Abstract
Overview
With over half of the U.S, household population now banking online, online banking and bill pay have finally achieved mainstream acceptance. Over the past three years online banking and bill pay adoption have plateaued, and 38 million consumers are less likely to recommend online banking in 2007 as in 2005. Javelin has used five years of longitudinal data to create a forecast model to deliver projections of adoption through 2012 for online banking, consolidated bill presentment, and online bill pay (financial institution and biller-direct). Javelin also explores the benefits of green banking and its impact on consumer behavior and adoption. Using quantitative consumer research and case studies of select top ten U.S. financial institutions (FIs) Javelin has clearly outlined the next steps for FIs and vendors to reinvigorate growth, adoption, and profitability of the online channel.
Primary Questions
- Where is online banking and bill pay headed over the next five years?
- What prevents holdouts from adopting online banking and how can they be successfully persuaded to switch?
- What capabilities must be included in online banking and bill pay to capture market share?
- Which marketing and consumer education messages will best drive consumer adoption?
- How can online bankers be migrated into online bill payers?
- Which new features and enhanced services will increase transaction volume and loyalty among existing online bankers?
Findings and Analysis
In 2007, 61 million households are banking online, representing 53% of the U.S. household population and corresponding to 33% of U.S. adults. Javelin projects that the number of online bankers will grow to 82 million households by 2012, a compound annual growth rate (CAGR) of 6.1%. Bank bill pay will begin to catch up to biller-direct bill pay, as preference and product finally come together in a cohesive experience for the customer. Online banking has met three main needs, convenience, control, and cost savings, yet non-online bankers are becoming more entrenched in their points of view, with almost half strongly preferring to deal with people and fearing security breaches. Finer demographic cuts and analysis of new technologies reveal specific ways to address holdouts. Javelin has identified six key strategic areas that will be fully covered in this all-inclusive report: green banking, alerts, expedited payments, personal financial management, mobile banking, and security.
Audience:
Financial institutions, specifically online banking groups; security and messaging vendors to the financial services industry
Table of Contents
- Overview
- Primary Questions
- Findings and Analysis
- Executive Summary
- Online Banking and Bill Pay Growth Forecast 2003-2012
- 5-Year Forecast- Online Banking and Bill Pay Growth Forecast 2003-2012
- Electronic Bill View and Payment Hit Plateau
- Still Popular, but Downward Trend Noted in Consumer Preference for FI Bill Pay
- For Many Consumers, the Word Is Getting Out: Online Banking Hinders ID Theft
- Online Billing Losing “New and Exciting” Factor; 20% Fewer “Very Likely” to Recommend (2005-2007)
- Personas of Online Bankers versus Non-Online Bankers
- Online Bankers Have Many More Touches with Banks: Equals Opportunity
- Who Are the Holdouts? People Preferences and ID Fraud Fears Deep-Rooted
- Online Bankers: The Three Keys to Adoption
- Alerts and Consolidated Bill Pay Would Inspire Activity in 50% of Online Bankers
- Online and Offline Bankers Display Contradictory Profiles
- Online Bankers Prefer “My FI” More Than 2 to 1 for Paying Bills Online
- Green Banking
- Communicating Environmental Benefits in a Customer-Friendly Way
- The Tipping Point for Paperless: Better Records
- Cost Savings Can Be Found (and Not Just by Converting Off-Liners to On)
- 56% of Consumers Now View Check Images as Desirable- a Polar Shift
- Convenience
- Going Mobile
- Expedited Payments
- Control/Financial Optimization
- Personal Financial Management
- Focus on Consumers' Top Valued Features for Success in Online Banking PFM
- FIs' Top Online Protection Rating Falls 13%; Average Rating Rises
- Consumer' s Guide to Improving FI Online Protection Ratings
- Consumers Desire a Supermarket of Alerts
- Interactive Financial Messaging TM: The Next Stage- Prohibitions and Review & Release Functions
- Shared Secrets and Computer Recognition Tops for All
- Bank Comparisons
- Where Do Customers Pay their Bills?
- WaMu, Chase and Wells Top the Online Safety Ratings
- Good Online Safety Ratings Motivate Behavior: Chase, BofA and Wells Enjoy Outstanding Increases in Online Banking in Response to Consumer ID Worries
- Comparison of Top Six Online Banks by Attributes
- Demographics-Age
- No Mystery Here: The Younger You Are, the More Likely to Have Tried Online Banking
- The Eldest Clients Rank Bank' s Online Protection Performance the Highest- Then Why Aren' t They Banking Online?
- “Saving Time” Doesn' t Resonate with Older Bankers
- Demographics-Income
- Higher Income Levels Show Greater Online Banking Penetration
- The Poor (Under $15K) Have Different Reasoning for Not Banking Online
- Highest Online FI Bill Pay Penetration Rates Are for Consumers $100K-$149K
- Paper Turnoff: Middle Incomes Fear Losing Control-Want Better Records
- Demographics-Ethnicity
- Caucasians Lag in Online Banking Acceptance
- 30% of Asians who “Just Haven' t Gotten Around to it Yet” Represent Opportunity
- Different Ethnicities Motivated by Distinct Online Bill Payment Features
- Demographics-Gender
- Women Want Control; Men Time
- Window of Opportunity: Gap in Bill Pay Adoption Rates Will Close Quickly
- Men Desire Integration into Financial Tools; Women Want Bill Alerts
- Appendix
- Related Research
Table of Figures
- Figure 1: Total Number of Households Banking, Viewing, or Paying Bills Online 2003-2012
- Figure 2: Consumers Conducting the Following Bill Payment Activities within the Last 12 Months
- Figure 3: Consumers' Preference to View and Pay Online Bills (Longitudinal 4 Years)
- Figure 4: Consumers' Reactions in Online Banking Transactions in
- Figure 5: Would You Recommend Online Banking? (Longitudinal 3 Years)
- Figure 6: How Online Bankers' Usage Has Changed Most Since First Using Online Banking
- Figure 7: Reasons Why Certain Consumers Do Not Bank Online (Longitudinal 5 Years)
- Figure 8: Why Did You First Start Banking Online? (Longitudinal 3 Years)
- Figure 9: Consumers' Motivation to View More Bills Online (by Type of Banker)
- Figure 10: Criteria for Selecting a New Financial Services Provider (by Type of Banker)
- Figure 11: Where Consumers Would Most Prefer to View and Pay Online Bills
- Figure 12: Consumers' Opinions on Paper Statement Turnoff (by Type of Banker)
- Figure 13: How Do Consumers Receive the Following...?
- Figure 14: Consumers' Opinions on Viewing Electronic Check Images (Longitudinal 3 Years)
- Figure 15: Mobile Internet Users' Preferred Mobile Banking Transactions
- Figure 16: Expedited Payments Fee Revenue Forecast 2004-2009
- Figure 17: PFM Offering' s Effect on Likelihood to Remain a Customer (by Type of Banker)
- Figure 18: Consumers' Most Valued Features for Managing Finances
- Figure 19: Consumers' Ratings of their FIs' Online Protection Performance (Longitudinal 2 Years)
- Figure 20: Security Methods Consumers Would Like their FIs to Implement (by Type of Banker)
- Figure 21: Alerts that Are Valuable to Consumers (Longitudinal 3 years)
- Figure 22: Applying the Javelin “Prevention and Detection” Model to IFM™
- Figure 23: Consumers' Preferred Methods of Authentication
- Figure 24: Top 15 Online FIs (by Numbers of Online Bill Payers)
- Figure 25: Rating of Banks' Online Banking Safety Performance (by Top Six Online Banks)
- Figure 26: Consumers' Response to ID Threats in Online Banking Transactions
- Figure 27: Feature Comparison of Top Six Online Banks
- Figure 28: Last Conducted Online Banking (by Age)
- Figure 29: Rating of Bank' s Online Protection Performance (by Age)
- Figure 30: Most Important Reasons for Beginning to Use Online Banking (by Age)
- Figure 31: Last Conducted Online Banking (by Income)
- Figure 32: Reasons for Not Banking Online (by Income)
- Figure 33: Paid a Bill Online through Bank or Credit Union' s Bill Pay Service (by Income)
- Figure 34: Opinions on Paper Statement Turnoff (by Income)
- Figure 35: Last Conducted Online Banking (by Ethnicity)
- Figure 36: Reasons Why Consumers Do Not Bank Online (by Ethnicity)
- Figure 37: Motivation to Pay More Bills Online (by Ethnicity)
- Figure 38: Reason for Beginning to Bank Online (by Gender)
- Figure 39: Last Time Paid a Bill Online Through FI' s Web Site or Bill Pay Service (by Gender)
- Figure 40: Motivation to Pay More Bills Online (by Gender)
- Figure 41: Viewed Electronic Image of a Check
- Figure 42: Consumers' Ratings of their Banks' Online Protection Performance
- Figure 43: First Began Banking Online (by Top 6 Online Banks)
