ATLANTA — Internet-based financial institutions have nearly doubled their penetration in checking accounts over the past two years, according to new research released by Synergistics Research Corp.
Its study, Competing for Checking Relationships, shows that nearly nearly four in 10 Internet households with checking accounts currently have a relationship with an Internet-based financial institution, a significant increase from the firm's previous study in 2007.
"Survey findings suggest that Internet-based financial institutions have achieved significant success in pursuing a model that, rather than displacing current primary relationships, seeks to capture a portion of customers' core deposits that would be going into savings, money market accounts, or CDs at a traditional branch-based institution," said Gene M. Driskill, COO of Synergystics, "Internet-based providers are now faced with a situation of having 'picked all the low hanging fruit' and must add further value to their product offerings in order to continue expanding their market. These providers do, however, have an ongoing competitive advantage in not having to support large branch networks or the transaction costs associated with a huge volume of checking transactions.
