Safety, ease of use, and bill payment services lead the way to customer satisfaction, but institutions must compete with other channels.
Posted Nov 18, 2004
The number of Americans going online for personal banking is up 17 percent in 2004 compared to 2002, according to results from a survey of 1,000 American adults conducted by New York-based market research firm Ipsos-Insight.
The study compares results of customer banking surveys conducted in 2002 and 2004. The number of Americans going online frequently or sometimes for personal banking has grown from 23 percent in 2002, to 40 percent today. "Not only are more Americans banking online, but the number of online activities per customer has increased as well," says Kerri Ryan, an Ipsos-Insight vice president.
One of the most popular financial service activities of online users is bill payment. In 2002 half of online bankers told Ipsos-Insight that they pay bills online; now virtually all online banking customers are take advantage of this convenience. But these tech-savvy customers are not just turning to their own banks for online bill payment.
"Banks are losing upsell and cross-sell opportunities by losing Web traffic to competitive bill-pay channels," Ryan says. "Many online bill payers are bypassing their primary banks and going directly to a corporate Web site to make a payment, while others are using online bill-payment services from competitors like PayPal and other banks."
In fact, according to the study, nearly 64 percent of online bill payers make payments by going directly to a company's Web site. Bill payment through one's bank is the second-most-favored online mode, used by 50 percent of online bill payers. Ipsos-Insight analysts said banks should consider improving their bill-payment features to draw customers' attention. An earlier study estimated that in the first quarter, 4.6 million people used online bill-payment services at the country's top 10 banks.
Interestingly, 90 percent of the employees of Bank of America (BoA) use the financial institution's Internet banking channel, which the bank cites as a major reason for 70 percent of new customers signing up for online banking. By using the channel themselves, the tellers and call center agents become natural educators and promoters of online banking to those customers who have questions or reservations.
One of the major draws for BoA's online banking offering is the online bill payment capability, says Gayle Wellborn, senior vice president and online manager. Nearly 40 percent of the bank's online subscribers use online bill payment. Nearly half of the online payment users signed up in the past year, which Wellborn attributes to the elimination of fees two years ago and to a redesign of the bill-payment portion of the bank's Web site.
Today most banks offer free bill payment, though some smaller financial institutions still charge for this directly through a monthly fee or indirectly through minimum balance requirements.
Online bill payment is one way in which the Internet is enabling banking customers to better manage their money, but as customers seek out the best online portal to help manage personal accounts, retail banks and other bill-pay providers will need to stay on top of their game. Ryan emphasizes banks' need to communicate the safety of the online channel. "As the trend to go online for personal financial management continues, it will be crucial for bank Web sites to communicate services effectively and in a secure environment."
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