CAMBRIDGE, Mass. – Credit unions that want to increase their numbers of online bankers, and retain the "fence sitters" who do give it a try, would do well to concentrate on some basics: usability, support and security. That's the take from Forrester Research analyst Catherine Graeber in a new report titled "Online Banking 2004: Understanding the Mindset of Holdouts, Fence-Sitters and Quitters." Based on massive (by survey standards) research, the Cambridge-based think firm found that three million online bankers have quit because of service frustrations and security concerns, and that 71% of U.S. consumers who do other business online won't bank there and say they never will. "But the situation isn't as dire as it appears," analyst Graeber says. "Security and privacy concerns mask the factor most responsible for holding back online banking adoption: online tenure. "The longer a consumer is online, the more comfortable and confident he is with transacting online. But time won't heal all wounds," she says, advising financial institutions to "fix site usability issues, offer a security guarantee, and improve phone and e-mail support." Other factors keeping some consumer banking off line include preference for existing service channels, especially among senior citizens, and simply being unaware that the service exists, especially among the younger set, the Forrester research found. Graeber and her colleagues based their conclusions on a Forrester survey of more than 3,800 U.S. households in mid-2003, followed by a canvass of more than 53,800 U.S. households earlier this year as part of its Consumer Technographics 2004 North American Benchmark Study. They found that while online banking has grown sharply during the past four years, active online bankers remain a minority of all online households. "Nearly two-thirds of U.S. consumers are online, yet only a little more than one-third have banked online in the past three months," Graeber notes. The Forrester Report categorizes the non-online bankers three ways: * Holdouts are generally technology pessimists who don't believe credit card information is very secure online and say they'll never bank on that channel. They tend to earn considerably less than active online bankers and also tend to be older. * Fence sitters plan to bank online someday. They tend to be Baby Boomers who are more optimistic about technology. * Quitters have banked online and then gave up. They are mostly Gen Xers and Baby Boomers who are less optimistic about technology than active online bankers and less likely to have broadband at home, the Forrester report says. Addressing usability, service and security issues that keep the "holdouts" and "fence sitters" at bay also would win back many of the "quitters," the Forrester researchers say. Doing that will require credit unions and banks to work with both their technology providers and end users. Too much time, for instance, is spent on public content on a site at the expense of back-end usability, Graeber argues, and financial institutions "must educate their platform providers on the importance of usability on adoption and push them to simplify navigation choices, condense the number of screens needed to complete a transaction, and offer context-sensitive help." And as for security, simply posting a security and privacy policy on a site with a link at the bottom of the screen "doesn't cut it," the Forrester analyst says. A security guarantee, one such as Wells Fargo's that promises full coverage for any funds improperly removed, is needed to really assure the wary consumer, Graeber says. And to win back "quitters" and prevent creating more in the future, accurate and consistent answers need to be provided to consumers via phone, e-mail and chat," the Forrester researcher says. -

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