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Online banking has yet to live up to expectations.
The eBanking Report gives you perspective on the online banking market.
Neighborhood banks and local branches are still alive and well. Pure-play internet banks, on the other hand, are looking more and more like failed dreams.
eBanking tells you what you need to know about
The eBanking Report also provides insightful analyses, pointing out lessons from the past and suggesting ways for banks to succeed online.
This report is written by an analyst with investment and banking experience. It is designed for anyone involved in off- or online banking, including startup online or mobile banking ventures, traditional banks, investment firms, consultants, and credit unions.
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| I Methodology | 7 |
| II Prologue | 9 |
| A. The Net Worth of Online Banking | 10 |
| B. All Aboard? | 13 |
| C. The Derailing of Net-Only Banking | 18 |
| D. Affluence Does Not Equal Profitability | 20 |
| E. Dropping the Other Shoe | 21 |
| F. Not Only Net-Only | 25 |
| G. The Train Becomes A Roller Coaster | 27 |
| III Online Banking in the US | 31 |
| A. Market Size & Growth | 32 |
| B. Young, Affluent & Unprofitable | 38 |
| C. Banks Don't Know How to Sell | 44 |
| D. Technology Expenditures | 47 |
| E. Revenues | 54 |
| IV Online Banking Across The Ponds | 59 |
| A. Western Europe | 60 |
| B. Lessons From Scandinavia | 68 |
| C. Asia and the Pacific Rim | 71 |
| V Mobile Banking | 75 |
| A. BCDe…Skip a Few…m | 76 |
| B. Having No Standards | 81 |
| C. Sleeping With The Enemy | 83 |
| D. We've Heard It All Before | 84 |
| VI EBPP: Electronic Bill Presentment & Payment | 87 |
| A. The Most Unromantic Killer App | 88 |
| B. Do Consumers Want EBPP? | 90 |
| C. The Biller's Perspective | 96 |
| D. Market Size & Growth | 104 |
| E. Expenditures & Revenues | 107 |
| F. EBPP Around The World | 110 |
| G. Postscript | 113 |
| VII Appendix | 115 |
| Index of Charts | 116 |
| Concluding Remarks | 122 |
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| Section II: Prologue |
| A. |
| 1. percent of Community Banks Offering or Planning to Offer Online Banking Services |
| 2. percent of Community Banks (with Assets Greater than $100 Million) Offering Online Banking Services |
| 3. Response by Community Banks: The Internet Levels the Competitive Playing Field |
| 4. Response by Community Banks: The Internet Will Attract New Customers |
| 5. Response by Community Banks: Existing Customers Want to Bank Online |
| B. |
| 1. US Households Banking Online as a percent of All Households, 1999 (Millions) |
| 2. Retail Depository Banks Offering Websites with “Significant” Transactional Capabilities, 2000 |
| 3. Online Banking Consumer Growth and Attrition, July 1998-July 1999 (Millions) |
| 4. Analysis of Defection, Usage & Non-usage of Online Banking Using Gomez Advisors’ Numbers, Millions |
| 5. Consumer Defection From and Dissatisfaction With Online Banking |
| 6. Declining Growth Rates of PC Banking, 1994-2000 |
| 7. Complaints of 1,000 Active Internet Users About Bank Websites, by percent |
| 8. Consumers’ Reasons for Dismissing Online Banking |
| C. |
| 1. Net-Only Banking Households as a percent of Online Banking Households in the US, Year-end 1999 |
| 2. Comparative Estimate: Number of Net-Only Banking HH’s and as a percent of All Online Banking Households, 1999 |
| D. |
| 1. Average Number of Times an Online Banking Customer Uses a Bank Service per Month |
| E. |
| 1. Deposits of Net-Only Banks and as a percent of All FDIC-Insured Institutions’ Deposits, 1999 (Billions) |
| 2. Retail Banking Transactions by Channel, 1994 & 1999 |
| 3. Comparison of E&Y’s 1998 & 1999 Surveys: Predicted percent of Retail Transactions by Channel in 2001 & 2002 |
| 4. Comparison of E&Y’s 1998 & 1999 Surveys: Priorities for Technology Investment in 2001 & 2002 |
| G. |
| 1. percent of Household Using Each Type of Financial Services Institution |
| 2. Consumers’ Preference for Online Bill Presentment |
| 3. percent of Bank Customers More Confident in Banks than Other Financial Institutions, 1995 & 1999 |
| Section III: Online Banking in the US |
| A. |
| 1. US Households Banking Online as a percent of Online Households and All Households, 1999-2003 (Millions) |
| 2. Comparative Estimates: Number of Online Banking Households, 1999 (Millions) |
| 3. Comparative Estimates: Number of Online Banking Households, 2003 (Millions) |
| 4. U.S. Bancorp Piper Jaffray: Millions of Households Banking Online, 1999-2003 |
| 5. Jupiter Communications: Millions of Households Banking Online, 1999-2003 |
| 6. Dataquest: Millions of Households Banking Online, 1999-2003 |
| 7. IDC: Millions of Households Banking Online, 1999-2003 |
| 8. Comparative Estimates: Millions of Online Banking Households, 1999-2003 |
| 9. Online Banking Report: 3 Projections of US Online Banking Household Growth, 1999-2001 (Millions) |
| 10. PSI Global: percentage of Online Banking Households Versus All US Households, 1999 & 2002 (Millions) |
| 11. Gomez Advisors: Online Banking Consumers, 1999 & 2003 (Millions)3 |
| 12. Comparative Estimates: Households Using Online Banking and Households Online, 2000 (Millions) |
| B. |
| 1. Median Incomes of Early Online Banking Adapters Compared to Median Income of All US Households |
| 2. American Banker Survey: Incomes of Online Bankers |
| 3. American Banker Survey: Subscription to an Online Service, by Income |
| 4. American Banker Survey: Usage of the Internet, by Income |
| 5. American Banker Survey: Usage of eCommerce*, by Income |
| 6. American Banker Survey: Internet Users Somewhat Interested in Online Banking, by Income |
| 7. American Banker Survey: Internet Users Very Interested in Online Banking, by Income |
| 8. American Banker Survey: Subscription to an Online Service, by Age |
| 9. American Banker Survey: Usage of the Internet, by Age |
| 10. American Banker Survey: Usage of eCommerce*, by Age |
| 11. American Banker Survey: Internet Users Somewhat Interested in Onlline Banking, by Age |
| 12. American Banker Survey: Internet Users Very Interested in Online Banking, by Age |
| 13. North American Financial Services Institutions’ Customer Segmentation Strategies by Main Feature |
| 14. FSI Survey: What Area Is Most Responsible For Profit and Loss? |
| 15. percentages of Profitable and Unprofitable Banking Customers, Online & Offline |
| 16. Financial Services Institution Survey: percent of Revenues Generated by Top 20 percent of Customers |
| C. |
| 1. eCommerce Goals of North American Financial Services Institutions |
| 2. FSI Survey: percent Dissatisfied and Satisfied With eCommerce as a Tool to Gather Customer Information |
| 3. Least Integrated Channels With Customer Relationship Management (CRM) Solutions |
| 4. Bank IT Managers Survey: Effectiveness of Their Banks’ Websites, by percentage of Positive Responses |
| 5. Banker Survey: CRM Activities at Bank Websites |
| 6. Banker Survey: The Biggest Obstacle to Finding a Profitable Internet Strategy |
| D. |
| 1. percentage of Banks, Thrifts & Credit Unions Offering Online Capabilities, 2001-2003 |
| 2. Global IT Spending, by Industry Segment, 1999 & 2000 (Billions) |
| 3. North American Portion of Global IT Spending by Financial Institutions, 1999 & 2000 (Billions) |
| 4. percent of North American FSI’s IT Spending on Strategic Initiatives and Banks’ percent of Strategic Spending, 2000 |
| 5. North American Banks eBanking Software Expenditures, 2000-2004 (Billions) |
| 6. percent of IT Budget Spent on eCommerce, 1999 & 2002 |
| 7. Comparison of North American Financial Services Industry’s Spending on CRM Technology, 1999 |
| 8. FSI Survey: Change in Customer Profitability Since Implementing CRM Technologies, 1999 |
| 9. Banker Survey: First or Second Driver of Bank Profitability |
| 10. Cost of Branch Transaction Versus Same Transaction on the Internet |
| 11. Cost for Delivery Bank Services, by Select Channels |
| 12. percentage of Consumer Debt Distributed by Lending Institution, 1995 & 1998 |
| E. |
| 1. Revenues from Online Banking with Households Banking Online, 1999-2003 (Millions) |
| 2. Revenues from Online Banking with Households Banking Online, 1999-2003 (Millions) |
| 3. Revenues with Number of Online Banking Households and Accounts, 1999-2003 (Millions) |
| 4. Online Bank Accounts Charged and Not Charged Fees, 1999-2003 (Millions) |
| 5. Comparative Estimates: Online Banking Revenues, 1999-2003 (Millions) |
| 6. percent of Customers Who Would Buy Insurance From a Particular Financial Institution |
| 7. Banks As Competitors in the Insurance Industry, Scale of 1 to 5 (Strong Disagreement to Strong Agreement) |
| Section IV: Online Banking Across the Ponds |
| A. |
| 1. Western Europe: Millions of Online Banking Users and as a percentage of Internet Users*, 1999-2003 (Millions) |
| 2. European Online Bankers, 1999 & 2004 (Millions) |
| 3. European iTV Banking Customers, 1999-2004 |
| 4. Online Banking Account Penetration Among the European Online Population, 1999-2003 (Millions) |
| 5. Germany: Online Banking Penetration Amongst Online Users, 1999-2003 ( percent) |
| 6. Sweden: Online Banking Penetration Amongst Online Users, 1999-2003 ( percent) |
| 7. United Kingdom: Online Banking Penetration Amongst Online Users, 1999-2003 ( percent) |
| 8. France: Online Banking Penetration Amongst Online Users, 1999-2003 ( percent) |
| 9. Online Banking Users in Europe with Breakout of Users in the UK, 2004 (Millions) |
| 10. Online Banking Users in Europe with Breakout of Users in Germany, 2004 (Millions) |
| 11. Number of Internet Banking Clients as a percentage of All Retail Customers, by Select Countries, 1999 |
| 12. United Kingdom: Millions of Online Banking Users, 1999 & 2004 |
| 13. Leading European Banks* Offering Online Services with Banks’ Customer Growth Forecast, as of mid-1999 |
| 14. percent of IT Budgets Spent on eCommerce Initiatives by European Financial Institutions, 1999 & 2002 |
| 15. European eBanking Solution Expenditures by Country, 1999 (Millions) |
| 16. European eBanking Solution Expenditures by Country, 2004 (Millions) |
| 17. Advantages of Online Banking in the United Kingdom |
| 18. Popular Uses of Online Banking in the United Kingdom |
| 19. Interest in Devices Other Than The Net for Banking |
| B. |
| 1. SwedBank: Comparison of Average Number of Product Relationships Between Online and Offline Customers |
| 2. MeritaNordbanken: percent of Transactions Handled Through Their Internet Channel, November 1999 |
| 3. Banking Value Potential for Scandinavian Banks, 2001 Estimates |
| 4. Lessons from Scandinavian Banks |
| C. |
| 1. Survey of Asian CEO’s: Sectors Most Affected by eBusiness Over the Next 2 Years |
| 2. Online Banking Services Currently Offered by 5 Select Banks in Asia |
| Section V: Mobile Banking |
| A. |
| 1. Worldwide Cellular Users Accessing Internet Data Sources, 1999-2000 (Millions) |
| 2. Cellular Phone Subscribers Worldwide, 2000-2004 (Millions) |
| 3. Millions of Cellular Phones in Place Worldwide by Region, 2000 & 2003 (Millions) |
| 4. Cellular Phone Subscribers in Asia-Pacific, 1998 |
| 5. Penetration of Internet-Enabled Handheld Wireless Devices in Use: Japan vs.Rest of World, 1999 (Millions) |
| 6. Cellular Phone Penetration Rates in Top 5 Western European Countries, 1999 (Millions) |
| 7. European WAP-enabled Mobile Phone Banking Customers, 2000-2004 |
| 8. Analysis of Datamonitor’s Online Banking Customers by Access Device , 2004 (Millions) |
| B. |
| 1. percent of Major Financial Institutions Offering Mobile Services in North America and Europe, 2003 |
| 2. percentage of Cellular Phone Subscribers by Technology Used, 1999 (Millions) |
| 3. Most Popular Functions of Bank of Montreal’s Veev Wireless Banking Services |
| 4. Worldwide IT Spending on Wireless Financial Services*, 1999 & 2003 (Millions) |
| C. |
| 1. Recent Deals And Deals Under Consideration between European Banks and Telecommunication Providers |
| D. |
| 1. European mCommerce Revenues, 2003 (Billions*) |
| Section VI: EBPP: Electronic Bill Presentment & Payment |
| A. |
| 1. Online Bill Payment Revenues, 1999 & 2002 (Millions) |
| B. |
| 1. A Biller’s Cost For Establishing Arrangements with an EBPP Provider (Thousands) |
| 2. Electronic Media Used For Consumer Bill Payment |
| 3. Different Methods for How Consumers Pay Bills |
| 4. Consumer Preferences for Paying Bills, 1999-2003 |
| 5. Consumer Use of Checks For Bill Payment by Select Expenses, 1990 & 1999 |
| 6. Why Bank Customers Don’t Pay Their Bills Online |
| 7. How Much Are Consumers Willing to Pay For EBPP? |
| 8. The Cost of Paying Bills: EBPP vs. US Postal Service |
| 9. Households’ Preference For Receiving and Paying Bills Within the Next 3 Years |
| 10. Consumer Beliefs About the Security of EBPP |
| 11. Reliability of Receiving and Paying Bills: EBPP vs. USPS |
| 12. percent of Consumers Who Like The Convenience of Paying by Check |
| 13. percent of Consumers Who Like The Privacy of Paying by Check |
| 14. Consumer Preference For Receiving Bills & Financial Statements: Regular Mail vs. eMail |
| C. |
| 1. Biller’s Costs of Paper Billing vs. EBPP per Bill |
| 2. Costs of Telephone Billing vs. EBPP |
| 3. percentage of Bills Being Received Electronically, 2000 & 2005 |
| 4. percent of Telephone Bills Being Delivered & Being Paid Electronically, 2000 |
| 5. percent of Telephone Bills Being Delivered & Being Paid Electronically, 2005 |
| 6. Average Monthly Dollar Volume of Bills Sent by Top US Billers (Millions) |
| 7. The 5 Market Segments Accounting For 70 percent of All Bills & Statements Sent |
| 8. ePayments as a percentage of All Payments |
| 9. Preference For Where Billers Want Their Online Bills Presented |
| 10. EBPP Interest Level, by Revenue Size of Business (Millions) |
| 11. percent of Cash Management Customers Asking Banks About Bill Presentment Services |
| 12. Type of Bill Statements by Leading Biller Industries |
| D. |
| 1. US Online Households Using EBPP Services and Number of Bills Paid Annually Through EBPP 1999-2003 (Millions) |
| 2. Comparative Estimates: US Households Using EBPP, 2003 (Millions) |
| 3. percentage of US Households Not Online, Online, Banking Online & Paying Bills Online, 1999 |
| 4. Number of US Households Paying Bills Online, 1999 & 2003 (Millions) |
| 5. Number of Bills Paid Online vs. Offline, 1999 (Billions) |
| 6. Electronic Bill Presentments, 1999-2003 (Billions) |
| 7. Electronic Bill Payments, 1999-2003 (Billions) |
| E. |
| 1. Strategic IT Spending for ePayments by Region, 2000 (Billions) |
| 2. Strategic IT Spending for ePayments by Institution, 2000 (Billions) |
| 3. Expenditures of North American Firms on Electronic Presentment and EBPP, 2000-2005 (Billions) |
| 4. Revenue Growth of EBPP Industry, 1999 & 2004 (Millions) |
| 5. EBPP Revenues, 1999-2001 (Millions) |
| 6. B2B EBPP Revenues, 1999 & 2003 (Billions) |
| F. |
| 1. Electronic Presentments: Worldwide Compared to North America, 1999-2003 (Billions) |
| 2. Electronic Bill Payments: Worldwide Compared to North America, 1999-2003 (Billions) |
| 3. B2C and B2B EBPP in Europe, 2005 (Billions) |
| 4. European Financial Institutions’ EBPP Expenditures, 1999-2003 (Millions) |
| 5. Volume of EBPP in Asia-Pacific, 2005 (Billions) |
| G. |
| 1. Use of Customer Service Channels by Banks, 2002 |
Text © 2001 eMarketer
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