Twice a year we update our online banking forecast. Even though we are skeptical of forecasting new technology adoption, every spreadsheet and business plan needs a topline forecast for credibility. But we can say one thing for sure about the following forecast. It’s wrong. We just hope it’s less wrong than others. With those caveats in mind, we submit our revised online banking and epayment projections through the next decade.

Table 1
Online Banking Evolution

Source: Online Banking Report, 4/00

In Sept. we projected 11 million online households by yearend 1999. It looks like we ended the year close to that. We’ll call it 10.5 million (+/- 15%). As more primary research becomes available from we may revise that number. For 2000, we project 4.5 million (+/- 33%) additional households, ending the year at 15 million (+/- 20%) Even though bill presentment continues to lag in adoption, its easier-to-use cousin, email payments, is growing dramatically, and will add 2 million to the 2000 forecast. For the past three years, we’ve projected household penetration of 25 to 30 million by year-end 2002. We continue to believe that is a realistic projection.

Definition: Online Banking Household

Must have done any of the following in the past 90 days:

•  Registered for online¹ access to checking, credit card², or loan/mortgage account access
•  Signed up to pay bill(s) online
•  Paid a monthly fee for online banking or bill pay
•  Accessed balance or transaction data online for a checking account, credit card, or loan/mortgage
•  Authorized a bill payment online at any bank, non-bank, portal, or biller site³
•  Sent money over the Internet using email payments (e.g., PayPal, X.com, eMoneyMail)

(1) Online is any connection where data can be viewed, wired or wireless, including Web phone, browser, proprietary software, Quicken, Money, etc. from home, work, school or other.

(2) Unlike many, our estimates include 1+ million households whose only online banking activity is accessing credit card statements.

(3) Viewing a bill without paying it is not included..

Table 2
Online Banking Forecast Summary
millions of U.S. households using online banking and/or epayments*

Source: Online Banking Report projections based on industry data (+/- 20%), 4/00; *past 90 days; ** CAGR from 2005 to 2010

Table 3
Detailed Online Banking¹ and Bill Payment Forecast (U.S.)
millions of households using online banking and/or bill payment each month
 

Source: Online Banking Report, 4/00

1) see account definition on previous page

2) household has used at least one of the following 9 account access and payment services listed below (+/- 20%)

3) household has used at least one of the following 5 statement access services (+/- 20%)

4) includes any FDIC-insured deposit account (does not include brokerage cash accounts held in money market mutual funds) (+/- 20%)

5) includes users accessing credit and charge card accounts online even if they don’t use an online checking account (+/- 30%)

6) uses statement aggregation services (e.g., Yodlee, VerticalOne) at any site, bank or non-bank (+/- 40%)

7) subset of statement aggregation that monitors loan payments, balances, and helps user minimize total interest expense (+/- 50%)

8) subset of account access; any of hundreds of email notifications triggered by account balances or activity; includes full statement delivery as well (+/- 30%)

9) uses any of the following 4 epayment products; does not include online purchase using a credit or debit card (+/- 25%)

10) pays bills to multiple billers at a third party site (not the biller’s site); the third party can be a bank, non-bank, Web site, Quicken, or Money (+/- 25%)

11) sends money to any person or business using email payments such as PayPal (+/- 35%)

12) pays bills directly at the biller’s Web site, or directly to the biller in response to an email message (+/- 35%)

13) Scan & pay is a subset of third party bill payment; providers are PayTrust, PayMyBills.com, and CyberBills (+/- 50%)