Online Banking Increased 47 Percent Since 2002

Online banking has been the fastest growing Internet activity in the U.S. over the last five years, with 53 million Americans, or 44 percent of all U.S. Internet users, now using some form of online banking service as of November 2004, according to a survey conducted by Pew Internet & American Life.

That current U.S. online banking population is more than 3.5 times the number of online bankers Pew measured in March 2000. At that time, only 14 million Americans (17 percent of U.S. Internet users) did banking chores online.

The findings are based on a national telephone survey of 537 Internet users conducted November 23-30, 2004, with a margin of error of plus or minus 5 percentage points.

The survey also finds on a typical day online, 13 million Americans perform banking chores online, a 58 percent increase since October 2002, said Susannah Fox, associate director at Pew and the lead analyst on the survey.

“Online banking has been the fastest growing online activity since Pew conducted its inaugural study in March 2000,” Fox said. “The second fastest growing online activity in that time period is buying or making a travel reservation online, which grew from 36 percent in 2000 to 62 percent of U.S. Internet users in 2004.”

Click here to view a summary of the survey’s findings

That growth may be partly attributed to the proliferation of broadband users in the U.S. over the last few years. Nielsen//NetRatings found that 55 percent of all at-home Internet users in the U.S. connected via broadband in December 2004, a figure that could reach 70 percent by the end of 2005 if current adoption rates continue.

According to Pew, the average broadband Internet user performs seven different online activities in a given day, compared to three online activities per day for dial-up users.

“Broadband users are more likely to sample a variety of online activities than dial-up Internet users, including online banking,” Fox said. Pew found that 63 percent of Internet users with broadband at home engaged in online banking, almost double the 32 percent figure for dial-up users.

The survey’s other key findings offer a profile of the online banking demographic in America:

  • Generation X versus Y: 60 percent of Generation X Internet users (age 28 to 39) have tried online banking, compared to 38 percent of Generation Y (age 18 to 27) Web users.
  • The gender gap: The survey finds men are more likely to perform banking online than women. Approximately 49 percent of men with Internet connections reported trying online banking services, a full 10 percent more than female Internet uses who responded the same way.
  • Higher socioeconomic status: Like other Internet activities, online banking is most likely to be performed by individuals living in households with an annual income of $75,000 or more; with a college or graduate school degree; and living in suburbs.

Pew also notes that with the surge of newcomers to online banking in America, phishing attacks have increased in frequency and lethality.

A January study on phishing conducted by Cyota substantiates this conclusion: Cyota observes an increased use of phishing tactics, involving sophisticated Trojans that don’t require duping a victim into providing information.

The New York-based company has identified two variants: a Trojan software that records all keystrokes, including passwords, on an infected computer, and emails them to the fraudster; and a second that waits until a user logs in to an online banking Web site to access the victim’s financial account.

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Overhead view of a row of four business people interviewing a young male applicant.