Consumer attitudes to online current accounts

Introduction

Consumer attitudes toward using the online channel for current account transactions are constantly evolving. Ongoing technological advancement as well as demographic and lifestage complexities are driving these shifts in attitude. Current account providers must understand what consumers want from the online channel in order to maximize the advantages that it can bring to their business.

Scope

*Using global data from our FSCI survey this report identifies how consumer attitudes towards the online channel are changing.

*The report analyzes the causes of these shifts and identifies strategies that can be employed by providers to attract and retain online customers

*The report discusses the opportunities and threats faced by current account providers wanting to develop their online strategy

Highlights

The online channel is currently not being used to its maximum capability. Nearly all (97%) of those registered online for their current/checking account have used the channel to check their balance, but remarkably less one fifth had used it to order a new card, check book or paying in book.

Mobile banking is expected to take the same upwards trajectory as online banking and is expected to grow faster. Over half of consumers globally believe they are 'at least somewhat likely' to conduct banking through a mobile device in the next 12 months. Take-up is expected to be particularly prominent in emerging markets by reaching the unbanked.

Security concerns are the main deterrent to consumers' use of the online channel 48% those consumers who are not registered online agreed that it was a reason why they were not. With 30% of current account holders still not registered for online facilities, this a concern which banks must address.

Reasons to Purchase

*Access the results of Datamonitor's Global FS Consumer Insight survey, enabling you to understand shifting online attitudes and behaviours.

*Identify why these changes are occurring, and understand the future implications for the online channel.

*Identify actionable strategies that can help encourage consumers to engage with the online channel.

Report Highlights

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Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 2
Table of figures 3
Table of tables 4
Introduction 5
Financial Services Consumer Insight: dispelling the myths surrounding online behaviors 5
Understanding consumers' attitudes towards financial services is vital for providers 5
the future decoded 6
Trend: Global use of the internet has increased 6
Ongoing technological evolution has facilitated a steady increase in internet usage 9
Demographic changes and alterations in consumer behavior have increased consumer driven demand 9
Insight: Increased global internet usage has led to an increase in use of the online channel in the day-to-day management of current accounts 10
Take-up of online registration for current accounts is most popular in the West 11
The greatest proportion of online users are from Generation X, but take-up is becoming increasingly popular with older demographics 15
Many consumers still prefer branch banking 17
Insight: The online platform for current account transactions is not used to its full capability 18
The online channel is not being used for all the tasks available 19
Task preference shows some regional variation 20
Eurozone and US consumers check their balance more frequently than others 21
Trend: Mobile banking is gaining in popularity 22
Insight: Mobile banking will follow the same trajectory as online banking 24
Consumers are more comfortable performing simpler tasks through the mobile platform 26
Insight: Mobile banking appeal differs regionally 28
The mobile banking platform holds the most potential for emerging markets 29
Usage and adoption of mobile banking platforms varies considerably in the developing countries 31
Trend: The impact of Web 2.0 has provided banks with key opportunities to increase use of the online channel for financial services 32
Web 2.0 presents challenges as well as promises 32
Insight: Dynamic content is a key factor in engaging consumers 33
""MSN style"" chat functionality holds great customer service and cross-selling potential 33
Insight: Greatest use of social media is for customer service rather than sales and marketing 33
Trend: Security issues are the biggest threat to online current account banking 35
Insight: Security concerns are more prominent in emerging regions than in the Eurozone and US 37
Insight: Day-to-day convenience does not overcome security concerns 39
Consumers are as concerned about post-fraud customer service as they are about fraud prevention and detection measures 40
Perceived security is just as important as real security 40
Authentication processes are key to finding the balance between deterring consumers and quelling security concerns 41
Action points 44
Action: Improve the online platform and venture into mobile banking platforms 44
Experiment more boldly with mobile banking technology 45
Action point: Acquire and retain customers through more experimental use of Web 2.0 technology 45
Integrate the use of social media into customer service strategies 46
Aggressive advertising through social media channels should be avoided 47
Integrate more advanced technology into the in-branch experience 48
Action: Focus marketing on alleviating security concerns 50
Make the authentication process less cumbersome 50
Increase focus on reverse authentication 50
Educate users on security and technology 50
APPENDIX 53
Data tables 53
Methodology 64
Further reading 65
Ask the analyst 65
Datamonitor consulting 65
Disclaimer 65
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List of Tables
Table 1: Global internet penetration 53
Table 2: Product holdings among those who have used online banking in the last six months or bought financial services online 53
Table 3: Product holdings in Asia Pacific 54
Table 4: Product holdings in BRIC countries 54
Table 5: Product holdings in Eurozone and US 55
Table 6: Internet penetration and online registration for current/checking accounts by country 55
Table 7: Online registration for current/checking accounts by age 56
Table 8: Product holdings by age 56
Table 9: Online banking will never replace branch banking by country 57
Table 10: Tasks conducted through online banking over the last six months (of those who have a current account/checking account) 58
Table 11: Tasks conducted online over the last six months by region 58
Table 12: How often do you check your bank balance? 59
Table 13: Consumers who avoid opening their bank statements, by country and region 59
Table 14: Mobile telephone subscribers per 100 inhabitants 60
Table 15: Tasks conducted online by urban Indians 60
Table 16: Why not online banking? 61
Table 17: Security concerns by age 61
Table 18: Of those that have never used online banking or bought financial services online, security concerns and preference to deal in branch by country 62
Table 19: Of those that have done online banking in the last six months or bought financial services online, security concerns and preference for face to face contact by country 63
Table 20: Proportionate identity fraud data 63
List of Figures
Figure 1: Internet penetration has shown consistent growth since 2000 7
Figure 2: Internet penetration is highest in North America but the majority of internet users are in Asia 8
Figure 3: Current/checking accounts are the most popular product to be registered online for 11
Figure 4: Current account online registration is the most popular in all Eurozone countries and the US 13
Figure 5: The BRIC countries have the lowest levels of internet penetration but comparatively high online registration levels for current/checking accounts 14
Figure 6: Online registration is most popular for current accounts across all demographics 15
Figure 7: Most consumers registered to use their current/checking account online are between 25 and 64 years old 17
Figure 8: Half of the global population believes that online banking will never replace branch banking in their eyes 18
Figure 9: The simplest and most frequently required tasks are the most popular on the online platform 19
Figure 10: Task preference shows some regional variation 20
Figure 11: Eurozone and US consumers check their bank balances most frequently 21
Figure 12: Consumers who avoid opening their bank statements by region 22
Figure 13: Mobile phone subscriptions have steadily increased since 1997 23
Figure 14: The mobile banking platform has increased in sophistication with the introduction of 'smartphones' 24
Figure 15: Mobile banking is expected to follow the same trajectory as online banking 25
Figure 16: Checking balances is the most popular function on the mobile banking platform in India 27
Figure 17: Mobile bankers in the UK appear to use the service during 'dead' time as a convenience 29
Figure 18: Monitise predicts the most growth for mobile banking in the Asia Pacific region 30
Figure 19: Mobile banking was found to be most popular with lower income users in India 31
Figure 20: UBank has pioneered the use of social media in Australia 35
Figure 21: Security concerns are the biggest deterrent to registering online 36
Figure 22: Security concerns span all age groups 37
Figure 23: Security concerns are greater in emerging markets, whereas a preference for dealing with people in branch is more important in developed countries 38
Figure 24: Security concerns show less disparity among those who are registered online, but are still lower in developed countries 39
Figure 25: Only 12% of identity fraud occurs through the online channel 41
Figure 26: Sending OTPs to mobile phones as a second authentication factor is gaining popularity 42
Figure 27: Use of social media such as Twitter represents a key marketing opportunity 47
Figure 28: Barclays piloted Microsoft Surface technology in its concept branch, launched in December 2008 49
Figure 29: Natwest educates consumers on how best to prevent consumers exposing themselves to identity fraud 52
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