Online Banking Growth Stalls, Use Grows - 9/9/2005 - Mortgage Loan Refinance Debt Equity

Online Banking Growth Stalls, Use Grows

by Broderick Perkins

The growth in online banking -- considered by some experts to be a deterrent to ID-theft -- stalled in the past year, but those who are handling financial accounts online are accessing their accounts more often.

Survey-based market researcher Ipsos' "Interest In Online Banking Flattens" found that this year growth in online banking across various demographics has remained relatively unchanged or it has decreased.

 

• Thirty-six percent of females now frequently or sometimes bank online, compared to the same percentage in 2004; 42 percent of males banked online frequently or sometimes this year, down from 44 percent in 2004.

   

• Online banking by 18- to 34-year-olds slipped from 54 percent in 2004 to 53 percent now.

   

• The older online bankers, those 55 and older, reduced usage the most -- from 26 percent in 2004 to 21 percent in 2005.

That behavior appears counter to the message in the findings of "Online Banking and Bill Paying: New Protection from Identity Theft" a Javelin Strategy and Research study that said "turning off the paper" can help prevent more than one million cases of identity theft and save consumers and businesses $4.8 billion each year.

However, Javelin's study predates the round of digital bandits stealing tens of thousands of personal records from ChoicePoint Inc., hacking into Bank of America's electronic files and plundering Lexis-Nexus data -- to name some of the larger jobs.

This summer, a survey financed by Privacy & American Business and conducted by Harris Interactive found that 33.4 million Americans say they have been victims of ID-theft or fraud since 1990. Victims' out of pocket expenses have totaled $1.5 billion a year since 2001, the survey said.

It's not surprising then, when it comes to their money, consumers are wary about the digital world.

One in six consumers, representing almost 34 million Americans, say they have bought a privacy protection product to help avoid ID-theft, to check their credit report, and to surf or shop online anonymously, the Harris Interactive poll also discovered.

Many of them are likely among those who've decided not to tap their financial accounts online.

"People are hesitant to use online banking due to heightened concerns and skepticism of the industry," said Doug Cottings, a senior vice president at Ipsos.

The survey found:

 

• Eighty-three percent of those who conduct their personal banking online reported concerns over protecting their personal information from theft.

   

• Seventy-three percent said personal information theft is a deterrent for them to use online banking.

   

• Seventy-two percent said their concern about banks selling their personal information to a third party is extremely or very important.

  However, revealing consumers' mixed emotions about banking online, online banking among existing customers is up, Ipsos found, perhaps indicating some satisfaction.

   

• Those who pay bills online paid them an average 5.1 times per month this year, up from 5 times in 2004.

   

• Stock, mutual fund, retirement fund and other asset management occurs an average 4.3 times per month this year, up from 3.7 in 2004;

   

• Those who transfer funds do so 3.1 times per month, up from 2.5 in 2004.

   

• Customers who make balance inquiries check in 8.2 times per month, compared to 7.1 in 2004.

Experts say one of the benefits of online banking, when it comes to protecting your identity, is that it gives you the option to look in on your account as frequently as you wish and that gives you the opportunity to quickly spot questionable activity. Mailed statements can contain activity that is a month old.

Many online accounts can be set to alert you via email of any activity, giving you nearly instant notification of problems.

"The industry needs to convey that they are, in fact, addressing the fundamental issues of personal information protection and theft associated with online banking because the public's misperception is what's deterring growth," said Cottings.