For the first time in banking history, more bank customer prefer doing their business online than any other way, according to an American Bankers Association survey, with 25 percent of bank customers engaging in the practice.
The use of ATMs is dropping among all age groups, while for those 55 and under, online banking is the major way consumers do their banking.
This practice of online banking will continue to grow, but it doesn’t mean all other banking transactions will fall by the wayside, as people will use the most convenient method of interacting with their bank accounts based on where they’re at at the time, and of course using cell phones to do banking is just starting to gain a foothold as one of the means of doing banking, and that will also grow significantly over the next several years.
This has been a boon for regular banks with a physical presence as well, with the convenience of online banking attracting strong deposit growth. For example, the online banking arm of HSBC Bank USA – HSBC Direct – has enjoyed an 18 percent surge in deposits year-over-year, now standing at about $15.5 billion.
While some of this growth also comes from products that target the need for consumers to have flexibility in their accounts in order to have immediate access to their money in difficult times, while enjoying a decent interest rate, it’s the easy and fast way to check out the higher-yielding savings accounts on the Internet, which draws consumers in the first place.
Most banks understand that it’s interest rates that attract consumers initially, but it’s products that will keep them there for the long haul, as there’s a strong number of consumers who move their money based upon the best available interest rates, so adding other products to keep them in the fold is one way to gain long-term customers via the Internet.
Along with flexible products targeted to our existing economic conditions, other things like fast applications for loans that can be completed in a matter of a few minutes online with some banks.
Among some of the top online direct banks in the U.S. are Ally, Discover (NYSE: DFS), GMAC Financial Services (NYSE: GJM), HSBC and ING Direct (NYSE:ING).