Instead of banks or brokerage houses, Internet portals have become the key to financial services on the Web, according to a recent study.
Of today's 58 million Internet users, 35 million, or 60 percent, are "digital financiers" conducting some form of financial services over the Web, according to a study from Cybercitizen Research released today by Cyber Dialogue.
The study, done in conjunction with Booz-Allen & Hamilton, also found that consumers are primarily using America Online , Yahoo , and Quicken to access financial services on the Internet, placing portal brand recognition above traditional financial institution brand names online.
Out of the 18.1 million Internet users who manage their investments online, more than 2 million "digital investors" reported that the most frequently used site for managing their finances is America Online's Personal Finance area. AOL's financial area is accessed five times more often than the nearest "established" brokerage branded Web site.
Financial services providers cannot go online and rest on the laurels, depending on their offline brand to bring in the hits, although some major finance firms, along with newspapers, sports sites, and other cultivators of timely, popular information, have garnered a good Web audience based solely on their offline brand name popularity.
"These findings tend to support the long term valuations of leading Internet portals," Mark Esiri, CEO of Cyber Dialogue and a principal of Wand Partners, Cyber Dialogue's financial sponsor, said in a statement. "Marketers' access to Internet consumers for financial services, a potential Internet 'killer app', increasingly involves a delicate dance between established offline brands and newly emerging portal-branded affinity groups."
The Cybercitizen research also found that only 3 million Internet users perform a majority of their stock trades via the Internet. However, 18.1 million users are regularly engaged in some form of investment activity via the Net, a 132 percent increase from 7.8 million measured in the second quarter of 1997.
"Among digital investors the most important criterion for selecting a brokerage, bank, credit card, or insurance firm is, consistently, a trusted brand," said David Fenichell, a vice president of Cyber Dialogue and director of Cybercitizen Finance, in a statement. "At the same time, the service provider must have a range of online and offline service options available to obtain and retain customers. More than 50 percent of Digital Investors use multiple sources to retrieve stock quotes, and nearly 20 percent use multiple brokerage sources when they trade."
The study is based on interviews with 1,000 Internet users and 500 nonusers. Respondents were asked about their use of online and offline financial services usage. The survey was fielded in the second quarter of 1998.