Online Banking, E-Commerce Use Linked

Online Banking, E-Commerce Use Linked
by Erik Sass, Monday, Jun 25, 2007 6:00 AM ET
PEOPLE WHO BANK ONLINE ARE far more likely to engage in e-commerce activity, according to a study from Moda Solutions, a company that links the two by bringing online banking to the virtual checkout.
The cause and effect behind the phenomenon isn't clear--i.e., which affinity drives the other one. But the strong correlation suggests that an increase in online banking could see a concurrent lift for e-commerce.
The study of 1,077 e-commerce shoppers, performed by global retail consultants J.C. Williams Group, found that during the previous six months, people who bank online spent more than double the average online shopper's expenditures ($1,060 versus $488). Within the online banking group, people who frequently use online banking to pay bills spent 34% more than the rest of the group ($1,423).
The study also delved into consumer attitudes and perceptions of online transactions. Unsurprisingly, with identity theft in the news lately, 80% of respondents put a high priority on the security of online payment mechanisms, and 76% were favorable to the idea of online mechanisms allowing direct payment from their bank accounts.
An uptick in online banking rates might thus help revive e-commerce, which according to a recent report in The New York Times has seen slower growth compared to previous years. But, according to two other recent studies, online banking faces a number of obstacles to higher adoption.
An April study from Brulant, Inc. found that banks were behind the curve in home page personalization, personal product landing pages, product and service promotions, and online recruitment. According to Brulant, 76% of home pages fail to "recognize" returning customers at subsequent visits, and only 19% offer customer service support via chat. Fully 44% of bank Web site home pages don't even offer online account sign-in, and 76% fail to provide targeted messages for online customers.
A separate study from IBM and Kana Software produced similar findings, with 72 top U.S. financial institutions--including not just banks but insurance companies and investment firms--failing to build substantial customer self-service presence on the Web. The study found low levels of implementation for various self-service features, including e-mail, chat, telephone, and online collaboration tools. Some 95% of Web sites don't answer basic questions about check cancellation fees, making insurance claims online, and buying and selling stocks, the study reported. What's more, 67% of companies surveyed also failed to provide satisfactory answers to these questions via email.