Online-Only High-Yield Savings Accounts Have a Disruptive Impact on Customer Asset Loyalty
Posted on: Tuesday, 6 December 2005, 09:00 CST
RESTON, Va., Dec. 6 /PRNewswire/ -- comScore Networks today released an analysis that revealed an increase in the number of non-loyal customers within the pure online segment of the banking industry. The study found the ease of use of the Internet for conducting financial transactions and the increased competition in the pure online space have fragmented the marketplace.
comScore measured the impact of new entrants into the high-yield business and their disruptive affect on the main players in this space. The study found that despite the impressive growth brought about in the pure online savings business by the Internet -- due to the increased availability of information, and ease of conducting financial transactions -- this dislocation could be causing a high rate of customer switching.
comScore analyzed the high-yield savings segment as a pure online banking business in order to better understand the impact of online-only players. The analysis found that, on average, 4.3 percent of consumers accessed multiple online high-yield savings accounts in September 2005. In addition, the study revealed that 40 percent of consumers who accessed an EmigrantDirect American Dream Savings Account(TM) online also accessed online high-yield savings accounts from at least one other financial institution during the same time period. These findings point to a disparity in consumer loyalty among financial institutions offering high-yield savings accounts.
Additional study findings: -- The number of unique users accessing online high-yield savings accounts increased by 16 percent from 730,000 unique users in January 2005 to 850,000 unique users by October 2005. -- Users accessing online high-yield savings accounts at more than one institution nearly doubled from 2.2 percent in January 2005 to 4.3 percent in September 2005.
"It is clear the players in the online high-yield savings space have excelled at creating a compelling product for consumers," said Brian Jurutka, director of financial services solutions at comScore Networks. "A growing number of consumers are now comfortable moving assets from more traditional savings, checking, and brokerage accounts into these online-only accounts. But online-only companies must be aware that they are attracting a segment of consumers who may not remain loyal once another institution begins offering a higher interest rate."
Although ING Direct still enjoys the strongest share as a result of being first-to-market with a high-yield savings product in 2000, competitive pressure has eroded their share of accounts accessed in more recent months. From January to September 2005, a decline of 5.5 percent was noted in the share of ING's online high-yield savings accounts accessed. During the same period, the share of accounts accessed at Capital One and EmigrantDirect grew 60 percent and 100 percent, respectively.
"EmigrantDirect has been aggressively promoting some of the highest interest rates in the country for online high-yield savings accounts since late last year. Although they have grown their deposits significantly, the percent of EmigrantDirect customers who accessed their American Dream Savings Account(TM) in October 2005 and who also accessed another institution's online high-yield savings account was nearly ten times the industry average," said Jurutka. "The degree to which consumers have opened high-yield savings accounts online demonstrates their rate sensitivity, and this research shows EmigrantDirect customers are willing to switch online high-yield savings accounts for even higher rates."
Banking industry professionals and members of the media seeking additional information may contact comScore Networks by sending an e-mail to banking@comscore.com.
About comScore Networks
comScore Networks provides unparalleled insight into consumer behavior and attitudes. This capability is based on a massive, global cross-section of more than 2 million consumers who have given comScore explicit permission to confidentially capture their browsing and transaction behavior, including online and offline purchasing. comScore panelists also participate in survey research that captures and integrates their attitudes and intentions. Through its proprietary technology, comScore measures what matters across a broad spectrum of behavior and attitudes. comScore consultants apply this deep knowledge of customers and competitors to help clients design powerful marketing strategies and tactics that deliver superior ROI. comScore services are used by global leaders such as AOL, Microsoft, Yahoo!, Verizon, Best Buy, The Newspaper Association of America, Tribune Interactive, ESPN, Nestle, MBNA, Universal McCann, the United States Postal Service, Merck and Orbitz. For more information, please visit http://www.comscore.com/ .
comScore Networks, Inc.
CONTACT: Jeremy Shermak of comScore Networks, Inc., +1-312-775-6520, orpress@comscore.com
Web site: http://www.comscore.com/
Source: PRNewswire
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