RealTime IT News

Study Finds High Churn Among Online Banking Customers

Although the absolute number of online banking customers grew 100,000 to a total of 6.3 million in the past 12 months, 3.1 million U.S. adults have discontinued their use of online banking, according to a new survey.

The Cybercitizen Finance study from Cyber Dialogue also found that only 35% of online bank customers who discontinued their service were inclined to try it again.

"Although Cybercitizens begin banking online to save time, more than 50 percent have discontinued use because they find the service too complicated or were dissatisfied with the level of customer service," said Michael Weiksner, manager of finance strategies at Cyber Dialogue.

A majority of Internet users (63 percent) are aware of online banking, and 13 percent intend intend to begin banking online within the next 12 months, the study found. Cyber Dialogue said it believes that financial institutions must improve customer service to maintain their customers.

In contrast to online banking, only 3 percent of investment traders who are online have discontinued trading online and 85 percent percent of current traders are satisfied with their service. As a result, the number of online traders has grown from 4.0 million in July 1998 to 6.1 million in July 1999.

"Online brokerages like E*Trade and Schwab have demonstrated real leadership by investing aggressively in marketing and customer service," said Weiksner. "Banks must react in Internet time or risk losing the banking relationships of their most valuable customers."

The Cybercitizen Finance report is based on interviews with 1,000 Internet users and 1,000 non-users. Cyber Dialogue is an Internet database marketing company.