Online banking already is successful, but credit unions must learn the profile of the next wave of adopters to keep up with other financial institutions.
That was the message from Paul Jamieson, president and director of analytics for FiSite Research, a financial services research company. Jamieson delivered one of the keynote addresses on the second day of the Digital Insight National Conference here.
"People keep asking me when online banking is going to 'take off,'" said Jamieson. "It already has."
The number of registered online banking end users has climbed steadily from 1999 to present, he noted, pointing out that online banking has outpaced online travel and purchasing since 2000.
Yet there still is room for improvement-the United States trails several other countries in the percentage of the population that is active users of online banking services. Jamieson said about one-third of U.S. adults, or 37 million people, have registered.
"The 'early adopters' came for the new technology. The 'fast followers' came for the convenience," he said. "The rest will come for ease of use."
According to Jamieson, time is the new currency for consumers. He said they want products, services and brands that save time and are convenient.
The second commodity universally desired by consumers in simplicity, he continued. "People's lives are complicated. They like simplicity. Saving time, simplicity and originality will drive consumer adoption."
In the online space, people need privacy, safety and ease of use. Jamieson said "convenience" is the most-cited factor for banking online.
Segments of Opportunity
There is significant opportunity across the board in the U.S., because no age group dramatically leads online banking usage. The youngest users are the least satisfied with online banking-simply because they have such high expectations.
"These people say 'ho hum' to the things online banking can do. They expect it," Jamieson said. "This is the next, next generation. If you are not online, you will sacrifice this generation-and probably your future."
The next two age groups-"young" and "middle age" in FiSite parlance-can be "gently nudged" online through communication, Jamieson said.
But the most underrated group, he said, is "seniors." It is a big group and getting bigger as the Baby Boomer generation ages.
"These are the most satisfied online banking end-users," said Jamieson. "To them, it is 'magic' being able to check balances or pay bills at home, on their computer, without having to drive to their branch."
The people in the senior age bracket have a high concentration of wealth and are looking for conservative, low-risk investments-two factors that make them excellent potential members for credit unions. For many seniors, their mobility is declining due to waning eyesight or other factors that limit driving, but they have a strong desire to remain independent.
These people are not actively looking for online banking, so financial institutions must find them. "Train them, show them the ease of use, the safety and accessibility," Jamieson said. "It will be worth it."
If someone is not already using online banking, then he or she might not be looking for a new way to bank. However, these people would appreciate the convenience and time savings, if a financial institution had the chance to show them. "These people say they have no compelling reason to bank online," said Jamieson. "This is a communication issue. They have to know about it."
The answer, he said, is to promote the benefits. When people visit your website, tell them Internet banking is easy and convenient.
The second reason consumers say they don't want to bank online is because they perceive it is not safe. Jamieson urged credit unions to emphasize to members the reasons their online transactions are secure. That concern extends to fears their privacy will be compromised. "Financial institutions must be sensitive to this," he said. "Tell your members their privacy is something that will be protected."
Because of these fears and objections, it is necessary to motivate consumers in order to produce "online magic," according to Jamieson. To do this, he recommends lightening up the "clutter" on a credit union's home page, concentrating on communicating features, and emphasizing the benefits of online banking.
"On top of all this, you also need to make the technology transparent," he said. "Develop a customer culture, and do not become technology driven."