Report: Movement Grows To Consolidate Online Bank Accounts

Almost half of U.S. consumers who bank online would have no problem consolidating their accounts at a single institution, though others continue to have concerns about using one bank only, according to a report released Wednesday byJupiter Media Metrix (Nasdaq: JMXI).

The trend toward single-source banking is likely to gain momentum as companies consolidate their operations and diversify their offerings to encompass such services as banking, lending, brokerage and insurance, Jupiter said.

“The financial concierge model, where institutions offer a wide range ofproducts and services through relationship management and targetedmarketing, will drive increased consolidation among online financialproviders,” said Jupiter analyst Raj Dhinsa.

Concerns Linger

The survey, which asked consumers why they might be hesitant about online account consolidation, found that 45 percent had no major concerns about keeping all their accounts in one place. Eighteen percent, however, said they were holding back because of concern that the financial institution they chose might fail.

Eleven percent said they were concerned that having all their accounts with a single provider might result in a deluge of unwanted sales solicitations, and another 11 percent said that shifting all their accounts to one place would be too much trouble. Jupiter said it expects those concerns to decrease over time.

“With the U.S. having one of the highest bank-to-citizen ratios,institutions must create highly tailored online offerings to securelong-term customer relationships and ultimately survive an increasinglycompetitive market,” Dhinsa said.

Regular Banks Wanted

More Americans are banking online, though many consumers prefer to deal with established companies rather than Web-only banks, according to a Jupiter report issued in August.

The report found that financial institutions with both brick-and-mortar and Internet operations saw a 110 percent increase in traffic to their Web sites between July 2000and July 2001. Meanwhile, Internet-only banks lost ground, falling 8.1percent over the same period, Jupiter said.

At the time, Jupiter predicted that in order to survive, a Web-only bankwould need to either develop a physical presence or find a niche audience.

Chase, Citibank Popular

The August report found that Chase Manhattan Bank (NYSE: JPM) gained the most ground of all multichannel banks, with Citibank (NYSE: C) and Bank of America (NYSE: BAC) also attractingmore Internet users.

Online banking has been slow to catch on in the United States, even as itthrives in Europe. In July, Jupiter said 20million Europeans banked online in May, and in Sweden, 60 percent of allconsumers did some banking on the Web.

France, the UK and Germany are also seeing online banking grow, that report said.