Four out of five people responding to a survey on the Internet said they would deposit money in an out-of-town financial institution that paid higher yields than their local bank.
The survey was answered by 525 Internet subscribers at the Web site of the Florida-based publishing company Bank Rate Monitor Inc. Respondents were offered free subscriptions in exchange for completing the questionnaire.
The study indicated that most consumers are not bound by allegiance to their local banks, said Linda M. Green, managing editor of the weekly publication that covers interest rate trends.
"The Internet is going to make banking much more competitive," said Ms. Green. "Since the overhead is less, banks can give the customer a better deal. They will have to be on-line, and they will have to be competitive on-line."
Bank Rate Monitor's survey came on the heels of another study by the accounting and consulting firm Grant Thornton showing six out of 10 banks with Web sites had brought in new customers over the Internet; 34% said they had sold products or services on that medium. But two-thirds of the respondents were concerned about the security of on-line transactions.
Although Bank Rate Monitor's results were skewed toward those already inclined to use the Internet, its survey appears to demonstrate that bank customers are willing to switch banking relationships for a better deal elsewhere.
Ms. Green said bankers appear more resistant to the Internet than their customers are. "That could be a problem for the institutions if they don't realize that customers like the idea and will soon demand banking on-line," she said.
Asked whether they would go to an out-of-town institution for a higher yield, 80% of survey respondents said "yes" and 3% "no." Seventeen percent were undecided.
In addition, 96% said they would use the Internet to help make a mortgage decision, 95% would do so for an auto loan, 94% for a personal loan, 92% for a credit card, and 87% for a home equity product.
