Internet battles with ATM, phone for bank customers

TORONTO — Online banking has caught up to ATM banking and may even exceed it at this point, suggests a study released Wednesday.

Toronto-based Faulkner Consulting outlined the highlights of its “”Behind the firewall””

study before a crowd of banking and financial professionals. The study was based on ComScore Media Metrix’s panel of 12,000 Canadians that use the Internet through the company’s proxy server. In a six-month period (ending in April), 70 per cent of that panel visited an online banking portal.

Faulkner principal Miles Faulkner estimates that Canadian Internet users conduct 384 million online banking sessions a year and may accomplish three or more transactions per session. By comparison, the most recent Canadian Bankers Association data, as quoted by Faulkner, says that there are 1.2 billion annual ATM transactions in Canada.

Jackie Irvine, senior vice-president of the direct banking division (which includes online and phone banking), at Bank on Montreal confirms that the tide is turning.

Growth of phone banking is on the order of five or 10 per cent versus 30 to 50 per cent for online banking, she said. The combined total of phone and Internet banking at BMO accounts for more than two-thirds of its non-cash transaction business, far outweighing the impact of ATM.

“”There was a trend from ATM to the phone,”” she said. “”And now the trend is from ATM and phone to online.””

The CBA acknowledges the growth in the popularity of Internet banking, but the ATM isn’t dead yet. CBA numbers reveal that the number of Canadians who prefer to bank online grew from 16 per cent from 8 per cent over a two-year period from 2000 to 2002. But the same study says that ATMs are still the most popular means of banking at 40 per cent.

Canada is still very much a card-centric country, said CBA spokesperson Shawn Murray, whether it is using them for ATM withdrawals or to make debit purchases. “”Canadians still have the highest per capita use of debit cards anywhere in the world,”” he said.

He noted that phone banking may be slipping overall and the Internet is still gaining ground. “”In our own survey, what we did see was a slight decrease in the number of people using telephone banking. It has slipped a couple of percentage points and the assumption was that some of those people switched from phone banking to banking online,”” he said. He added, however, that “”people don’t want to carry out transactions in just one way, they want it all.””

That reflects BMO’s policy of multi-service banking, where customers often use more than one channel to accomplish their banking. ATMs aren’t going anywhere soon, said Irvine, since (other than tellers) they remain the only channel that can actually put cash in your hands.

Online banking may have become saturated, said Faulkner, since most of the big banks may have already converted all of their willing customers to online banking. They key will be adding more services behind the firewall.

Faulkner also looked at the number of visitors to major banks’ Web sites in front of the firewall — in other words, what all visitors see if they visit a bank’s homepage. According to Faulkner’s numbers, Royal Bank of Canada has slipped 24 per cent in unique visitors, BMO has climbed two per cent, while TD Canada Trust has gained 61 per cent. He admitted those numbers can be “”very illusory,”” but said they may indicate the degree to which the banks can attract new online customers.

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