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February 17, 2005

A comparative analysis of polls taken by the Pew Internet and American Life Project in 2002 and 2004 indicates that a growing number of Americans are turning to the Internet for many of their banking needs. Overall, the percentage of US Internet users who bank online has risen from 30% in October 2002 to 44% in November 2004.

More specifically, online banking use has expanded in every demographic measured by Pew. Almost 50% of men and 40% of women bank online in 2004, compared to 31% and 29%, respectively, in 2002.

More Internet users in every age group are using the Net to handle their banking needs, with usage gains especially significant in the 28 to 39 year-old group (34% in 2002, 60% in 2004) and the 50 to 58 year-old group (26% in 2002, 49% in 2004).

Online banking use has ramped up among Internet users of every income group as well, with growth especially strong among those with annual salaries over $50,000.

It's also up among all education levels — high school graduates, those with some college and those with college or graduate degrees — by about 15 percentage points.

And while the use of online banking has increased from 24% in 2002 to 35% in 2004 for dial-up users, it's jumped among broadband users, rising from 35% in 2002 to 63% in 2004.

eMarketer Senior Analyst David Hallerman notes: "It is important to point out that while these numbers indicate great increases in online banking penetration, it does not mean that people do nearly as many different banking chores online as they do through more traditional channels, such as the branch or even an ATM."

A recent survey by Keynote Systems reinforces this point, finding that most US online banking customers predominately perform the simplest of tasks — 92%, check their transaction history.

A smaller though not insignificant 51% check or print their monthly statement, while 43% use online bill payment services and just 21% download their transactions to software applications.

Barriers to greater online banking use remain, however. eMarketer's latest estimates, presented in its Interactive Banking Report place online banking use among all US households at only 28.3% in 2004 and 30.9% in 2005. Many people still have concerns about the safety of online banking or are skeptical about its usefulness.

Respondents to a Forrester poll in 2004 cited a number of reasons why they are hesitant to bank online, including worries about data security and privacy as well as a preference for branches, ATMs and phones.

At least 20% said they "don't see the point of it," while others have said they "haven't gotten around to it" (12%), don't know how it works (9%) or feel it's too complicated (7%).

Many of these barriers are similar to those that keep people off the Internet or from engaging in e-commerce, so it seems likely as time passes and Web-based activities become more accepted, online banking will prosper too.

                               Source: eMarketer