Online bank sets up shop

As more and more transactions are occurring on the Internet, some Internet trailblazers are hoping that the idea of online banks will take off as strongly as online stores.

Launching itself into the breach of an online bank with no physical presence comes First Internet Bank, or Firstib.com, which will go live on 22 February. Firstib.com will be a completely Internet-based bank that will provide checking, money market savings, certificates of deposits, loans, credit cards, and ATM cash card services to consumers.

Firstib.com utilized technology from CuStar and FiNet to enable real-time transaction processing, and connects Internet users to a bank's back-office systems. The online bank has been examined by the Federal Deposit Insurance Corporation for its structure and for year-2000 readiness, according to the bank.

Although Firstib.com is an Internet bank, it is still a closed system and therefore secure, and every user must use strong encryption technology, according to David Becker, chairman of First Internet Bank.

"The only thing that is really out on the Internet is the home page of the site," Becker said. "We're requiring the consumer to have 128-bit encryption on the browser level."

Becker added, "Literally, it's safer than dialing 1-800 flowers and giving your number to some voice on the other end of the phone."

The bank is hoping to attract users with its round-the-clock access and lower costs, based on the savings of not having a physical presence and the capability to provide individual customer profiles based on their banking information.

Although some analysts agree that Internet banking is the wave of the future, they also said they believe that larger banks will eventually push out the smaller trailblazers with their proven good name and security.

"It's clearly a trend for the future. People will in ever-increasing numbers will use Internet banking services. This sets the stage for banks to be 100 percent online with no physical presence," said Vernon Keenan, an Internet analyst at KeenanVision. "However, I would expect Internet branches of large existing banks to be more successful. Trust is a key element in choosing a bank and big national brands engender trust."

Additional information on First Internet Bank will be available after 15 February.

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