of the world's money has existed, not as stacks of bank notes, but as data bits stored within computer networks. At last, cheap home computers and easy Internet access are enabling ordinary people to handle their money with the same electronic efficiency as large corporations.

On-line banking systems fall into two general categories. You can sign up for a system, such as BankBoston's HomeLink or Fleet Bank's Web Banking, that works with any standard Web browser.

This method lets you go on-line from practically anywhere to get up-to-date information about your finances. You can also use this method to pay your bills and transfer funds among different accounts.

Some banks, including BankBoston, also let the customer communicate with the bank through a popular money-management program, such as Intuit Inc.'s Quicken or Microsoft Corp.'s Money software. These banks have made arrangements to link their computer systems to a network operated by Intuit.

Users of Quicken and Money dial a number that connects them to the Intuit network, or they can link up through the Internet. Then they can download their latest banking data directly into their software.

But this method forces users to do their banking on the computer where their banking software is installed. With Web-based banking, any Internet-linked computer in the world will do. In addition, the Web-based systems tend to provide more up-to-date information, while data sent through the Intuit network is generally delayed by about a day.

However, the Web-based services make it more difficult to keep permanent records of your data. Users must download a file containing the data, then import it into a home-finance program. For those who want an easy way to keep accurate records, it's simpler to bank directly through their finance software.

Many banks provide basic on-line services free of charge. You can log on to verify account balances or see if a check has cleared. But for many users, it's being able to pay bills on-line that makes computer banking worthwhile.

Banks generally charge service fees for on-line bill payment, though they will often make an exception for those with large amounts on deposit. Customers who use a bank's own Web-based banking system often pay less than those who use software like Quicken. That's because it costs the bank more money to process checks through the Intuit network.

The biggest problem with on-line bill payment isn't technology, but the lack of it. In an ideal world, the entire process would be electronic. Money would be transferred instantly from your bank account to the company you're paying. In the real world, it hardly ever works that way, because very few companies are equipped to handle direct electronic payments. Instead, the bank must print out a check and mail it. Ironically, these checks will often take longer to arrive than if you'd mailed them yourself. Thus, you may have to pay your bills earlier in the month.

In addition, many companies ask you to return a coupon with your check, to help them enter the payment into their computers. You can't include these coupons when you pay on-line. Many consumers have had bill payments go astray because of a missing coupon.

Fortunately, this happens less often as more people use on-line banking. Meanwhile, major companies are slowly moving toward so-called ''electronic bill presentment'' systems, that will let them send bills over the Internet and receive instant electronic payments through consumer bank accounts. Jupiter Communications estimates that 15 million households will pay bills this way by the year 2002. It won't make bill paying any more pleasant, but at least they won't clutter up the mailbox.