Online Banking: Consumers Seen Flocking to Broadband for Banking

By Bach, Deborah | American Banker, June 13, 2002 | Go to article overview

Online Banking: Consumers Seen Flocking to Broadband for Banking


Bach, Deborah, American Banker


Not so long ago -- perhaps a year or two -- conferences about technology in financial services were preoccupied with the prospects for banking through wireless devices and, to a lesser extent, through television.

Now those channels are considered cold, and the buzz that surrounded them has been replaced with high expectations for two other technologies: broadband Internet service, which gives consumers a high-speed digital connection that is always "on"; and instant messaging, which some analysts say could make online customer service cheaper and easier to offer.

At Forrester Research's annual technology conference this week in New York, analysts from the sponsor company presented their findings that consumers do not want to use new channels like television to conduct their banking, but would like to use channels they already use -- including the Internet -- in new ways.

Jed Kolko, a senior analyst at Forrester, said that instant messaging, or IM, is among the most popular new options. The number of people using instant messaging (not just for financial services transactions, but in general) has doubled in the past two years, and 38% of online consumers now use IM for an average of 20 minutes a day, according to Forrester's research.

Fewer than 2% of the consumers surveyed by Forrester use mobile financial services, and television banking "is not going to go anywhere," he said.

At the same time, consumers are getting broadband connections installed in their homes at a steady clip, Mr. Kolko said. The broadband usage rate will increase from 2% of online households in 1999 to 50% in 2004, he said. For financial institutions, "this is going to reshape the way you deal with your customers."

IM and broadband present powerful opportunities for financial institutions, Mr. Kolko said. IM "radically reduces" the amount of time it takes to talk to customers and can improve the quality of that dialogue, he said.

For example, normally a customer receiving an "error" notification while trying to send e-mail to a customer service representative has to phone the representative and relay the error information, he said. If IM service is available -- and it does not refer a customer to a toll-free number -- the customer could simply cut and paste the error message into a chat window and receive instructions in real time from a representative, Mr. Kolko said.

Broadband enables financial institutions to offer collaborative advice, applications that are easy to navigate, and interactive tools that allow customers to roll over or click on an item to receive more information, he said. …

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