Consumers prefer the convenience and availability of the online banking channel to traditional banking.
Posted Mar 11, 2005
Traditional banks are losing their customer satisfaction foothold to their online counterparts, according to a study from Forbes.com and ForeSee Results. In fact, the "Forbes.com/ForeSee Results Online Banking Report," based on data collected from more than 950 wealthy Forbes.com registrants in fourth-quarter 2004, contends that online bankers' satisfaction score is up 5.5 percent from 2003's tally of 73 to 77. That score is two points higher than the aggregate University of Michigan's American Customer Satisfaction Index banking score of 75, which remained stagnant from 2003's score.
Part of that satisfaction stems from the convenience and availability of the online channel. In the report's rankings of the facets of online banking that deliver the highest satisfaction levels, content and functionality tied for first with an 84. Bill payment earned the third slot with a score of 82, while tasks and transactions earned an 80, and navigation received a 77. Set-up for bill payment earned the lowest, but still sound, marks with a score of 74. "Those consumers that want to use an online channel are going to choose it and you would expect them to be happier," says Larry Freed, president and CEO of ForeSee Results. "The default is really the traditional banking channel and our expectation with the value that the Web brings in terms of convenience and being able to bank at any time and more and more functionality provided, our expectation would be that it would surpass it."
Additional results indicate that "view online statement/check," used by 92 percent of respondents, continues to be online banking's most popular feature for the second year in a row. Eighty-eight percent responded that they use "check deposit balances" and 73 percent reported using online bill payment, a 26 percent uptick from last year's 58 percent. Increases in usage levels also point to a correlation with satisfaction levels and the likelihood to buy more products and services. Online banking customers who use three or more banking features are 15 percent more satisfied than those who use just one to two. Additionally, customers using three to five features are 11 percent more likely to purchase additional products and services compared to those who use one to two, and 23 percent more for those using six or more features. "When users are satisfied with online banking they're more likely to buy their products and services, which is really the name of the game in the banking industry. Making the online channel meet the needs of banking customers should be a critical part of their strategy," Freed says.
Online bill payment tells a similar story as those who pay bills online are 11 percent more satisfied than online bankers who do not pay bills online, 17 percent more likely to purchase additional services, and 34 percent more likely to recommend the Web site.
The rising adoption and satisfaction levels of online banking, however, do not signal a drop in the usage of offline channels. Seventy-two percent of those surveyed had been to a bank branch within the past 90 days, and over that same timeframe 35 percent interacted with their bank through the phone. "There are still certain things you're going to use traditional banking channels for," Freed says. "It's hard to get money out of your PC right now. You're still going to need those channels, so it's really not a replacement technology."
The trend of higher usage levels from online channels compared to offline outlets is evident in other verticals including the hospitality industry. In fact, a Keynote Systems study reports that 67 percent of participants reported that they are likely to book lodging reservations via a hotel Web site, 10 percentage points higher than the amount of consumers who are willing to use a phone reservation system. Just 16 percent indicated openness to using a travel agent.
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