Standing on line for a teller or searching out an ATM may soon be a thing of the past, according to reports that tout the growing popularity of online banking. With the exception of being able to withdraw cash directly from the PC, many banking transactions can now be easily completed online.
In the U.S., the online banking population grew 37.6 percent in 2001, with projections of 23.3 percent by the end of 2002, 18.9 percent in 2003, 13.9 percent in 2004 and 9.8 percent in 2005, research from eMarketer finds.
Of the projected 70.3 percent of all U.S. households online by 2004, 37.1 percent will be banking online, and David Hallerman, senior analyst at eMarketer, expects that by the end of 2005, 31.5 million American households will be banking on the Internet.
“A few years ago banks hoped that the Internet would reduce traffic in higher-cost channels such as the branch and the call center, but that isn’t happening,” says Hallerman. “Customers want the same banking services no matter the channel: Internet, branch, ATM or call center. Banks are finding, however, that combining the Internet and in-person channels is often the best way to deal with complex financial tasks such as mortgages and financial planning.”
The results of Gómez, Inc.’s evaluations of online banking sites indicate that customers will be gained through enhanced online services, such as electronic document delivery of statements and images of cleared checks.
“Promotion of bill payment especially has become more aggressive, with an increase in the number of firms offering incentives and strong encouragement to start paying bills online,” noted Moriah Campbell-Holt, Gómez analyst.
Gómez predicts that these innovations, coupled with a focus on customer acquisition, could lead the 34 million Internet users that are expected to bank online by 2005.
The demographic that seems to be most attracted to online banking is the group that Jupiter Research (a unit of this site’s corporate parent) terms “young affluents” – U.S. adult Internet users, ages 24 to 35, with household incomes in excess of $75,000. Jupiter expects that by 2007, this age group will account for more than 30 million online users, up from 24 million users in 2002.
Jupiter found that almost half (48 percent) of young affluents engage in online bill viewing, as opposed to 48 percent of total users, 40 percent of users 25 to 34, and 41 percent of users with household incomes over $75,000. Furthermore, 44 percent of young affluents pay their bills online, versus 34 percent of total users, 38 percent of all users in the same age group, and 39 percent of users with the same household income.
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