WSU Podcast: Online banking grows, but some consumers still hesistant
This WSU Newsline Podcast is available at www.wichita.edu/newslinepodcast. See transcript below.
You're listening to the podcast edition of the Wichita State University audio newsline. Learn more about WSU — the home of Thinkers, Doers, Movers and Shockers — on the Web at wichita.edu.
The number of U.S. households banking online continues to grow. Jupiter Research projects the number of households banking online to jump from 29.3 million in 2003 to 56 million this year, and the percentage of those paying bills online to increase from 50 percent in 2003 to 85 percent in 2008. Even so, Rick LeCompte, a personal finance expert at Wichita State University, says financial institutions are struggling to balance the needs of customers.
LeCompte: "Financial institution firms are struggling to balance the needs of customers versus the cost they incur to provide Internet-type delivery of banking services."
LeCompte says financial institutions spend a lot of money to provide customers with security.
LeCompte: "Financial institutions expend tremendous amounts of funds and energy in order to provide their customers with security. They have to weigh this against the costs that they incur and also the benefits to their customers and to the institution itself."
And banks continue to encourage customers to give online banking a try.
LeCompte: "Banks encourage their customers to use the Internet in a variety of ways. Some are even (offering) cash reimbursements for setting up bill pay or setting up additional online accounts. They may also send out postal mailings in order to get customers to sign on for rewards programs and other types of benefits that the bank may be able to offer."
LeCompte explains why banks want you to do business online.
LeCompte: "The primary reason banks want you to do business online is that it reduces their cost. This can have the benefit of increasing their profits. It can also have a benefit of reducing the rate they charge on loans, and also increase the rates they're able to pay on deposits."
One of the most attractive aspects of online banking is online bill paying. With a few clicks, you can pay your bills, check your balances and see what has cleared. But LeCompte says not all consumers are quick to join the growing number of people using online banking.
LeCompte: "A primary reason people don't switch to Internet banking is that they may not see a benefit to them. There can also be privacy concerns. There can also be the fact that they have unreliable Internet service, and maybe it's just too much difficulty for them to change."
LeCompte says while online banking continues to grow in popularity, brick and mortar banks won't disappear anytime soon.
LeCompte: "It's unlikely that brick and mortar locations will go away in the near future. There are many transactions that need to be performed in person. Also, some who will like that personal touch of walking in and talking to the banker, and banks also look at that as a different delivery mechanism, in addition to their Internet."
Thanks for listening. Until next time, this is Joe Kleinsasser for Wichita State University.