SOURCE: eMarketer

May 11, 2006 09:00 ET

Consumers Losing Trust in Online Banking

eMarketer Report Shows Security Big Concern as Adoption Slows

NEW YORK, NY -- (MARKET WIRE) -- May 11, 2006 -- Internet bankers beware. Lack of trust in online banking among U.S. consumers is a serious constraint because of doubts about banks' security measures, according to eMarketer's new report, "Online Banking: Remote Channels, Remote Relationships?"

The result is a slowing rate of adoption, with online banking households increasing by only 3.1% in the last quarter of 2005 -- the lowest increase in three years. The number of online banking households as a percentage of total online households is pretty stagnant, too. It is expected to grow by just 4 percentage points between 2006 and 2010.

The key factor in customer attitudes is the perception of Web site security. Being able to trust a banking site is extremely important to customers, with more than 87% saying in an Ipsos Insight survey that they wanted assurance that the bank would not sell their personal information and 83% wanted assurance that such data was protected from hackers.

"Security is not a luxury to online banking users, and it cannot be for online banks," says Lisa Phillips, eMarketer senor analyst, who wrote the report. She pointed to the fact that 75% of European consumers do more than half their banking business online, compared to 38% of Americans. Europeans have confidence in Internet financial transactions as a result of more advanced authentication and ID policies.

eMarketer's "Online Banking: Remote Channels, Remote Relationships?" report answers questions such as:

--  Which demographic groups present the most opportunity for online
    banks?
--  What causes consumers to switch online banks?
--  What do consumers consider the most important feature of a banking
    site?
    
Click on eMarketer.com for more information on eMarketer's "Online Banking: Remote Channels, Remote Relationships?" report.

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