Financial institutions of all sizes are opening virtual branches that offer higher savings yields and lower interest rates in an effort to lure more customers.
“Online Banking Paying Off”
eMarketer believes that around 80 million U.S. adult Internet users will do at least some of their banking online this year, an increase of 9.5 percent over 2006.
By 2011, 101 million adult Internet users in the U.S. will be baking online.
“When you look closer at the numbers, however, you find that growth in the US online banking population is actually slowing, at least at the top 10 online banks,” says Lisa E. Phillips, eMarketer Senior Analyst and the author of the new report, Banking and Bill Paying Online: Chasing Those Digital Dollars.
“comScore’s online banking report showed the online banking population grew 47.3% in 2004 and dropped to a 27.1% growth rate in 2005.”
Growth will continue to slow to 6.7 percent next year and just 6 percent through 2011, when eMarketer expects 48 percent of the U.S. online adult population to do some form of banking on the Internet.
“Nevertheless, financial institutions from banks to insurance companies are trying to move more business online, where the operating costs are lower and profit margins higher,” says Ms. Phillips.
Aite Group projects that for every new account opened online, financial providers could save $50.
“With an average of 4.2 million applications for all forms of financial products made online per month in 2006, the potential savings are huge,” says Ms. Phillips.
By 2010, Aite Group predicts 13% of all checking accounts will be opened online in the US, up from just 3% in 2006.
