GartnerGroup's Dataquest Forecasts Three-Fold Increase in Online Banking Over Next Five Years
Stamford, Conn., August 10, 1999—The number of U.S. households using PC banking applications is projected to more than triple in the next five years, from 7 million at the end of 1998 to more than 24.2 million by 2004, according to Dataquest Inc., a unit of Gartner Group, Inc. (NYSE). Approximately 57 percent of these-about 13.7 million households-will be paying bills online in 2004.
"To promote growth in these online activities, banks and other financial institutions face two primary challenges," said George Barto, senior industry analyst for Dataquest's The Interactive Home: Financial Services U.S. program. "They need to widen the overall appeal of online banking and overcome consumer unease about control of the online bill paying process."
Online banking households are not typical of the potential mass market; they differ not only in terms of household composition and income level, but in terms of bill payment habits as well, Mr. Barto said. Dataquest research shows that current consumers who bank online are largely those whose time is at a premium-well educated households with high, dual incomes and children.
"Anytime access" was cited by 86 percent of current online banking consumers as the prime motivators for establishing an online banking account. Moreover, among online households, the male head of household typically pays the monthly bills. Among households in general, the female head of household is usually the monthly bill-payer.
If banks are to widen the appeal of online services and migrate them into more mainstream households, they must demystify the entire online process while allaying fears of paying bills online. Consumer behavior is difficult to change, but banks are beginning to get help in this effort from other quarters, most notably from organizations such as credit card companies, stores, telephone companies, and utilities that require regular monthly payments.
"Many of these are offering account viewing capabilities for their customers. Once it becomes familiar behavior, consumers will have less trouble making the transition from account viewing to transferring money among accounts and then to bill paying," Mr. Barto said. "The process will be further demystified as digital TV and digital cell phone banking applications become available."
Dataquest estimates the average fee for online bill payment services is $6.20 a month, but it is noted that only about half of all online bill paying customers actually pay. Some banks offer the service free, and others waive the fee for preferred customers. The average fee for account viewing stands at about $5.10 a month. The number of banks with a formal fee schedule is declining. Only about 20 percent of banks have a fee schedule, and only about 10 percent of account viewing households actually pay. Fees from all account view and bill payment services are forecast to reach $1.3 billion by 2003.
Additional information on this market is available by subscribing to Dataquest's The Interactive Home: Financial Services U.S. program. This program provides strategic analysis of changes in consumer technology use and the impact these changes have on the financial services industries, including retail banking, brokerage, insurance, and loans. More information on this program, as well as other Dataquest e-commerce and Internet programs is available on Dataquest's Web site at http://www.dataquest.com/dq/static/offer/inteco_products.html.
To subscribe to this program or other consumer Internet related programs, please call 203-316-3107. To subscribe to other Dataquest programs, please call 800-419-DATA, or 408-468-8009. More information about Dataquest's programs, descriptions of recent research reports, and full text of press releases can be found on the Internet at http://www.dataquest.com.
GartnerGroup's Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.
As the world's leading authority on IT, GartnerGroup provides clients with a wide range of products and services in the areas of IT advisory services, measurement, research, decision support, analysis, and consulting. Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community serving Fortune 1000 clients from 80 locations worldwide. Additional information about the company is available on the Internet at www.gartner.com.
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Fred Dulaney
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fred.dulaney@gartner.com 		Tom McCall
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