Four out of 10 Canadians banking online, research shows

Online banking is continuing to grow in popularity, according to an annual tracking study called “How Canadians Bank” released Tuesday by Toronto-based marketing research firm TNS Canadian Facts.

“E-banking still continues to be a growth trend. Online banking has only been around for about ten years or so. It’s up from nothing  to four out of 10 Canadians using it regularly, which is an important level of growth,” said TNS Canadian Facts vice-president Rhonda Grunier. She said that the rate of growth has slowed down in comparison to the rapidity with which it was adopted in the early years (at a growth rate of approximately 20 to 30 per cent per year), but that it is merely a reflection of the maturation of the market.

According to the survey (which polled a nationally representative sample of 1,899 Canadian adults 18 years and older in fall 2006), the percentage of Canadians who have registered for online banking increased four points to 44 per cent last year, and 37 per cent of Canadian adults had banked online in the last month. These people are part of the 76 per cent of Canadians with Internet access; 67 per cent of Canadians have the Internet at home. Among these Canadians with at-home Internet access, six out of 10 use online banking.

“We’re going to continue to see growth in online banking, but there is an upper limit — the number of people with access to the Internet,” said Grunier. One of online banking’s growth factors is the increasing numbers of young people who will skip in-person or telephone banking entirely in favour of online banking, and the occasional older person who is a late adopter. The survey also showed that those who bank online are often financially upscale post-secondary graduates. “Over time, it’s will have widespread penetration like any trend, and will then represent the population as a whole.”

Currently, online banking is the service of choice to pay bills, check account balances and activity, according to Grunier. There is a small faction who staunchly stick to their guns when it comes to online banking — six per cent of Canadians who don’t bank online have no plans to sign up in the next six months. One of the reasons cited included their satisfaction with the standard banking procedures, and security concerns (three out of 10 of those not banking online expressed concerns about security, but Grunier declined to comment on whether the rash of security breaches would skew the number higher next year). To put the banking public’s mind at ease, several Canadian financial institutions, including the RBC Financial Group, TD Canada Trust, and the Canadian Imperial Bank of Commerce have online banking security guarantees that will reimburse their clients any monies lost through e-banking breaches.

Banks and companies have been pushing their customers to embrace e-billing, which seems to be meeting with some success — over half those surveyed cited online banking as their preferred method to pay bills. But they’re much warier of receiving and viewing bills online — 11 per cent of Canadians use this service, which has remained steady with last year’s results. Those who do use this service prefer to view their bills on the billers’ sites, while the others are split between their financial institution’s Web site, or Canada Post’s epost service.

The survey showed that half of the respondees are fine with receiving financial information on the Web (and 14 per cent use the Internet to manage their investments), an affinity that the RBC Financial Group has used to their benefit, courtesy of an extensive Web presence and Web 2.0 technologies.

“It’s a case of making sure we have tools, calculators, anything that they need to fully educate themselves and be able to hand them off to the most appropriate channel, whether that be one of our Royal Direct telephone representatives or one of our financial advisors in one of our branches,” said the Royal Bank of Canada‘s vice-president of online strategy and client experience James MacGuire, who added that Web 2.0 tools can ensure that even the tech-shy can get something out of the Web experience, even if it just leads back to another channel. “We’ve used (a virtual host) as a demo for our online bill payments. We used an interactive video session for a conversation of a student loan package that we had. That really resonated with that specific group of clients. We could have used the virtual host for something like that, but we ended up using live people to make that interaction a little more personal and friendly for those clients,” said MacGuire.

No matter how useful some of the Web experiences are, many are leery of what lies beyond online banking. Only three per cent use e-mail money transfers, and only one per cent of people who own Web-enabled wireless communication devices use them for online banking.

Telephone banking, the previous non-brick-and-mortar banking trend, is continuing its spiral in the wake of online banking’s increasing popularity: only 32 per cent said they were signed up for telephone banking, which was down from a peak of 40 per cent five years ago.

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