Nervous consumers are flocking to the Internet and their banks' websites to keep track of their finances, according to a study conducted by Forrester Research (Cambridge, Mass.) on behalf of Brookfield, Wis.-based financial solutions providers Fiserv.
Last fall, Forrester surveyed 1,009 U.S. consumers, the majority of whom banked online (763 online bankers versus 246 non-online bankers). The findings show that 71 percent of those polled said they are keeping a closer eye on their finances than they did a year ago and that the online channel is their means for doing so. Online banking usage increased far more than any other banking channel, with 28 percent of consumers indicating they are using online banking more than they did a year ago. A further 63 percent said managing all of their accounts online from one site would help them feel more in control of their finances.
It is this feeling of being in control that is the heart of the matter, according to Bob Homer, VP of product management at Fiserv. "The crisis highlighted the need for individuals to have control over their finances," Homer told BS&T. "The earlier online financial management tools were more for the tech-savvy. Now, however, the average individual wants to understand where their money is going and how they are spending it. So they can free up cash to meet their obligations."
The Web, he says, is the most logical path to obtaining this information instantaneously. And banks are a great source for providing this data to consumers.
At the outset of the study, Homer says Fiserv expected to see this increase in interaction between consumers and their banks. However, what really surprised him was the actual change in people's behavior as a result of the economic crisis. "People told us they were doing things for the first time, like delaying payment of a bill to make ends meet," Homer explains. "Consumer behavior is changing with the environment. We need to watch this to see how it manifests in other areas, such as what they will want from their financial institutions."
The research by Forrester wasn't alone in assessing the changes in consumer behavior. According to comScore, a Reston, Va.-based company that measures digital media, data it compiled found changes in Americans' online searching criteria as a result of the financial crisis. Information based on December 2008 data from comScore Marketer, a search intelligence tool, illustrated notable increases in searches for terms related to the deteriorating job market. For instance, searches using the term "unemployment" and "unemployment benefits" were up 206 percent and 247 percent, respectively. Also, terms relating to personal financial situations, including "mortgage" (up 72 percent to 7.8 million searches), "bankruptcy" (up 156 percent to 2.6 million searches), and "foreclosure" (up 67 percent to 1.4 million searches) also grew strongly. The data also showed Americans are trying to look for ways to save their money as well, as evidenced by the increase in the number of searches for "coupons" (up 161 percent to 19.9 million) and "discount" (up 26 percent to 7.9 million).
As the world changes and consumers become more heavily reliant on the online channel to keep pace, it is important for banks to provide them with more timely information so they can make smart financial decisions, Fiserv's Homer notes. "Anything a financial institution can do to help them get a better idea of their financial picture will build stronger relationships with individuals," he says.
Fiserv, for example is already enhancing its offerings to banks to include new services such as Web 2.0 tools to help increase the interactivity on banks' sites. "You want to provide information 'just in time' and it has to be contextual," Homer relates. "This is where financial institutions can provide value—data comes to consumers immediately without customers needing to search for it on their own. Consumers expect this now."
Homer says the information will be revisited periodically. A refresh of the study is due to be conducted in the spring to see if the trends continue.