If not for the foul economic climate and over inflated expectations of the late ‘90s, the online channel would be the toast of the industry. By most measures, online banking is a runaway success. Compounded annual growth since OBR’s founding, at year-end 1994, has been 80%. Worldwide, more than 100 million households now bank online, up 20-fold. In the U.S., household adoption passed 25% a few months ago, up 100-fold since 1994. Looking ahead, we project another doubling of usage in the U.S. to 50+ million households by decade’s end. Worldwide, the total is expected to triple to 300 million or more households.

Table 1

7.5 Years of Web Banking

Source: Online Banking Report estimates, +/- 25%, 11/02          WW=worldwide

* Using dial-up services such as Prodigy or CitiDirect in the U.S., Minitel in France

However, the industry is still young and has many challenges ahead including:

• difficulty in quantifying the benefits of online channel usage
• post dot-com skepticism from management, media, and nonusers
• security issues, real and imagined
• adverse selection problems with loan accounts generated online
• miniscule spread on deposits

In 2003, we’ll address these issues and more, helping you realize the full potential of the online channel, both internally and with customers.
Happy holidays.