Are Consumers Satisfied With Online Banking?

by: Compete November 15, 2008 | about stocks: BAC / ING    
Compete logo

Compete

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

It is undeniable that consumers are increasingly living their lives online. From buying a book, to viewing a photo, to posting a tweet through the use of Twitter, individuals are turning to the internet for a myriad of reasons. Financial services is certainly not immune to this digital migration. While it is clear that online banking usage and adoption is growing, it is less obvious how consumers view their current experience. Are consumers really satisfied with online banking functionality? We surveyed existing online bankers to find out.

The chart below illustrates consumers satisfaction with their current online banking experience across a variety of areas. The most apparent conclusion from this data is that consumers, in general, are very satisfied with most banking functionality offered online. For instance, fewer than one in ten consumers who currently use online bill pay are either indifferent towards or dissatisfied with the experience. The immediate inhibitor to continued growth in adoption of online banking functionality is thus not the usability of these site features, but rather convincing consumers to try them out in the first place.

The data below shows the percentage of existing online bankers that currently use particular types of online banking features. While in the above chart 92% of respondents that use bill pay are happy with the experience, only 54% of online bankers choose to utilize this feature in the first place. Banks need to do a better job of driving initial trial for online banking functionality, for once consumers engage with these offerings they typically are satisfied with their experience.

Traditional marketing efforts promoting features and functionality across multiple distribution channels are clearly one way to drive trial. However, perhaps an additional way in which banks can drive trial of online banking functionality is to more aggressively leverage the high satisfaction levels of existing consumers by letting individuals speak to each other in an online community. It is not unprecedented for banks to create an online community around a particular topic area. Bank of America (BAC), for instance, created a compelling online community for small business owners. Letting consumers learn from the experiences of others is likely to drive increased trust in the bank and thus impact trial. It will be interesting to monitor the adoption of specific online banking features over time and what banks specifically do to drive trial.

Related Articles

This article has 8 comments:

  •  
    Nov 16 09:11 AM
    I'm sure people have plenty to say about their PayPal experience!!!
    Reply | Link to Comment
  •  
    Nov 16 05:02 PM
    My online banking experiences have been acceptable. Not having to drive to a bank and wait in line during 'Banker's hours' is great. I do have to say that when I got my first ATM card, I was thrilled! i never had to go into a bank again! In fact, I see no real benefit in brick and mortar banks at all.

    However, as far as online banking/investment companies. My many bad experiences with Etrade leads me to rate them an 'F'. I would hesitate suggesting them to my worst enemy. TDAmeritrade runs great ads touting their online trading software, when in fact, not only is it buggy, it doesn't integrate properly with their website and their support staff answer questions correctly about 1/2 the time, when they even bother to respond. I give TDAmeritrade a B-. I am presently looking at TradeStation as their staff responded to my inquiry quickly and competently and their software seems to provide for all the things that TDAmeritrade's doesn't.

    jegan ;-)
    Reply | Link to Comment
  •  
    Nov 16 08:45 PM
    I bank with Etrade and it's great. And they give you a 3.3% savings rate. Awesome.
    Reply | Link to Comment
  •  
    Nov 17 09:23 AM
    Bank of America's system is down every time there is an "up" day or a bad "down" day. They have taken on too many customers without adequate IT backup. When their server goes down, accounts show a zero balance. No trading can be done when this occurs and the system remains in gridlock until IT personnel get the blasted thing fixed. BAC is in the customer service hall of shame and it should be. Their hurry to acquire companies (Merrill Lynch, Countrywide) left their customer service in the toilet. Big certainly does not mean better. Early in October a quote on IBM was frozen for more than 24 hours. How many people do you think made decisions based on the erroneous information? How ironic the frozen IBM is the very company BAC so desperately needs to fix its problems!!!
    Reply | Link to Comment
  •  
    Nov 17 10:59 AM
    I've been with Etrade since it's inception. There have been good times and yes, some bad times during it's growth stage. Overall, on a scale of 1-100, I'd rate my experience at 90+%. I have purchased as much Etrade stock as I can afford. This company has shown it's ability to have staying power and now has great management. I'm with them all the way. Of course I also own sizable BAC and GNW. Today's market will be the seed for future millionaires. Buy long while you can because when the market turns it will be so fast you may be unprepared for it.
    Reply | Link to Comment
  •  
    Nov 18 10:15 AM
    How about interviewing customers who don't use online banking? I think you'll find a number who tried online banking and quit. Maybe it didn't meet their needs or wasn't fast enough. I suspect most of the people who aren't happy with online banking aren't using online banking. I think that a contributor to increased online banking use is the friendliness and ease of enrolling.
    Reply | Link to Comment
  •  
    Nov 19 06:43 PM
    I've used online banking since it's emergence. The biggest problem I see is that almost all the US banks by the same "front-end" (ie, software, which use to be S-1's) and a couple of years ago when they did an update, I thought it stunk. Nonetheless, since everyone used the same software, I was forced to stick with Netbank... "luckily". :-)

    Netbank went BUST and was taken over by ING direct (if you don't know, ING is a Dutch insurer/banker). ING direct does NOT use the same canned software as everyone else (least not the half dozen I've used or reviews). I'm not sure if it's their in-house or a European software house program, but when you want to write a check on-line, up pops a picture of a check. You just fill it in. Then up pops a picture of an envelope, you just fill it in. Their system is simple and it DOES NOT limit you to just 3 months of data (the most frustrating aspect of my other accts).

    The only negative I know is the customer service is not wonderful. For example, online there is a feature to print out a "blank canceled check" when setting up linked accts. I have used it before but couldn't remember where it was. The customer service rep did not know about it and I had to wait for him to find someone who did.

    Nonetheless I like the "front-end" of ING Direct and would recommend it (it's intuative, so it's easy, something I haven't seen elsewhere).
    Reply | Link to Comment
  •  
    Dec 08 08:39 PM
    I too use ING for my checking and savings account, and really love it. I haven't missed the neighborhood bank at all. They have a really cool feature to write checks online (free) and the interface is cool and easy. Very happy with ING
    Reply | Link to Comment
More Comments on BAC ยป
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Compete

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
e-Finance
e-Commerce
Internet Advertising
Internet Content/Community