Bank customers logging on

By KEVIN TAYLOR

People are flocking to online banking, new research reveals.

An ACNielsen.Consult online banking report said a survey done between October and December showed 66 per cent of the country's 725,000 regular internet users now banked online.

The online banking population grew 54 per cent to 480,000 in a year, up 170,000 from the same period in 2000.

Sixty-six per cent of regular internet users now use online banking services compared to 50 per cent in 2000 and less than 20 per cent in 1999. The report is based on an annual survey of internet users.

Senior ACNielsen.Consult analyst Dr Richard Sandlant said attitudes to online banking had changed dramatically in the last few years.

The proportion of internet users adverse to online banking has fallen from 32 per cent in 1998 to just 11 per cent at the end of last year.

Even among internet users who did not bank online, the appeal was strong.

Of the 250,000 internet users not yet banking online, 65 per cent were willing to do so.

ACNielsen New Zealand director of syndicated financial research Gary Martin said as online banking has increased, the number of branches and telephone banking use had fallen.

But while a level of substitution was apparent, online banking was complementing rather than replacing other channels.

Users of online banking services were also happy, with 94 per cent of regular online users claiming to be either "extremely satisfied" or "satisfied".

Sandlant said, however, there was a need for banks to improve in some areas like online customer service.

Newer users also found navigating the bank websites and accessing the myriad of features and functions a challenging and sometimes frustrating experience.

The big five banks - ANZ, BNZ, ASB, WestpacTrust and the National Bank - dominate online banking in New Zealand.

Together they control more than 90 per cent of the online banking market.

The next tier of online banks, including PSIS, TSB, AMP Banking and HSBC, make up 6 per cent of the online banking market.

Sandlant said the growth showed banks had been successful in positioning online banking as being both secure and convenient for internet users.

He said the convenience of internet banking was stimulating the growth of multiple online banking relationships as people learn to shop around and use one bank's specialised services while maintaining an everyday account with another bank.

Sandlant said that was likely to produce a more competitive online banking market as customers become less "sticky" and banks exploited opportunities to attract "secondary relationships" away from competitors.

"Ultimately more competition among the online banks is good for the internet banking consumer," he said.

That would translate into lower fees, more functionality, and better online services overall.

KPMG banking and finance group chairman Andrew Dinsdale said the annual KPMG financial institutions survey out in May would show a similar trend of rising internet use.

He said online banking use could be related to the large number of computers in New Zealand homes. Kiwis were also willing to adopt new banking channels.