Abstract
Overview
Financial institutions need to be aware that in the midst of this banking
crisis, consumers are unusually sensitive to fees and are prone to switching
banks. Seven years of Javelin consumer survey data underscore the necessity of
designing banking products and services to serve the customers' craving for
financial control, as 8 out of 10 online households now bank online. The
industry has made laudable strides in bringing customers to their Web sites to
bank and pay bills.
For the first time, slightly more consumers paid at bank sites than at
biller-direct sites. Yet many banks and credit unions have been slow to
upgrade, creating a wide gap in online capabilities and usage between the
nation' s four biggest banks - Bank of America, Citi, JPMorgan Chase and Wells
Fargo - and smaller regional, community banks and credit unions.
Primary Questions
- How fast will online banking and bill-pay adoption grow over the next five
years?
- How active are users of online-banking and bill-pay services?
- Can banks use online-banking and bill-pay services to boost revenues,
increase customer loyalty, reduce costs and create cross-selling opportunities?
- Can mid-size banks and credit unions boost the performance of their
online-banking services to better compete with giant national financial
institutions?
- What services can make online banking more appealing to consumers?
Audience:
- Financial institutions: E-commerce, mobilebanking and marketing
strategists.
- Vendors: Online-banking platform providers, online-banking vendors,
online-banking marketing.
- Others: Personal finance Web sites.
Author: Mark Schwanhausser, Analyst, Multichannel Financial Services
Methodology
This report is based mainly on data collected online from a random-sample
panel of 2,779 households in April 2009. The survey targeted respondents based
on representative proportions of gender, age and income compared to the
overall U.S. online population. Overall margin of sampling error is &
plusmn;1.86% at the 95% confidence level.
This report is additionally based on data collected online from a random
sample of 2,350 households in March 2008. The survey targeted respondents
based on representative proportions of gender, age and income compared to the
overall U.S. online population. Overall margin of sampling error is &
plusmn;2.02 percentage points at the 95% confidence level. It is also based on
data collected online from a random sample of 2,714 consumers in March 2008
and 2,800 respondents in March 2007. The surveys targeted respondents based on
representative proportions of gender, age and income compared to the overall
U.S. online population. Overall margin of sampling error is & plusmn;1.88
percentage points at the 95% confidence level and & plusmn;1.85% at the 95%
confidence level, respectively. This report is also based on data collected
through a telephone-CATI survey from a random-sample panel of 4,784
respondents in October 2008, including 487 identity fraud victims. The survey
targeted respondents based on representative proportions of gender, age and
income compared to the overall U.S. online population. Overall margin of
sampling error is & plusmn;1.4 percentage points at the 95% confidence level
and & plusmn;4.4% at the 95% confidence level for the identity fraud victims.
Finally, it was based on data collected online from a random sample of 2,339
consumers in September 2008. The survey targeted respondents based on
representative proportions of gender, age and income compared to the overall
U.S. online population. Overall margin of sampling error is & plusmn;2.03
percentage points at the 95% confidence level.
Secondary data from public sources such as the U.S. Census Bureau and the
Bureau of Labor Statistics was incorporated into the forecasts.
The majority of Javelin data for online banking and bill pay is based upon
“households” vs. “individual consumers.” This is a
typical way of presenting online-banking and bill-payment data because bills
are normally paid on a per-household basis. In 200 9, the U.S. population was
estimated to comprise 306 million people. That includes 232 million adults,
118 million households, and 86 million households that are online. On average,
there are about 2.6 people per household. Javelin also collects online-banking
data using a base of all consumers for comparison purposes.
The analysis of financial institutions by size was based on where households
maintain their primary banking relationship. Institutions were divided into
four categories based on total deposits as of Dec. 31, 2008, according to
rankings by American Banker.
- Giant national banks: Deposits greater than $750 billion (JPMorgan
Chase, Bank of America, Wells Fargo and Citi).
- Large regional banks: From $30 billion to $200 billion in deposits.
- Regional or community banks: Less than $30 billion in deposits.
- Credit unions: All credit unions, except for Navy Federal Credit
Union, which was classified as a large regional based on deposits.
For the first time this year, Javelin collected “last 90 day“
figures for benchmarking purposes. These are shown in the Appendices, under
Figures 34 and 36, pages 61 and 62 , respectively.
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