Online Banking Catches a Tidal Wave of Consumer Popularity

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The latest annual American Bankers Association survey of consumer banking preferences shows that the popularity of online banking is surging. The survey findings also revealed an apparent big drop in the popularity of ATMs and even a decline in the preferences for mobile banking.

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The August survey of more than 2,000 online consumers found that 62% of respondents named the online channel, meaning laptops or personal computers, as their preferred banking method versus only 36% in the 2010 survey. From 2007 through 2009, Internet banking scored in the low to mid-20s in popularity. Consumers now prefer online banking to all other channels combined.

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While online banking has long been popular with tech-oriented younger Americans, older consumers are beginning to embrace the channel in a big way. Some 57% of respondents aged 55 and up said online was their preferred banking method against only 20% who stated that preference last year.

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“These survey results hammer home the point that retail banking has changed for good,” ABA senior counsel Nessa Feddis said in a statement. “They tell us for the first time that customers of all age groups prefer the speed and convenience of conducting their banking transactions on the Internet to visiting their local branch or ATM. They also tell us that customers trust the accuracy and security of online banking.”

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A spokesperson for the Washington, D.C.-based ABA tells Digital Transactions News that online banking has now been around long enough that even those initially reluctant to try it are getting over their fears. “As with any new technology and financial transaction, people are cautious about being early adopters just because of the sensitivity involved with it,” she says.

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The popularity of visiting branches fell a bit, from 25% of respondents naming the branch as their preferred banking channel in 2010 to 20% this year. Six percent of respondents said the mail is their preferred way of banking versus 8% in 2010. Only 3% of respondents preferred the telephone, down from 6% last year.

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Perhaps the biggest surprise in the results is the plunge in ATMs’ popularity: only 8% of consumers in 2011 prefer the ATM channel versus 15% last year. The spokesperson did not have an immediate explanation, noting that the survey did not query consumers about the reasons for their preferences. One possible influencing factor is a change in methodology. This year is the first that the survey was done online; in 2010 the data were compiled from a random telephone survey of a smaller sample, about 1,000 adults. “The big tell-tale will be next year when we repeat it,” the spokesperson says.

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The spokesperson doesn’t put much stock in the finding that only 1% of respondents in 2011 stated that mobile devices such as cell phones and smart phones were their preferred banking channel, down drastically from 3% last year. She notes that the change is within the survey’s margin of error (plus or minus 2.2 percentage points at the 95% confidence level). “The number is so small, I think what it does tell us is that it’s not growing by leaps and bounds.” A safe conclusion might be that banks need to put more marketing dollars into mobile banking if they want it to grow.

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Market-research firm Ipsos Public Affairs conducted the 2011 survey, which the ABA started in 1998.