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September 14, 2011

A new ABA survey shows that for the first time, older Americans prefer to do their banking online compared to any other method. The survey of more than 2,000 U.S. adults, conducted Aug. 12-14, by Ipsos Public Affairs, revealed that the popularity of online banking among customers 55 and up has surged since last year. Fifty-seven percent of bank customers 55 and up say they prefer banking online compared to 20% in 2010.

Overall, bank customers now prefer online banking more than all other methods combined. This year, 62% of U.S. adults polled named online banking as their preferred banking method compared to just 36% last year.

The preferences for all other banking methods experienced declined. Customers named the following banking methods as “preferred”:

•    Internet banking (laptop or PC)—62%  (36% in 2010)

•    Branches—20%  (25% in 2010)

•    ATMs—8%  (15% in 2010)

•    Mail—6%  (8% in 2010)

•    Telephone—3%  (6% in 2010)

•    Mobile (cell phone, Blackberry, PDA, I-Pad, etc.)—1% (3% in 2010)

According to ABA research, online banking first became the most preferred banking method in 2009 with 25% of customers naming it as their favorite. This marks the first time, however, that adults 55 and up also named it their preferred banking method. Previously, visiting a branch was the most popular method, followed by ATMs.

“These survey results hammer home the point that retail banking has changed for good,” said Nessa Feddis, ABA senior counsel and retail banking expert. “They tell us for the first time that customers of all age groups prefer the speed and convenience of conducting their banking transactions on the internet to visiting their local branch or ATM. They also tell us that customers trust the accuracy and security of online banking.

“Online banking may be the most preferred method of banking but banks are still committed to providing multiple choices to serve the needs of all customers,” said Feddis. “Bank customers will continue to have the choice to use branches, ATMs, telephone, mobile devices, or the internet to conduct their transactions—whichever they find most convenient for them.”

Asked about the apparent drop in preference for mobile banking, to 1% from 3%, Carole Kaplan, ABA public affairs, said: “I am not putting a lot of stock in that change for a couple of reasons. First, it’s within the margin of error of plus or minus 2.2%. Second, the numbers are so low in this category compared to the jump in popularity of online banking.

“If anything,” she continued, “I would say that it shows that mobile banking is having a tough time gaining traction with the public. It’s still a new technology and people are still wary of it. Consider how long internet banking has been around and how long it has taken to gain widespread appeal. I think it comes down to people waiting to be assured that the kinks have been worked out of the new technology and that it is safe before they make a commitment to use it.”
 
 
Comparison to other online banking surveys
The ABA survey generally bore out results of similar independent surveys conducted recently, which tended to show the rise in preference for online banking compared with other channels.

In May, for example, customer satisfaction with online banking increased its lead over customer satisfaction with the overall banking experience in a study by ForeSee Results. Satisfaction with online banking overall regained two points to 83 on a 100-point scale one year after dropping by the same amount. Meanwhile, customer satisfaction with banking overall scored 76 using the same methodology, 8% lower than satisfaction with online banking.

When respondents to the ForeSee survey were asked which channel they were most satisfied with, 55% selected the online channel while 28% chose the branch, 13% chose the ATM, and 2% chose call center and mobile banking.

In July, a major study by U.K.-based Cable & Wireless Worldwide, which polled 2,255 adults, found that 60% of consumers said online banking has become the most valuable factor to banking engagement over the past two years.

Other analysts have weighed in not only about the growing popularity of online banking, but on how banks can make online banking even more valuable to customers.

“Online banking isn’t an alternative channel any more. It’s a mainstream channel,” said Celent in a June report. “This channel, however, requires a lot of attention. If banks don’t act swiftly, they risk critical customer relationships and revenue. It’s important that banks harness technology but don’t use it as their best foot forward. It’s easy to get caught up in the array of sexy tools and devices on the market, but at the end of the day it’s the customer and their experience that matter most. Financial institutions need to determine customer pain points and act swiftly to alleviate them.”

In particular, Celent recommended banks focus on functionality and ease of use, as well as offering better services, especially in the area of personal finance management. This was a theme, as well, that Javelin Strategy & Research noted in a report late last year.

“It is time for personal finance management to take center stage in the consumer’s banking experience,” said James Van Dyke, Javelin’s president and founder. “Financial institutions can become their customers’ primary financial portal by installing platforms that weave PFM into online banking, provide a consolidated view of customers’ accounts, speed customers’ common banking chores, and give them unprecedented financial control.”

Michele Metcalfe, director of Banking & Financial Services at Cable & Wireless Worldwide, said, “Consumers increasingly prefer remote interaction, but also want good customer service, greater trustworthiness, and a fair level of engagement with the banks. These findings suggest that financial institutions have an opportunity to better meet customer preferences by investing in the right online innovation.”

 
http://www.aba.com/NR/rdonlyres/C1AD194A-766C-4CCD-ABBD-07F6220D43DB/73328/consum2011chart.png
 

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