According to research carried out by Nielsen NetRatings, 3.7 million people visited an online banking Web site in the month of December 2002, an increase of 16.2 percent over the number of visitors in December 2001.
In terms of demographics, users of online banking services still tend to have higher-than-average levels of education and income, however the last twelve months has seen a shift away from the 20+ year old early adopters.
Marcus Judge, general manager for e-commerce for the Commonwealth Bank of Australia, says mainstream acceptance of banking services is leading to an older demographic logging on in increasing numbers.
"The pattern has been that the early adopters have been younger, white collar professionals, often working in IT," Judge said. "However, now we have over 2 million people registered with online banking, and as it becomes more mainstream it attracts a wider demographic."
Across the board, financial institutions are reporting seeing a surge in the number of users in the 50+ age group, whose needs they have to balance with more experienced users who are after increasing functionality.
Patrick Kelly, marketing manager for direct financial services at HSBC, says many of the users attracted by the online service have been online for more than 5 years, and are demanding high services levels.
"In terms of the service level requirement we are seeing a lot of fragmentation in the industry," Kelly explains. "Customers choose their bank based on its product in the first instance, but people are expecting improvements in the online service levels year in, year out."
So far as the banks are concerned, if they want their customers to become regular users of the online service, they need to offer a service the customers are comfortable using. And it would seem financial institutions generally are not doing at all badly in the usability stakes.
Measuring up the service
Dr Adir Shiffman, founding director of Melbourne based Web site assessors Global Reviews, describes online banking as "the Internet's trailblazing industry" in terms of customer experience, however he says there is still a long way to go when it comes to e-mail-based support.
"The online customer experience provided by banks is better than virtually any other industry," Shiffman says. "However, unfortunately offline support provided by e-mail operators is still not up to scratch."
The high service level may well have to do with the level of competition present in the industry, with many financial institutions having established their service in the late 90s, and continuously improved on the functionality ever since.
According to Shiffman, the past 12 months have been characterised by three key features which have lead to increased competition and service levels generally.
"Rather than only providing transactional banking facilities online, most banks now offer a range of services including loans, savings, managed funds, etc," Shiffman says. "Smaller financial institutions have moved online whereas once only the larger banks operated in this space and Internet-only, or at least Internet-focused -products have emerged. Some of the smaller players now actually offer far more user-friendly services than their larger competitors."
One company which is making its presence felt is the Community First Credit Union, which launched an attractive online savings offering by the name of Easy Saver, in 2002. Easy Saver has yet to establish itself among the big players, and while it doesn't appear in the Nielsen NetRatings' top fifteen online banking sites in terms of unique visitors, it did well in most recent Global Reviews' survey of online savings packages.
"Without the Internet, these products simply could not exist. Whilst they were in the marketplace over 12 months ago, the past year has seen a large increase in the number of such products," Shiffman says.
Describing the online offering as a "natural progression", Kerry McMorrow, general manager of marketing for Easy Street Financial Services, says the decision to move a service online would ensure the credit union was offering existing customers a range of options, as well as attracting new customers.
"We need to ensure we are doing all we can for our members, and maintain high visibility in the market place so as to attract the attention of other organisations, as well as retaining our own customers," McMorrow said.
However, not all credit unions are recent players in the online banking arena. Launched in 1997, the Australian National Credit Union's online banking service is amongst the oldest service offered in Australia.
"The site has been relaunched and regularly updated since day one," says Andrew Hubbard, head of business systems for Australian National Credit Union. "There seems to be more people logging on as the functionality increases, but it also has to do with a reduction in channels of access."
According to Hubbard, online credit unions are benefiting from bank branch closures and disgruntled bank customers seeking alternatives. As a result the online service focuses on customer service.
"The majority of people who log onto the Internet seem to do so for the convenience factor, we try to extend the functionality as quickly as possible," Hubbard says. "Over the next year we expect to see the patterns of actually doing business starting to change in terms of the way people are interacting with us, and we'll continue to integrate those changes into the Web site and back end."
Unfortunately, the reviews only give the features of the banking sites. I have an HSBC, Commonwealth Bank, ANZ and UK based First Direct bank account.
I can say for a fact that the HSBC online banking facility is very poor in comparison to the others with possibly the worst most cryptic transaction list of all the institutions I know of! Looking at the transaction list is totally cryptic and users have to click on every transaction to see what it is - even an ATM withdrawal!!! Not only that but HSBC is extremely slow. However, their online savings account is excellent and offers me the most attractive interest rates.
My favourite is Commonwealth Bank Netbank for it's simplicity and speed. ANZ is also good but has far more clutter on the screen.