Online Banking Breakdown--Wells Fargo

Hello all,


Today I am going to use this post to highlight the massive number of online services provided by banks online. As most Stanford students use Wells Fargo, I will be specifically focusing on them. 


Online Statements
This is a rather simple one, as basically every bank is providing this service now. The concept is rather basic--account and credit card statements that one would usually receive in the mail are now being sent over e-mail. Banks prefer this method of delivery because it saves them a huge amount of money in printing and mailing costs. Because of this, Wells Fargo has been offering incentives for costumers to switch to paperless statements (as detailed in my last post). This shift, while hardly revolutionary, has lead the way to a number of other paperless advances.


Bill Pay
In the past, paying bills was a bit of a hassle. One had to hand-write checks and mail each one directly to the company to which they owed money. Since most adults have a number of bills to pay each billing period, this naturally has lead to much aggravation and annoyance. Wells Fargo's Bill Pay option is a way of creating a more convenient system of handling all those payments. All one has to do is add the person to whom they owe money (whether it be a credit-card company or just a friend) as a payee. Then, each payment cycle, they just need to type in the amount they owe each payee, set the date of delivery, and click "pay." No paper checks needed. While obviously there are some risks involved in making wire transfers of this nature so easy, it is an incredible advance in banking that has been able to save Wells Fargo costumers tons of time and effort.


Wire Transfers
Online wire transfers are one of the most controversial features of online banking. At first, they worked somewhat similarly to Bill Pay. One would go on the Wells Fargo site, type in the account number they mean to send money to and the other necessary information and send money that way. This year, however, a number of banks including Wells Fargo, JP Morgan Chase and Bank of America have implemented a new program called clearXchange. This advance allows people to transfer money through text or e-mail. All they need to do is type in a person's phone number or e-mail address and the amount they would like to send. The person receiving the transfer would then be lead through steps to accept the money on their end. Immediately, the potential safety hazards of this program become clear. What if someone mistypes the address / number they mean to transfer the money to? The New York Times had the same thought when they heard of the program, and asked the executives how they would deal with this problem:


"bank executives said the potential thief would need to have your online banking user name and password. If someone did manage to break into your online banking account, they could conceivably send your money to their own account. That’s not a new threat though. If a fraud were to occur, the banks said they would refund the person sending the money as soon as possible."


At least to me, this does not seem like the most ringing endorsement of the safety of clearXchange. Time will tell if this program grows in popularity, but to me it seems as though banks are straying too far into the danger zone in terms of online safety. It is one thing to provide a service like Bill Pay, in which the convenience comes with small risk, but a much different story to create clearXchange which has some rather large security risks for the small increase in efficiency it creates.