Online Banking’s boo-boo

Finance

People are banking online in greater numbers than ever before, but according to a recent survey, banks aren’t keeping up with their customers’ appetites for online financial planning assistance. After questioning 1,800 banking customers in the United States, the United Kingdom and Canada, IT consultancy Keane found that financial institutions are failing to tap into a growing market for online financial advice on topics ranging from retirement to college savings plans.

“Banks are fulfilling a lot of basic tasks online, but when it comes to financial planning, they are far less effective,” says Paul Johnston, an analyst at Pilgrim Partners, a research firm that conducted the survey for Keane.

The Keane study comes at a time when people increasingly are checking their balances, transferring funds and paying bills online. In fact, the number of online banking customers in the United States grew to nearly 40 million during the last quarter of 2005, up 27 percent from the previous year, according to ComScore Networks.

The Keane study closely follows its January survey of banks, which found that financial institutions consider customer satisfaction with online services key to their revenue growth. And the most recent Keane study revealed that most customers are happy with their bank’s online services. More than 70 percent of those questioned said they believe that their bank’s site is secure, and most find the sites easy to navigate. But when customers were asked to go into detail, most said they don’t think that their financial institutions offer good online financial planning tools or advice.

Johnston says that banks are missing a big opportunity by failing to use their sites to reach what he calls “aspiring planners”—the 61 percent of those surveyed who want and need help to plan for their financial future. According to the survey, almost 80 percent of these aspiring planners said they would use expert advice and guidance on financial matters. Most banks say they offer financial planning services online, Johnston adds, but the Keane survey revealed that customers aren’t using them because, he says, most online planning tools are neither sophisticated nor easy to use.

“Banks need to focus on making their planning tools more interactive and fun to use,” Johnston adds. “Build it and they will at least try it. If you get it right, they will use it.”