Online Banking on the Rise, With 1 Notable Exception
NEW YORK (MainStreet) – Thanks to advancements in mobile and Web technology, we have more tools than ever in our pockets and on our screens these days, but the unstoppable rise of digital banking is far from a foregone conclusion.
A study from Web analytics firm comScore underlines the importance of online banking, but says that one key component – online bill pay – is still getting short shrift from a large block of consumers.
The study notes that 66% of Americans have used online bill payment technology before, but banks can’t close the deal on an apparently stubborn (or cautious, depending on your point of view) group of bank customers who worry about online security.
As the data indicate, security concerns are increasingly keeping those who don’t use the service from using it, suggesting that any hope banks have to make bill pay a fully automated process that they manage for people has a large hurdle to clear first. A comparison between last year and 2010 shows people’s increasing concern over online security:
Concern over available funds
Service is too complicated
After growing by 19% in 2010, the online bill payment business saw a precipitous drop in activity, growing only by 2% in 2011. More consumers favor paying all or most of their bills through banks (21%) than credit card companies (16%), but relatively few have consolidated their bill payments with a single financial institution, comScore says.
If and when banks and credit card companies can ever find a way to convince consumers that their online financial data is safe, then financial institutions may really be able to close the gap and get people to use online bill payment more readily.
But that day seems far away, and many consumers won’t sign on until the threat of identity theft significantly dissipates.
“Today’s Internet threats wear many different disguises, from fake websites to fraudulent text messages on cellphones,” warned Michael Benardo, chief of the FDIC’s cyber-fraud and financial crimes section, in a 2011 report. “That’s why online consumers need to be aware that they may be targeted and they should always be on guard.”
The FDIC advises consumers to use credit cards to pay bills online rather than debit cards (credit cards offer more protection), and to mix up their user ID and password combinations when paying bills (making your email address your user name is a surefire way to attract ID thieves, the agency says).
Until consumers feel safe paying their bills online, banks may find it difficult to get those numbers from 66% to 100%. It’s a significant obstacle, and one that will likely act as a drag on full online banking adoption in the future.
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