Last year we led the annual planning issues with the title, “The Honeymoon is Over” What we meant was that competition had yet to become intense in the online banking sector. In looking back over the past 12 months, we can see that competition has indeed intensified. But overall, there has still been little market share gained by Net pioneers. In mid-1999, we estimated that fewer than 400,000 households, less than 5% of those banking online had switched accounts to Net-oriented brands. As you can see in the following table, those numbers haven’t increased dramatically unless you include the P2P payments arena where Net-only companies have grabbed nearly 99% of the business so far.  And since email payments are free¹ and will probably stay that way for some time, even in this product there’s been little revenue impact except for a few hundred thousand fewer money orders, mostly purchased at post offices and other non-bank outlets.

Is Market Share Finally Beginning to Shift to Net-Only Banks?

households that have moved accounts to Net-only banks¹

Source: OBR estimates plus or minus 33%, 6/00         n.m.= not measurable

¹U.S. households that have moved business from a traditional bank to a Net-only bank; e.g., moving a balance from a Citibank credit card to Next Card; ²Number and percent of HHs with at least one account at a Net-only bank or financial information aggregator, primarily P2P payments business; ³Percent of total U.S. retail financial services revenue garnered by Net-only banks & aggregators (a rough estimate)

So you’ve made it through another year; your Web site is growing, no one is talking about how Wingspan² is going to take over the Web. In fact, with the crash in B2C Internet stocks, the pressure may seem to have eased. Don’t bet on it. You will need to work harder than ever next year just to maintain share in the face of the growing popularity of truly virtual banking services³ such as statement aggregation and email payments. We’ve updated the 2001 Strategy Matrix to help you make sure you’ve covered all the opportunities.