RealTime IT News

Online Banking a Growing Trend

Many financial institutions dove into the online banking pool in 1998, resulting in an explosive growth of online banking households, according to a recent survey by research firm INTECO Corp.

PC banking grew from 3.8 million households in the third quarter of 1997 to 7 million by the end of 1998, the survey found. INTECO attributed the rise to more frequent Internet use and the "build it and they will come" approach by banks.

"Prior to 1998, there had been concern over the slow rate at which consumers were adopting PC banking, so the burst of activity in the past year has surprised most industry observers," said George Barto, senior financial services analyst for INTECO.

He said that banks removed a lot of barriers, so consumers could easily make the transition to PC banking.

"Customers need take no action to formally open an online account: they simply activate the online banking functions through the institution's Web banking site," he said. "Customers can use their existing account numbers and PINs. They can even pay bills if they had previously been doing that function via a touchtone telephone. And they can do it from home, from work or even from the road--wherever they have Internet access."

Online banking is dominated by an upscale market segment, with two out of three online banking households made up of married couples with household income in excess of $50,000, the survey noted. INTECO also found that the pacific region has the highest percentage of online banking households, and the Great Lakes region has the lowest.

As for the future, Barto predicted that customers will be looking for global access to their accounts.

"Banks will see greatly increased competition from other organizations such as portal services seeking to provide financials services in ways that are even more convenient to the consumer," he said.

The survey was based on 16,500 interviews conducted in December 1998 with a sample representative of all U.S. adults.