Bank of America Corp. is expected to announce Monday that it has exceeded two million on-line retail banking customers, the first institution to make such a claim.

Though information about on-line customers is sketchy, Bank of America is widely believed to be in front of the competition in number of Internet accounts: Last June it had 1.3 million, Wells Fargo & Co. was second with 930,000, and Citigroup Inc. was third with 750,000, according to an American Banker analysis of company reports.

Jeanine R. Brown, executive vice president and head of interactive banking at Charlotte, N.C.-based Bank of America, said growth is exceeding projections. She attributed that growth largely to word-of-mouth referrals in branches and said the company has not specifically marketed its Web offerings.

"A year ago, if you asked me if I thought we would be at this point, I would have been skeptical," Ms. Brown said, "but it is phenomenal how fast this continues to grow."

In January, the most recent month for which data are available, the $633 billion-asset company signed up 125,000 customers. Ms. Brown said she hopes to have three million Web customers by yearend.

"I think over time it will grow to be as ubiquitous as the check card," she said. She added that Bank of America has considered giving all customers access to Web banking without having to sign up.

In addition to more than two million retail customers, Bank of America has 1,650 commercial and corporate clients doing business on the Internet.

Ms. Brown said the advantages of offering on-line banking are becoming more apparent to Bank of America. The company has found that its typical Web customer is more profitable than a traditional client and less apt to switch banks on a whim.

"It appears that once you have gone through the effort of signing up for the Internet, you tend to stick with the institution," Ms. Brown said. "Since most of the cost in retail banking is acquiring new customers, there can be big cost savings and revenue gains if you can lower the churn rate."

Retention rates are even higher among customers who use electronic bill payment, she added.

Ms. Brown said she expects that cost savings will continue increasing with the number of services the bank offers on-line. Retail customers can apply on-line for almost any product, including checking and savings accounts, certificates of deposit, mortgages, credit and debt cards, and auto loans. They can access account information, transfer funds, and pay bills on-line.

The company recently added the ability to schedule transactions. That feature caters to customers who travel frequently and might not have access to a branch or a computer between the time a check is deposited and a bill is due. In response to customer demand, it is also adding more transaction details to on-line statements.

"We want to replicate more of the things that are done at the branch and through our call center," Ms. Brown said. "There are cost savings down the road as we continue to add more features to the product."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.