Although growth in the online banking industry has slowed, high yield savings accounts are on the rise, due in large part to online advertising.
The online banking industry saw significant growth, change and advancement in 2005. As evidence, nearly 40 million online banking customers logged into their online accounts during Q4 2005, which represents an increase of 27 percent from Q4 2004. However, growth in online banking adoption is clearly slowing. During 2004 the total number of online banking customers for the year grew 47 percent, with growth of almost 19 percent from Q3 2004 to Q4 2004 alone. In contrast, the 3.1 percent increase realized from Q3 2005 to Q4 2005 was the lowest growth rate seen in three years.
Active OLB Customers: Top 10 Banks (000)*
Financial institutions have become more competitive in their online offerings, consumers have become savvier and online banking is no longer for early adopters-- it is mainstream. Online banking customers can choose from a variety of options, and among the most popular is online-only high yield savings accounts which enable the consumer to engage in truly branchless banking.
The big story in online banking during 2005 was the growth of the high yield savings (HYS) marketplace. New entrants to the market increased competition, spurring promotional offerings and adoption growth. In Q4 2005, 446,000 high yield applications were submitted, up from 390,000 in Q1 2005.
The increasingly competitive nature of the high yield savings industry has forced these financial institutions to compete not only with rates, but also in their advertising. Advertisements for high yield savings accounts have taken multiple forms, from bank branch advertisements to Superbowl commercials and bill statement inserts.
More than one in five high yield savings customers recall learning about their current HYS provider from a bank branch advertisement. Another 14 percent were informed through a customer service representative. TV advertisements accounted for 10 percent of responses and online advertisements (banners, email, et cetera) were cited by 16 percent of respondents as the means through which they initially learned about their current HYS provider.
Source of Initial Knowledge of Current HYS Account
Source: comScore Networks
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