Online Banking - US - June 2006

INTRODUCTION AND ABBREVIATIONS
Introduction
Scope of the report
Abbreviations and terms
Abbreviations
EXECUTIVE SUMMARY
Growth in online access
Marketing online services
Innovation and adaptation is key
The online banking industry
The online banking consumer
MARKET DRIVERS
Overall Internet usage
Growing population
Figure 1: Projected population of the U.S., by age: 2010-50
Adult Internet usage still growing
Figure 2: Percentage of adults online, 2001-06
Figure 3: Estimated number of adults who are online, 2001-05
Figure 4: Adult online population by gender, race/ethnicity, education, and household income, 2006
Broadband expansion
Figure 5: Growth in broadband composition and PC time among active Internet universe (U.S.,
Federal government’s role in marketing broadband
Figure 6: Total U.S. high-speed Internet lines
The role of online banking in real organic growth
Figure 7: Organic growth strategy at Bank of America, 2006
Online banking and women
Online banking and Generation X
Figure 8: Percentage of Generation X members who have tried online banking, 2002-04
Echo Boomers and online banking
Figure 9: U.S population by generation, 2006
Figure 10: Average annual minutes of usage of select finance websites by U.S. university internet users (average minutes per visitor), 2006
Getting Hispanic consumers online
Figure 11: Race and Hispanic or Latino origin of the population for the United States: 2004 and 2005
Figure 12: Population by race and Hispanic origin, 2001-11
Figure 13: Concerns about financial future, Hispanics online vs. general online population, 2005
Growth of online bill pay and presentment
Figure 14: Leading factors in choosing a bank, 2005
Figure 15: Most important overall benefit of online bill pay according to users, 2006
Figure 16: E-bill payers satisfaction with bank, online banking, and online bill pay, 2006
Innovation and differentiation of services critical to growth
High-interest yielding accounts
Figure 17: Highest yield money-market accounts, May 22, 2006
Consumers and online security
MARKET SIZE AND SEGMENTATION
 MARKET SIZE
Figure 18: Use of Internet and online banking, 2002-05
Figure 19: Online banking usage by proportion of population and number of individuals, 2002-05
Figure 20: Household access to broadband services, 2000–10 (proj.)
 MARKET SEGMENTATION
Figure 21: Top online full-service bank and credit union destinations, week ending April 23, 2006
Full-service banks
Figure 22: Active online banking users: top 10 banks (thousands), 2006
Online-only banks
COMPETITIVE LANDSCAPE
 COMPANIES AND BRANDS
Full-service retail banks
Bank of America
Citibank (Citigroup)
JP Morgan Chase
Wells Fargo
Wachovia
Washington Mutual
Online-only banks
ING Direct
E*Trade Financial
NetBank
Bank of Internet USA
ADVERTISING AND PROMOTION
Online advertising on the rise
Figure 23: Top bank brands, ordered by sales and adspend, 2004
Figure 24: Top banks and thrifts in U.S. ad spending, 2005
Marketing to Generation X and Echo Boomers
Customer-guided marketing
Marketing efforts for online-only banks
Rewards and incentive/loyalty programs
Marketing to Echo Boomers
Bank advertising
Bank of America
Citibank
Figure 25: “Living Rich” Advertisement, 2006
JP Morgan Chase
THE CONSUMER
Introduction
Summary highlights of consumer data
Internet banking services used
Figure 26: Internet banking services used by those with bank or brokerage accounts, by age, April 2006
Figure 27: Internet banking services used by those with bank or brokerage accounts, by gender, April 2006
Figure 28: Internet banking services used by those with bank or brokerage accounts, by income, April 2006
Figure 29: Internet banking services used by those with bank or brokerage accounts, by race/ethnicity, April 2006
Why online banking services are not used
Figure 30: Respondents with bank or brokerage accounts who do not use online banking services, reasons why not, by age, april 2006
Figure 31: Respondents with bank or brokerage accounts who do not use online banking services, reasons why not, by income, april 2006
Likelihood of opening an Internet banking account among non-users
Figure 32: Respondents with bank or brokerage accounts who do not use online banking services, likelihood of using internet banking in the next year, by age and income, April 2006
Level of use of Internet banking services
Figure 33: Respondents who use online banking services, how used, by age, April 2006
Figure 34: Respondents who use online banking services, how used, by income, April 2006
Desired features of online banking accounts
Figure 35: Features that online banking users like or would prefer to have, by age, April 2006
Figure 36: Features that online banking users like or would prefer to have, by income, April 2006
Type of institution used for online banking
Figure 37: Type of institution used for online banking, by age, April 2006
Figure 38: Type of institution used for online banking, by income, April 2006
Frequency of personal interaction with banks and use of ATMs
Figure 39: Frequency of personal interaction with banks, by age, April 2006
Figure 40: Frequency of personal interaction with banks, by income, April 2006
Figure 41: Frequency of ATM use, by age, April 2006
Figure 42: Frequency of ATM use, by income, April 2006
FUTURE AND FORECAST
 FUTURE TRENDS
Broadband growth and Internet expansion
Demographic changes transforming the market
Figure 43: Percentage of college students who keep their accounts after graduation, 2005
Getting Hispanic consumers online
Consumers expect constant innovation
Threats from non-banks
 MARKET FORECAST
Overview
Figure 44: Forecast of Online banking usage by proportion of population and number of individuals, 2006-08
Forecast factors
APPENDIX: TRADE ASSOCIATIONS
APPENDIX: ADVERTISING AND PROMOTION
 TELEVISION
Figure 45: Bank of America  television advertisement, 2006
Figure 46: Bank of America  television advertisement, 2006
Figure 47: ETrade television advertisement, 2006
Figure 48: ETrade television advertisement, 2006
Figure 49: FifthThird Bank television advertisement, 2006
Figure 50: FifthThird Bank television advertisement, 2006
Figure 51: HSBCDirect television advertisement, 2006
Figure 52: Wachovia television advertisement, 2006
 DIRECT MAIL AND PRINT MEDIA
Figure 53: AmSouth Bank direct mail advertisement, May 2006
Figure 54: National City direct mail advertisement, May 2006
Figure 55: INGDirect direct mail advertisement, May 2006
Figure 56: CapitalOne print advertisement, April 2006
Figure 57: Netbank direct mail advertisement, May 2006