Small and Medium US Firms Take to Online Banking

Online banking usage has doubled again in the last 12 months among companies with a turnover of $50k to $20m, according to a study by Informa Research Services, Inc.

The study looked at 'micro market companies', defined as businesses with annual revenue between $50k and $999k, and 'business market companies' which are defined as having annual revenue between $1m and $20m. Micro market usage of online banking doubled from 2002 to 2003 after being relatively flat for the five years prior to 2002, while business market usage grew by 26%.

'2002 was a year of surprising growth for online banking, and 2003 has proven to be even more significant', says the study's manager Mike Marselli. '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 quarter 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'.

According to Marselli, while online banking usage has been on a steep incline, branch traffic has not declined at all. 'What has declined is reliance on the telephone - especially automated telephone systems. 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'.

California-based Informa is a division of London-based Informa Group plc and currently supports the product pricing decisions of more than 2,500 clients, including America's top 25 financial institutions, with electronically transmitted competitive pricing intelligence.

Informa interviewed just under 1,000 micro market companies and just under 1,000 business market companies across the US by telephone between February and July 2003. Nearly 1,200 of the interviews were with business owners.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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