While the Internet may not be a dominant force at your local bank today, it appears inevitable that it will grow in popularity among both retail and business consumers.
A joint survey of the ABA Banking Journal and ABA Community Bankers Council found that nearly 50 percent of the people in the banking community to respond to the survey expect that while their Internet banking component may not turn a profit anytime soon, offering a wide range of Internet banking capabilities is "crucial to customer service."
The survey also found, for example, that 29 percent of bankers believe their Web site has produced business the bank would not have otherwise received.
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The Washington Trust Company in Westerly was founded in 1800. It is among the oldest banks in the country. And Internet banking has arrived.
Elizabeth Eckel, a senior vice president for marketing at the bank, sees it when one of the bank’s new services or programs are presented on the Internet.
"Every time we do a promotion on the marketing side, the online applications soar," she said. "There is a real interest out there."
And that interest, according to Eckel, runs through a wide range of consumers. Older consumers, she said, tend to use all delivery channels available to them. They still enjoy the personal contact with tellers, but they also have embraced the Internet, for example, when paying certain bills.
"It has been increasingly popular with a lot of customers – both on the retail side and on the business side," said Eckel.
And as the survey suggests, Eckel believes Internet banking is "definitely here to stay."
"We all have less time on our hands these days…so whatever makes it easier for people," said Eckel.
Nearly one in five bankers predict that the Internet will be their leading consumer-banking channel by 2005, according to "Web Census 2002," the survey of the ABA Banking Journal and ABA Community Bankers Council.
While less than one percent of bankers identified Internet banking as their current leading consumer-banking channel by volume, nearly 18 percent expect it to be so by 2005.
"Bank branches will continue to dominate but Internet banking is becoming increasingly important – though not a profit center – to servicing existing clients and attracting new customers," said Steve Cocheco, survey architect and executive editor of ABA Banking Journal.
Survey data shows that 49.2 percent of respondents have unprofitable bank Web sites that are expected to remain unprofitable but crucial to customer service. Twenty-nine percent of bankers expect their Web sites will soon be profitable while roughly 20 percent do not know.
"Web Census 2002" compiles the views of top management at 921 community banks across the country and examines Web site management, business banking, and retail banking. The survey is part two of the two-part "Sixth Annual ABA Banking Journal/ABA Bank Competitiveness Survey."
Additional Web Census survey findings include:
Most often, management of the Web site falls to those in operations/information systems (65.2 percent) followed by marketing (33 percent). Bankers commonly rely on Web hosting companies and Internet service providers to operate the site. Only one in five community banks run the site in house.
Twenty-nine percent of bankers believe their Web site has produced business the bank would have not otherwise received while 38 percent are not sure, and 33 percent said no.
Nearly twice as many community banks this year (15.6 percent) believe the Web site has cut retail-banking expenses as last year (8.5 percent).
Roughly 45 percent of community banks obtained extra liability insurance related to Web site risks. The additional insurance is most frequently purchased by banks in the west (50 percent) and least frequently by those in the central states (39.1 percent).
As it relates to business banking, the survey recorded the following trends:
More than 42 percent of bankers believe online banking is a necessity to maintaining business accounts. Nearly 25 percent of banks offer special Web services to small-business customers compared to 21 percent in the previous survey, and 12 percent two years ago.
Check balances (90.6 percent), cash management (81.8 percent), and wire transfers (73 percent) are the most popular of the 19 reviewed services offered to small-business customers.
Twenty-four percent of respondents are interested in offering digital-signature technology to business customers while just over half are unsure. Digital signature services are most used by urban (43.5 percent) banks.
As it relates to retail banking, the survey recorded the following trends:
The number of bank Web sites that serve as portals remained unchanged (26 percent) from last year to this year but the type of portal offered shifted. The 2002 survey shows that 21.4 percent of sampled Web sites serve as general portals while 4.6 percent are financial portals. Last year, 15 percent were general portals and 10.6 percent were financial portals.
The most popular portal services provided are weather reports (76.2 percent), links to stock quotes (70.9 percent), and community news (69.8 percent).
