Following on the heels of explosive growth in 2002, online banking hits critical mass in 2003

CALABASAS, CALIFORNIA (September 16, 2003)A new study of 2,000 micro and business market companies indicates that online banking usage has doubled again in the last 12 months. In this study, micro market companies are defined as businesses with annual revenue between $50,000 and $999,999, while business market companies are defined as those with annual revenue between $1,000,000 and $19,999,999.

“2002 was a year of surprising growth for online banking, and 2003 has proven to be even more significant,” said Mike Marselli, manager of the Informa Research Services study. “As recently as 12 months ago, only 12% of all businesses with less than $1 million in annual revenue used the online channel for routine banking. Now, in 2003, that number has risen to 24%, or one-fourth of the market. For the larger companies in the $1MM-$19.9MM business market, 44% use online banking. What makes this trend even more significant is that adoption increased during a downturn in technology spending. It shows that even during times of economic uncertainty, the nation’s huge base of micro and small businesses have been continuously leveraging technology to improve efficiency.”

The study found that micro market usage of online banking increased at a rate of 100% from 2002 to 2003 and business market usage grew at the rate of 26%. The growth rate in the micro market is particularly astounding considering that online banking usage in that market was relatively flat for the five years prior to 2002.

“The financial services industry’s relationship with small business has always been built on personalized service, and this fundamentally has not change. Indeed, while online banking usage has been on a steep incline, branch traffic has not declined at all,” said Marselli. “What has declined is reliance on the telephone—especially automated telephone systems—as a result of the increase in online banking usage. Institutions should not pull resources away from their branch simply because small business customers are turning to the Internet. The best way to leverage this trend is to reach out to micro and small business customers by investing in training for the online channel.”

“The Internet can improve a company’s loyalty to their lead financial services provider, since online customers tend to use more services and build deeper relationships,” concluded Marselli.

Mike Marselli, a certified cash manager and business analyst, has over 13 years experience in the financial services industry, serving with Dun & Bradstreet Information Services and PSI Global prior to joining Informa Research Services. His background includes experience in business-to-business market strategies, industry trend forecasting, e-commerce trend analysis, and primary market research.

The business market research study, performed by Informa Research Services, includes nearly 1,000 interviews with micro market companies and nearly 1,000 interviews with business market companies. These interviews included nearly 1,200 personal interviews with business owners. The study was conducted between February and July 2003, and consisted of telephone-based interviews with micro and business market companies throughout the US. The study has a +/- 3% margin of error at the 95% confidence level.

Micro and Business Market Usage of Online Banking, 2001-2003