15 October 2002
By David Hallerman
What bank customers do online and what they want don�t always converge. The US consumer wish list ranges from advice to insurance but stays within financial bounds.
Last year�s American Bankers Association poll points to the popularity of advice. Three types of advice — financial planning, investment and retirement planning — are among the products and services consumers listed highly as �likely to purchase� from US banks. And while buying investments received the most responses, at 51%, this survey took place before today�s extreme market meltdown.
Advice and planning fit well into a bank�s online services, especially when banks try to reach a mass-affluent audience. The costs for person-to-person advice make sense if the institution is dealing with high net-worth individuals. But for individuals with between $100,000 and $1 million to invest, automation is the key.
In this turbulent economy, customers are seeking help. Research from Gomez shows that customers frequently use several online financial-planning tools, bringing them back to a bank�s website repeatedly. Of the five tools listed in the chart below, all but college planning were turned to two to five times during the last six months by more than 50% of the respondents (and even college planning, a more age-segregated task, hit the 45% mark).
The same ABA poll cited above, when focusing on interest in online finances, found the majority of consumers �very interested� in all nine activities listed below. Several are information-gathering pursuits, such as obtaining interest rates and checking balances, but the active tasks were even more attractive. Above 60% of the respondents were very interested in transferring money between accounts and applying for mortgages or other loans. And active activities tend to keep customers around more than passive, information-gathering ones.
Age creates a variance in the non-banking financial products US consumers want from banks. According to the 2002 �American Banker/Gallup Consumer Survey,� the older the customer, the less likely he or she wants to buy financial planning, life insurance, or brokerage services from their bank. But in the key 35-to-54 age grouping, about 45% of respondents look to a bank for financial planning.
This concept of one-stop shopping (also called convergence or consolidation) appears to be a bit more a bank dream than a customer desire. For the bank, the more products and services a customer buys, the more likely that customer will be loyal. However, a 2002 survey from Synergistics Research points to consumer reluctance to place all their financial eggs in one basket. While 60% of respondents feel they�d be better off by shopping around, 55% are simply concerned about having all their financial services tied to a single institution. Distaste for too much cross-selling is another consumer attitude at cross-purposes to convergence, cited by 46%.
In contrast, the banking industry�s fear of losing customers — and therefore its needs to institute one-stop shopping — may be more emotional than logical, especially when it comes to online banking. A Gomez survey from last year shows that only 13.3% of online customers have considered switching primary banks based on the performance of their institution�s website. Even nearly 70% of dissatisfied online banking customers have not considered switching primary banks. This data points to the key importance of capturing the customer to start off, since loyalty appears to be strong, no matter what the reason or provocation.
Trust eMarketer to gather all the interactive banking research in one place. Find it in the Interactive Banking: Integrating Online into Traditional Channels report.
David Hallerman is a Senior Analyst with eMarketer. You can reach him at firstname.lastname@example.org with comments, questions or suggestions.
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