Digital MarketingStrategiesOnline Banking Spikes, then Slows

Online Banking Spikes, then Slows

Banks experienced a record increase of customers who use online banking in 2005, though Q4 showed a steep decline in adoption.

Banking customers are increasingly going online to access their accounts, according to a report released by comScore Networks. The research firm doesn’t believe the pace will continue.

Online banking grew to nearly 40 million customers by Q4 2005. The number accounts for a 27 percent increase over the last quarter of 2004. While the rate of online adoption is significant for 2005, the fourth quarter itself only returned 3.1 percent growth over Q3, the lowest sequential quarterly growth in online banking in three years.

Incentives supersede barriers to online access of financial accounts as people become more comfortable on the Web. In an additional omScore survey, 33 percent of new customers cited free banking products as getting them online, and 23 percent said they felt online banking was more secure than previously believed.

Washington Mutual accounted for 43 percent of the new enrollees to online banking in 2005. The bank offered a free checking account product that drove new accounts. Other attractive services include high-yield savings accounts, which the report states will continue to change the face of online banking.

Key demographic factors affect a consumer’s propensity to bank on the Web. Longtime Internet users are more likely to bank online. Banking customers with less than a year logged on the Web are 19 percent less likely to use online banking than those with five or more years of experience. Households with an income of less than $50,000 are 10 percent less likely than households making more than $100,000. Seniors 65 years or older are 18 percent less likely to bank online than 25 to 34 year-olds.

Dial-up users are 18 percent less likely than broadband users to actively bank online. Additionally, broadband users are twice as likely to apply for financial service products online as dial-up subscribers.

Bill payment through online bank accounts now accounts for almost a quarter of all bills paid online. Bank of America reported 5.1 million active bill pay customers, which totals more than half of all bank bill pay customers in Q4 2005.

The data are derived from comScore’s panel of over two million online consumers. Additional information was gathered through a survey of 2,124 consumers given in March of 2005.

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