It is undeniable that consumers are increasingly living their lives online. From buying a book, to viewing a photo, to posting a tweet through the use of Twitter, individuals are turning to the internet for a myriad of reasons. Financial services is certainly not immune to this digital migration. While it is clear that online banking usage and adoption is growing, it is less obvious how consumers view their current experience. Are consumers really satisfied with online banking functionality? We surveyed existing online bankers to find out.

The chart below illustrates consumers satisfaction with their current online banking experience across a variety of areas. The most apparent conclusion from this data is that consumers, in general, are very satisfied with most banking functionality offered online. For instance, fewer than one in ten consumers who currently use online bill pay are either indifferent towards or dissatisfied with the experience. The immediate inhibitor to continued growth in adoption of online banking functionality is thus not the usability of these site features, but rather convincing consumers to try them out in the first place.

The data below shows the percentage of existing online bankers that currently use particular types of online banking features. While in the above chart 92% of respondents that use bill pay are happy with the experience, only 54% of online bankers choose to utilize this feature in the first place. Banks need to do a better job of driving initial trial for online banking functionality, for once consumers engage with these offerings they typically are satisfied with their experience.

Traditional marketing efforts promoting features and functionality across multiple distribution channels are clearly one way to drive trial. However, perhaps an additional way in which banks can drive trial of online banking functionality is to more aggressively leverage the high satisfaction levels of existing consumers by letting individuals speak to each other in an online community. It is not unprecedented for banks to create an online community around a particular topic area. Bank of America, for instance, created a compelling online community for small business owners. Letting consumers learn from the experiences of others is likely to drive increased trust in the bank and thus impact trial. It will be interesting to monitor the adoption of specific online banking features over time and what banks specifically do to drive trial.

Now that the dust has begun to settle on the acquisitions of Washington Mutual by Chase and Wachovia by Wells Fargo, the question now is whether WaMu and Wachovia customers will remain customers of their current bank or transfer their assets to another bank. Some WaMu and Wachovia customers may perceive transferring their assets to another bank as a perceived flight to safety to banks not as entwined in the current economic upheaval.

We first looked at loyalty rates among top banks to get a better understanding of whether certain online banking customers are prone to shop the competition or stick with their current bank when shopping for a similar financial product. Below, you can see that 51% of WaMu online banking customers in market* for a checking account considered opening a checking account online at WaMu. Likewise, 46% of Wachovia’s customers considered opening a checking account online at Wachovia. According to our data, both WaMu and Wachovia have above average loyalty rates with the average among this competitive set being 33%. Bank of America ranks the highest among this competitive set with a 53% loyalty rate.

*In market is defined as online bankers that visit shopping checking product pages

Second, we looked specifically at the online behavior of WaMu and Wachovia customers to understand which banks may be getting new business from WaMu and Wachovia customers in the near future. The competitor most likely to receive business from both WaMu and Wachovia customers is Bank of America - 37% of WaMu online bankers and 45% of Wachovia online bankers researched Bank of America’s checking products online between January and June 2008.

It should be interesting to see how WaMu and Wachovia customers react in the coming months. But, in both cases, with almost half of their customers prone to shop on other competitors’ sites, there is a real opportunity for other banks, especially Bank of America, to capture additional market share.

Financial services marketers certainly spend a lot of time and effort in understanding why people choose to bank with them or decide to bank with a competitor. Compete recently fielded a survey to more than 1,600 online bankers to understand the factors that led them to choose their primary bank. Factors included a mix of both online and offline activities.

The offline channel is by far the most popular factor that led online bankers to chose their bank. Among respondents, more than half selected “Convenient Location or ATM” as a primary reason for selecting their bank. The least likely factor to influence where they bank was “Saw/heard advertisement on Internet,TV.” Even so, Washington Mutual led this category with 19.4% of its online bankers responding that this was a primary factor in selecting Washington Mutual.

Taking a closer look at respondents who selected “Convenient location or ATM” as their top choice, it looks like both Wachovia’s and Bank of America’s online bankers appreciate convenient locations or ATMs above all other online bankers included in the survey. This make sense as both banks have a significant branch network. For obvious reasons, ING DIRECT online bankers did not rate this factor as a primary reason — its six cafes are the closest it comes to branches.

As online banking becomes even more popular among consumers, it should be interesting to see how whether the convenience of banks or ATMs continues to be a significant factor in people choosing their banks or if online channel factors become more important to consumers in the future.

Financial institutions are investing heavily to build technological platforms and strategic partnerships to capitalize upon the growth of the mobile banking channel. We wanted to separate the hype from the reality by exploring one fundamental question: Is there really significant consumer demand for performing banking activities on a mobile device? The results of a recent survey targeted at online bankers illustrates that the mobile market, although still in its infancy, is poised for future growth.

One of the obvious drivers of mobile banking adoption is consumers having access to the internet from their mobile device. Our research indicates that 72% of online bankers never access the internet from their mobile device (see below). Mobile internet access will undoubtedly rise, as technology advances and “smart phone” adoption (Blackberry, iPhone, etc.) proliferates; however, if almost ¾ of online bankers never access the internet from a mobile device, how many people actually utilize mobile banking services? The answer is not many, as only 5% of online bankers currently use a mobile device to check a banking account.

It is clear that mobile banking is still in its infancy, but what about future growth prospects? Our research reveals that consumers are significantly more likely to view mobile banking as “very useful” (23%) than “not at all useful” (12%) (see below). It is interesting to note that 28% of respondents currently appear to be indifferent towards mobile banking, neither citing the functionality as useful or not useful.

Many of these indifferent consumers are likely to demand mobile banking functionality once the technology and partnerships make the usability of this banking channel easier for the average consumer. One good example is a current Bank of America promotion for free mobile banking to current online customers. The messaging promotes the accessibility, convenience, and security of mobile banking.

As consumers increasingly leverage mobile devices for shopping and account service needs it is highly likely that banking will be no different in its migration towards this emerging medium.

Are you one of the millions of Americans checking the status of your retirement funds more often than you check the time these past few weeks? Planning for retirement probably seems like a more daunting task than ever, so many financial services companies have developed online tools to help investors of all ages determine how to reach individual retirement savings goals. The benefits are twofold – investors receive quick retirement planning insights while financial services companies can use their various tools to help promote specific financial products.

Fidelity myPlan Snapshot: Fidelity’s myPlan Snapshot combines simplicity and speed. It can be completed in less than a minute with information that most individuals know off hand (e.g. age, annual income, monthly savings). Once an individual reaches the summary page (below) they are able to see where their current savings and investment track will likely put them financially once they reach retirement age, even taking into account possible future market conditions. Using the interactive slider bars, an individual can easily run through hypothetical scenarios to see how increased monthly savings or a change in investment strategy will impact future returns.

TD Ameritrade’s Wealth Ruler:TD Ameritrade’s Wealth Ruler is a similar retirement tool to MyPlan Snapshot but with a more in-depth and detailed setup. With a similar output as MyPlan (see below), it also allows for measured adjustments based on savings, retirement age, and investing style. However, while myPlan asks five basic questions, users of Wealth Ruler are asked to input each investment product they own as well as input expenses that will likely be incurred over the long haul. While these features likely make it a more precise representation of future savings, it is definitely not as simple as Fidelity’s myPlan Snapshot.

Vanguard: Instead of constructing a stand alone tool such as Fidelity’s or TD Ameritrade’s, companies like Vanguard have created tools that are integrated within information-focused pages. There is very little information required to use this tool, but the tradeoff is receiving little information in return. Tools like this also do not allow for contingencies such as a change in retirement age or projections based on certain market conditions. It seems clear that companies that provide calculators of this variety are not using them as tools to drive conversion. They are more likely viewed as additional research provided to current and potential customers.

With the varied tool offerings, the question remains – Are the tools an effective way to drive business? And the answer is a resounding Yes; IRA shoppers that used an online retirement tool between January and June 2008 were 50% more likely to start an application than those who did not use a tool.

Stand alone tools such as Fidelity’s tend to be more successful at engaging shoppers than those tools used simply as another information source. In the future, it would be even more impactful if companies were to provide more comparative measures to help benchmark their products against the competition. Implementing the use of similar tools could make a powerful statement and gain a competitive advantage for the financial services company in a time when they likely need any edge they can get.

As a Washington Mutual account holder, my greatest concern about WaMu’s viability became a reality last Friday. WaMu, known for its breezy “WhooHoo!” advertising and bright colors, was no more, and now I am officially an account holder at JP Morgan Chase. I immediately logged onto wamu.com to see what information Chase was providing for potentially nervous WaMu customers (this would have been prior to reading the Q&A guide posted on the FDIC’s website) and I noticed a bit of a quick fix update of the homepage.

I totally get that Chase probably didn’t have a ton of time to work on the homepage redesign so this is not meant to be a criticism. After all, the message is loud and clear although some WaMu customers may feel a little like their financial future is a bit blurry like the little boy in the graphic.
Then a second even more surprising blow hit this Friday with the acquisition of Wachovia by Wells Fargo. This made me think that with all the acquisitions happening, maybe Bank of America would have to give up its #1 spot online to either Chase or Wells Fargo? And, from an online perspective, is this acquisition a good move for Chase and Wells Fargo?
Below was the online landscape among these competitors just 10 days ago. Prior to the acquisition, in terms of the number of active online account managers*, the rankings among top competitors in August were:

1. Bank of America with approximately 18.5M active online account managers
2. Chase with approximately 15.9M active online account managers
3. Citi with approximately 11M active online account managers
4. Wells Fargo with approximately 9.7 active online account managers

In August, Bank of America had the largest share at 25%, followed by Chase with 21%, Citi with 14%, and Wells Fargo with 13% among the top 10 competitors. Both WaMu and Wachovia had a much smaller share of 7% each.

Post-acquisition, Chase now takes the top spot with 28% share of active online account managers outpacing Bank of America by 3% points.

However, looking closer at both Chase and WaMu’s online account manager base, there may be less opportunity due to overlapping customers. For example, a customer who may hold two accounts, one at WaMu and one at Chase may consolidate their finances with Chase. In August, about 4% of WaMu’s online account managers were already a Chase customer, which means that although Chase is still #1 it is by a slimmer margin if you take into account these overlapping customers. There is a 1%overlap for Wachovia customers who bank with Wells Fargo.

It should be interesting to see if WaMu and Wachovia customers, especially those who have never been a Chase or Wells Fargo customers previously, flee to a competitor. One thing is for sure that both Chase and Wells Fargo need to engage with its newly acquired customer base early on and often if they want to retain their business.