Consumers believe Internet banking is a good idea

The most significant change in banking technology is taking place today in community banks throughout the nation. Internet banking is bringing online bank information into the homes and offices of millions of people, and empowering them with more financial liberty than ever before.

The move

to Internet banking is not a simple one, which is why a supplier of banking software conducted a study of bank customers with regard to banking on the Internet. Precision Computer Systems, of Sioux Falls, S.D., arranged to have 400 individuals interviewed by phone about their awareness, their use and their attitudes about Internet banking.

The following summarizes key findings of the survey. All people interviewed already had Internet.

Awareness and availability of Internet banking. Three out of four Internet users are aware of Internet banking service. This awareness does not differ between urban and rural Internet users, and the data suggest that awareness of Internet banking may increase slightly with income. Among urban respondents, 58 percent said their banks offer the service.

In rural areas, availability was lower, at 43 percent.

More than one-fourth of urban residents have signed up for Internet banking. In total, 27 percent of urban and 14 percent of rural respondents said they had signed up for Internet banking. The percentage of respondents who have signed up decreases with age. Among those people who said their banks offer Internet banking, 47 percent of urban respondents and 33 percent of rural respondents said they had signed up for Internet banking.

The most common reasons for not trying Internet banking, when it is already available at the respondent's bank, dealt with security concerns.

Weekly use most common. About 17 percent use Internet banking daily, while slightly more than 40 percent use the service once or twice a week. About one-third of Internet banking customers use the service less often than weekly. Generally usage is more frequent among urban residents. There is little difference in usage by age.

Monitoring checking balance most common. Not surprisingly, almost all Internet banking customers use the service to check their balances. A slightly smaller percentage use it to verify deposits and monitor clearings. About 60 percent use the service to make transfers between accounts.

Satisfaction with Internet banking. Satisfaction with Internet banking is high. More than 77 percent of the Internet banking users said they were "very satisfied" with the service, while the remaining 22 percent said they were "somewhat satisfied." No one said they were "not satisfied."

Online bill payment. Most (90 percent) of the people who have signed up for Internet banking said that their banks also offers online bill payment. About 41 percent said they had tried bill payment over the Internet. The use of online bill payment was significantly higher among urban (47 percent) vs. rural residents (29 percent).

Likelihood to sign up for Internet banking a function of cost. All non-users of Internet Banking were given a brief description of the service and asked how likely they would be to sign up for the service if it were priced at $3 per month. After getting their response, they were asked about their interest if the service were provided free. If priced at $3 per month, only 11 percent would be likely to sign up. When offered free, the percentage likely to sign up increased to 37 percent. Price sensitivity is much higher among people under age 35.

Internet banking considered a good banking idea. The vast majority (90 percent) of people who currently have Internet access believe that Internet banking is a good idea and that it will grow in popularity and use. The attitude with regard to Internet banking is broad-based and not significantly affected by age or income.

Other services also wanted by Internet users. Respondents were read a brief description of four ways that banks might improve service to customers. These improvements included:

A portal (that featured easy access to Internet banking, plus news, sports, weather and shopping

E-mail notification of special account transactions;

An aggregator (a service that brings together all personal financial information); and

A personal banker (someone at the bank who would get to know the customer and be able to handle all financial needs).

Overall a personal banker received the highest score, followed by the aggregator, e-mail notification and the portal. The finding about personal banking is consistent with other studies conducted by the bank research firm that prepared this study. It has found that the availability of professional personal banking is important to selecting a bank and that the convenience of electronics (such as Internet banking) is key to building and retaining the relationship.

For more details on the study, go to www.pcs-sd.com.

IMAGE PHOTOGRAPH 11AUTHOR_AFFILIATION

Jerry Rossow

Northern Lakes Marketing

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About the Author

AUTHOR_AFFILIATION

Jerry Rossow is president of Northern Lakes Marketing, Minnetonka, Minn. He formed the company in 1985 to deliver research, planning, product development and promotional services. Rossow began his financial career in 1971 with Northwestern National Bank of Minneapolis as research and training manager. In 1976 he moved to First Bank System, where he coordinated research, branching

AUTHOR_AFFILIATION

analyses and electronic funds transfer development. Later he served as senior vice president for Marquette Bank. Rossow has published several articles and has spoken at national conventions of the Independent Community Bankers of America.