There's plenty of room for expansion in the Web banking arena, according to a recent consumer research study by Gomez, Inc. The study, which broke consumers into groups according to their propensity to use online banking services, found that the number of "active Web bankers"-defined as customers who are shopping for financial products online, prefer the Internet to other channels for routine customer care and are interested in new online services that banks are rolling out-has shot up from 6.1 million at year-end 1999 to 13.6 million today.
"Given the attitudes of consumers banking online, we've found there is definitely opportunity to increase profits and lower the costs of serving online banking customers," said Chris Musto, vice president of research at Gomez.
The good news for banks is that active Web bankers generally represent wealthy, satisfied customers who are interested in learning more about what their bank can provide in terms of financial products and online functionality. To boost the profitability of these customers, Gomez recommends-based on the research results-a focus on cross-selling. "We've found that consumers are ready to do more business with their bank," Musto said. "They're ready to apply for new products online."
The report found that among online bankers, there's a one in nine chance that they're going to apply for a credit card in the next six months. "If those users are going to apply for a credit card, there's a better than two-thirds chance that they are going to apply for it online, or at least that's what they plan to do," Musto said. "Given that they're coming to a bank's Web site on a regular basis, there's room therefore for a bank to try to market its credit card product." And that's a big area for growth. Retail banks, Musto noted, haven't been all that successful at getting their consumers to use their credit card products.
The pool of Web banking adopters is likely to increase as well. Gomez research indicates that another 16.3 million people who are not currently power users share the same demographic profile as active Web bankers and are likely to become active in the future. Some of these consumers will be driven to the Web channel by innovations, Musto said. "There is room to invest in the future if you understand what active Web bankers are interested in next."
Banks would be well-advised to invest in aggregation services to attract Web banking power users. The Gomez study showed 64.4% of online bankers expressing interest in bank-sponsored aggregation services linked to their Web banking offerings. But aggregation isn't the killer app that's going to drive people to either wireless or Web banking, the study indicated.
Number of Active Web Bankers
1999: 6.1 million
2001: 13.6 million
Source: Gomez, Inc.