Canadian online banking doubles over two years

The number of Canadians conducting most of their banking on the Internet has doubled in two years and more are expected in the next three.

According to a Canadian Bankers Association poll released Tuesday, 16 per cent of Canadians

say the Internet is their primary means for conducting bank business. By 2005 more than half (56 per cent) of bank clients will use the Internet for some tasks.

The statistics match trends at three leading Canadian banks.

“”It’s absolutely no surprise. It’s completely consistent with everything we’ve been experiencing,”” Chuck Hounsell, senior vice-president, e-bank at TD Canada Trust. “”When we look at our core customer base on retail, over 33 per cent of households have registered for online services.””

Corinne Charette, senior vice-president of Internet channel, retail market, for the Canadian Imperial Bank of Commerce, says if anything the number of people using Internet at her bank has more than doubled. Scotiabank senior vice-president of electronic banking Bob Grant echoes her position.

While the number of users has doubled, the subsequent traffic skyrocketed as well. Charette calls the phenomenon transaction inflation. Some users check their account balance once or twice a day, she says.

“”Customers who bank online do so with greater frequency than, say, a telephone customers or a branch customer. It’s easier for them to do, particularly if they have high-speed connections and the Internet is a part of the way the work or live,”” Hounsell says.

Despite the increased traffic, none of the banks report any concerns over scalability. Charette says CIBC is in the middle of a complete revamping of its infrastructure and capabilities, while Grant and Hounsell say they can deal with huge growth with minor hardware changes.

Banks are increasing their budgets to deal with the rising demand. According to the CBA, Canada’s big six banks spent $3.7 billion on technology last year, more than double the spend five years ago. All the banks say their budgets have increased in recent years and none are expecting them to be slashed any time soon.

“”The bank’s continued to invest in online channel development and has given every indication that it will continue to so in the future,”” says Grant.

While most of the money will go into application development and some infrastructure, wireless will be on the outside looking in. That doesn’t mean it will be completely shut out, however, despite the Bank of Montreal’s recent decision to wind down its Veev service. While all say wireless capabilities cannot be ignored, it is not the focus of Canadian customers.

“”We absolutely have to be prepared to participate in the wireless world when our consumers want wireless services,”” says Grant, but “”financial services can’t drive wireless adoption.””


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