"This marks a watershed change," said Nessa Feddis, ABA senior counsel and retail banking expert, in a statement. "It tells us that for the first time, more consumers prefer the speed and convenience of conducting their banking transactions on the Internet than visiting their local branch. It also tells us that consumers now have confidence in the accuracy and security of online banking."
Survey results showed that the popularity of online banking was not exclusive to the youngest consumers: It was the preferred banking method for all bank customers under the age of 55. Consumers over 55 still prefer to visit their local branch (26%), followed by ATMs (17%).
Banks appear to be already tuned in to these preferences, since many are emphasizing their online programs. For example, Bank of America recently announced plans to close up to 10% of its 6,100 branches while simultaneously increasing its online and mobile offerings. BOA has been in the forefront of the trend as one of the first financial institutions to offer free bill-paying services. The company's 29 million online customers conduct more than 3 billion transactions a year.
Credit unions and local banks also are jumping on the online bandwagon via Kasasa.com. BancVue launched a nationwide campaign in July to introduce white-label software, training, consulting and marketing services for local banks and credit unions. Customers are encouraged to use online banking, which saves the banks money, and in turn the banks can give the money back to consumers in the form of rewards.
Elsewhere, regional financial company Beneficial Bank in June rolled out a new personal finance manager, FinanceWorks, which provides online viewing and analysis of all a consumer's accounts (not just those from Beneficial).
Among all consumers, the preference for online banking was followed by visiting branches (21%) and using ATMs (17%). The use of mobile banking (cell phones, PDAs) was preferred by one percent of consumers, primarily among 18- to-34-year-olds. The popularity of ATMs was down in all age groups.
The annual survey of 1,000 consumers was conducted for the ABA by Ipsos-Reid, an independent market research firm, Aug. 14 to 16. A list of questions asked was designed to take a snapshot of current consumer trends.