Online Banking - US: Industry Report

Online Banking - US

Product Type: Market Research Report
Published by: Mintel International Group Ltd.
Published: June 2006
Product Code: R560-2134

Description

After a decade of building, marketing, and enhancing Internet-based capabilities, U.S. financial institutions now sit at a crossroads. Online banking simultaneously faces tremendous opportunities and considerable challenges. According to the 2004 Pew Internet & American Life Project, approximately 53 million Americans are banking online, or about one in four adults. However, many Web users do not trust online financial institutions to protect their accounts. Phishing scams, identity theft, and other forms of online fraud have become part of the popular culture mainstream. The sensational nature of such cases has made many online banking users and potential users more aware of the negative aspects than the positive. In Mintel’s online consumer survey for this report, for instance, 40% of respondents who have bank accounts but do not use online banking services (which would project nationally to about 70 million adults) state that they do not trust transactions on the Internet.

While a number of industry and governmental forces are combining to fight Internet fraud, financial institutions continue to invest heavily in online services. The benefits are too great to turn back, despite worries about security. Active online banking users not only show greater loyalty to their bank, but they almost always carry higher balances and are more willing to refer the bank to friends and family. In an age where even the largest financial institutions are willing to fight for every single customer, these benefits are huge.

The forces driving the growth of the Internet--increased broadband access, new innovations that provide a secure environment, and the coming-of-age of more tech-savvy people--will combine to propel online banking as well. Too much money rides on the success of the online banking sector for financial institutions to allow it to miscarry. Mintel expects that online banking will continue to grow and become more profitable for financial institutions, particularly as the Internet matures and subsequent generations become more technologically literate.

This report examines the factors impacting online banking, including the trends within the industry and the socio-economic forces behind changing demographics. The report emphasizes the role and place of the consumer in the channel, providing a glimpse into the possible future for online banking.

Table of Contents

INTRODUCTION AND ABBREVIATIONS: Introduction; Scope of the report; Abbreviations and terms
EXECUTIVE SUMMARY: Growth in online access; Marketing online services; Innovation and adaptation is key; The online banking industry; The online banking consumer
MARKET DRIVERS: Overall Internet usage; Growing population; Adult Internet usage still growing; Broadband expansion; Federal government’s role in marketing broadband; The role of online banking in real organic growth; Online banking and women; Online banking and Generation X; Echo Boomers and online banking; Getting Hispanic consumers online; Growth of online bill pay and presentment; Innovation and differentiation of services critical to growth; High-interest yielding accounts; Consumers and online security
MARKET SIZE AND SEGMENTATION: MARKET SIZE; MARKET SEGMENTATION
COMPETITIVE LANDSCAPE: COMPANIES AND BRANDS
ADVERTISING AND PROMOTION: Online advertising on the rise; Marketing to Generation X and Echo Boomers; Customer-guided marketing; Bank advertising
THE CONSUMER: Introduction; Summary highlights of consumer data; Internet banking services used; Why online banking services are not used; Likelihood of opening an Internet banking account among non-users; Level of use of Internet banking services; Desired features of online banking accounts; Type of institution used for online banking; Frequency of personal interaction with banks and use of ATMs
FUTURE AND FORECAST: FUTURE TRENDS; MARKET FORECAST
APPENDIX: TRADE ASSOCIATIONS
APPENDIX: ADVERTISING AND PROMOTION: TELEVISION; DIRECT MAIL AND PRINT MEDIA

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