Internet Banking's Popularity Increases
American Banker/Gallup Consumer Survey 2000 (09/00) Vol. 13, No. 7 p.3A; Stoneman, Bill

An American Banker/Gallup consumer survey finds that the percentage of personal computer owners who utilize online banking rose from 12 percent to 18 percent from 1999 to 2000, and the amount of satisfied online customers jumped from 59 percent to 60 percent over the same time period. While online banking showed little growth from 1997 to 1999, bank analysts feel that the current surge in online banking participants will continue into the future. The survey data translates into a 12 percent financial institution customer base penetration for online banking. TowerGroup reveals that stockbrokers still enjoy a far greater customer base penetration than online bankers but forecasts that improvements in online banking products and customer satisfaction will lead to total household use of online banking doubling in the next 18 months to 24 months. Online banking systems have become more advantageous as they have become easier and quicker to use and add more valuable features, states TowerGroup analyst Richard Bell. Other possible factors in online banking's increased popularity include people's growing familiarity with the Internet and the burgeoning presence of high-speed, continuous Internet connections in the home. Pamela J. Archer, Huntington Bancshares' vice president for strategy and market development, indicates that her bank is promoting increased utilization of Internet banking by teaching branch platform officers how to operate the company's online service and by offering an incentive compensation program based on the amount of activated online accounts that a bank employee is responsible for. Bank executives expect that the growing use of Internet banking will hinder customers' ability to change banks and will make banks a more pivotal component of customers' financial management. The Gallup poll shows that difficulty of use, service interruptions, and security worries are the most common reasons for consumers to be less satisfied or displeased with their online banking experiences. The most prevalent reasons for customers to discontinue utilization of Internet banking are security concerns, difficulty logging on, and the service not carrying enough advantages, finds a Mainspring poll. Mainspring director of electronic strategies Don Latimore does point out that most people who quit using Internet banking said that they will attempt to use it again. While half of the Gallup survey participants who have personal computers reported no interest in online banking, Deborah Newman, vice president of corporate communications at E-Trade bank, says that some of those people may change their minds as they conduct more business on the Web. The customer penetration potential for online banking is restrained by the fact that people who do not use automated teller machines are unlikely to try Internet banking and that the online medium is of limited utility to people who only make simple bank transactions. The Gallup survey finds that the typical profile of an online banking user is someone who is young, prosperous, and residing in the West.


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