Canadian banks are failing to meet the needs of their online customers, according to a recent survey of 9,000 Internet users across the country.
The first State of Online Banking report conducted for Internet quality measurement firm GomezCanada shows that banks are achieving an extremely low penetration rate for several types of online transactions, including mortgages, loans and the purchase of guaranteed investment certificates (GICs).
“The study shows that a surprising number of institutions still require physical-world activities to fulfill certain basic requirements that could be more efficiently handled over the Internet,” said Don Rolfe, managing director for GomezCanada.
In an interview from Toronto, Rolfe said many bank customers don’t realize the number of services they could — or should — be able to access on the Internet, nor are the banks offering compelling enough reasons why their customers should move their banking online.
The major banks are “spending tons of money on developing these sites, but the rewards still have not materialized,” Rolfe said. “Now they have to go back and educate people what they can do and why it’s beneficial.”
The study showed that only one per cent of respondents reported having obtained mortgages online, while 2.4 per cent said their had applied for a loan online and 2.1 per cent revealed they had purchased a GIC.
Everyday banking transactions seemed to be more popular with the 9,000 Canadians surveyed. A majority — 54.9 per cent — used the Internet to view account balances, while 44 per cent had paid bills and 38.5 per cent had used the Internet to transfer funds. Fifteen per cent applied online for a credit card.
But representatives at one major Canadian bank said that while they still face some technical and internal challenges, the number of customers using the Net for basic banking services continues to skyrocket.
Martin Stevens, director of e-commerce initiatives and customer banking with the Royal Bank, said 20 per cent of the bank’s active clients are using the Internet for their financial transactions. Typically, he said, small businesses go online to verify their balances and check what transactions have cleared, while consumers use the Internet more to pay bills and move money between accounts.
In the summer of 1999, the bank had 400,000 customers online. As of the end of this month, that number has risen to more than 1.3 million.
“As we add more functionality to give customers more reason to use it, I think they’ll just love it,” said Stevens.
He added that the Gomez study didn’t appear to differentiate between banking services offered to clients versus the general public, who are able to apply for mortgages or GICs without being a current customer.
For a bank to process a first-time loan application, it must verify who the new customer is and research credit histories, making it difficult to provide a real-time online response, he said.
One of the biggest challenges in expanding online banking services can be internal, said Stevens, including getting upper bank managers to buy in.
“We’ve made huge strides this year,” he said. “There’s nothing like 1.3 million customers to get their attention.”
