On-Line Banking: Older Customers Embrace PCs, Defying Expectations

PC banking figures from a handful of banks provide a glimpse into the future of on-line financial services.

NationsBank Corp. says 425,000 customers have signed up for either its Internet or dial-up PC banking services, and Wells Fargo & Co. reportedly has 250,000 on-line banking customers.

But smaller institutions also are finding willing consumers-many from demographic groups not expected to be avid PC banking users.

For example, Republic Bank of St. Petersburg, Fla., which has $1.5 billion of assets, said 6.6% of its customers have signed up for its Internet banking service since it began offering it in May.

This adoption rate is somewhat surprising, because 54% of the bank's customers are part of a 45-and-older demographic that is not expected to accept on-line services as readily as younger groups.

David P. Beach, electronic banking manager at Republic, said older users tend to be concerned about security and are sometimes daunted by the technology involved in remote banking. Because many are retirees splitting time between homes in different states, convenience often overrides fear or discomfort.

Mr. Beach said the bank's average on-line customer is 43 years old, receives one direct deposit per month, uses a bank-issued debit card twice a week, writes 17 paper checks per month, and makes one electronic payment per month.

Roughly 62% of on-line customers use their accounts more than once a month, and more than one-third of those signing up for Republic's service are new customers.

The emergence of services like WebTV, which let people surf the Internet through a television, has helped Republic sell its service, Mr. Beach said.

The adoption rate at Republic has far exceeded expectations. The bank had hoped to have 2% of customers using on-line services by the end of the year. The 6.6% it has signed up covers only through September.

Other banks are experiencing similar success.

Huntington Bancshares-which, like Republic, runs an Internet-based service with software from Security First Technologies of Atlanta-is on pace to open 100,000 on-line checking and bill payment accounts by the end of the year.

The bank's largest group of users is in the 25 to 35 demographic, but it has been surprised by the adoption rates among older people.

"The over-50 age group was a nice surprise," said Chet Thompson, senior vice president and general manager of electronic commerce at Huntington, based in Columbus, Ohio. "These are folks who have achieved economic success and are a very attractive segment."

About one-quarter of the bank's Internet customers make an on-line transaction each day, and 80% do so at least once a week, Mr. Thompson said. He added that 20% of users were not customers of Huntington before signing on for on-line banking.

Huntington has offered transactional services since June 1996, but its Web site was redesigned and relaunched last month. Mr. Thompson said the new site "offers superior navigation and significantly more information about the bank-in particular information about financial planning and starting a business."

Another on-line early adopter, First National Bank and Trust of Pipestone, Minn., has signed up 2.5% of its customers for Internet banking.

The $149 million-asset bank launched its transaction Web site in January, but has been promoting its on-line services for only a few months. Two to three people sign up each week-most in the 25 to 40 demographic.

"We expect 6% to 8% of our customers to use it within three years, and we're on track with that," said Todd Morgan, executive vice president at First National. "Home banking is just catching on."

He said the Internet service, which is based on software from Bogart, Ga.-based nFront, has generated $2.5 million of deposits from new customers.

Most customers use the service to check balances and make transfers. The bank provides links to personal financial management software packages such as Intuit Inc.'s Quicken and Microsoft Corp.'s Money.

Mr. Morgan said the bank plans to add bill payment services in a few months, which he expects to "attract more Internet customers to our site for our service."

Atlanta Internet Bank-which aims to do the vast majority of its business on-line, using Edify Corp.'s Electronic Banking System - has signed 4,000 customers since the beginning of the year and expects to have 20,000 by the end of 1998.

The bank's average customer is 40 years old, has net income between $50,000 and $75,000, maintains a balance of $15,000, and does eight on-line bill payments per month.

"There are signs that Internet banking is about to take off," said Tom Cable, chief technology officer of Atlanta Internet Bank. "Most major banks are now offering PC or an on-line banking product and customers are becoming more comfortable using this medium."

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