Barring a major security breach, online banking will enjoy steady growth for the foreseeable future as remaining U.S. households without Internet access go online, a report concludes.
According to Jupiter Research (a unit of this site’s corporate parent), the number of online banking households will grow at a compound annual growth rate of 14 percent to 56 million over the next five years.
The reason for the jump is simple – more households will connect to the Internet. In addition, more users are expected to tap into their employers’ high-speed connections to manage their personal finances.
Once the purview of well-heeled consumers, online banking will see its strongest growth from lower and middle class households (defined in this study as those with income of $75,000 or less), which will use bank Web sites to manage credit cards and auto loans, Jupiter Research says.
Other banking activities will also increase as users become more comfortable with the technology and banks add features to their sites.
“Basic activities such as viewing account balances and transferring funds between accounts continue to be some of the most popular,” the report says. “In coming years, online users will increase their usage of self-service activities such as viewing online statements and check images.”
Jupiter Research analysts say online banking has more to do with consumers’ choice of channel (the Internet, rather than the teller or telephone) than differences between rival banks offerings.
“Banks should stay the course, broadening and deepening their capabilities, improving usability and promoting the site as a channel option for customers,” the report says.
Leading banks will see benefits in customer retention and satisfaction, reducing the possibility of defections to other institutions. It might also help banks reduce costs by cutting the overall number of visits to tellers.
The report states “only possible threat” to increasing online bank usage is a security breach and concludes, “Security concerns are already a primary inhibitor of initial consumer adoption; if realized, they will be a serious drier of online attrition.”