The Board of Governors of the Federal Reserve System released findings Friday concerning banking service availability and banking fees, based on its annual survey of banking institutions. Today, Gallup is making public the results of a new consumer poll concerning financial services and how consumers access their banks*. Among the key issues addressed by the Gallup Poll:
- Are consumers taking advantage of the growing number of ways they can access their money?
- In what ways and how often are consumers accessing their banks?
- As access options have increased, are consumers using the traditional, brick-and-mortar bank branches much less?
- What has been the overall impact on banking convenience?
Key Findings of the Fed Study
According to the Fed's "Annual Report to the Congress on Retail Fees and Services of Depository Institutions," ATM fees have remained largely unchanged since its last report. Although the findings of the study are released with a significant lag, the June 2003 report includes a number of additional interesting findings:
- 96% of today's banking institutions offer some kind of checking account and 30% offer free checking.
- 99.5% of banking institutions offer some kind of passbook savings account and 40% offer no-fee passbook accounts, but only 15% offer no-fee passbook accounts that don't require a minimum balance.
- 93% of banking institutions offer ATM services to their customers and only 3% charge a fee if their customers use their ATMs, but 69% charge a fee if their customers use another bank's ATM, and 89% charge a fee if non-customers use their ATMs.
- All these findings were essentially unchanged in the year between the June 2001 and 2002 Fed surveys, with the exception of a 10-percentage-point decline in the number of banks charging their customers if they use another bank's ATM.
Most Consumers Regularly Visit Their Branches
During recent years, new technologies have greatly increased the number of ways consumers can access their banks. These innovations have led some observers to suggest that the era of branch banking is all but over. In fact, some bankers have actually begun to actively discourage their customers from using their branches. Among other things, they argue that other banking channels -- phone, ATM, and online services -- are less expensive for the bank to operate.
According to the April 14-16 Gallup Poll, 83% of Americans have visited their bank at least once a month on average over the past 12 months. Even more significantly, about 3 out of 10 say they have visited their bank at least four or five times a month on average -- or even more often -- over the past 12 months.
Surprisingly, these percentages are not very different from the findings of Gallup's March 2000 financial services poll. Although the questions were asked somewhat differently, that survey found that 87% of Americans said they were banking customers, and 78% said they used their bank branch once a week or more often. Despite the changes in banking technologies, the bank branch continues to play a key role in determining customers' relationships with their banks.
The Majority of Consumers Also Regularly Use the ATM
More than half of Americans also say they use an ATM on at least a monthly basis, and one in three do so four to five times a month or more. This is generally in line with Gallup's March 2000 findings; at that time, 48% of Americans said they used their bank's ATM at least once a month, and 27% did so once a week or more.
Many Consumers Also Bank by Phone
About one-third of consumers call their bank's 800 number and talk to a live representative at least once a month, in order to make banking inquiries or conduct transactions. Still, only 5% say they do so four to five times a month or more. This low number of frequent callers is explained, at least in part, by the fact that 38% of consumers also use their bank's automated phone service at least monthly. Once more, these findings are generally in line with Gallup's March 2000 finding that 30% of Americans used the phone to conduct some of their banking activities.
Many Consumers Also Bank Online
The most amazing finding of Gallup's new survey involves increased use of online banking. In March 2000, only 7% of Americans told Gallup that they used their computer to bank from home. Three years later, 29% say they bank online at least once a month, and 17% say they do so four to five times a month or more.
Banking Is More Convenient
Improved technology has greatly increased the convenience of banking for consumers, who can now access their banks 24 hours a day by ATM, phone, and online.
However, most consumers are not using today's new technologies as a significant substitute for visiting their bank branch. For most Americans, "relationship banking" is still exceedingly important. While consumers know that many transactions are routine, they also feel that some transactions are both vital to them and somewhat complicated. When customers have a problem or a complicated transaction to deal with, they want a banking relationship built on human interaction.
Bottom Line
Technology has not removed the consumer's demand for traditional banking services, including face-to-face interactions with bank representatives. It has, however, greatly increased both the supply of, and the demand for, broader access to banking services. The result is a shift in the definition of banking "convenience" -- and current banking fees suggest that consumers are both willing and able to pay for that added convenience.
*Results for April 2003 are based on telephone interviews with 1,011 national adults, aged 18 and older, conducted April 14-16, 2003. Results for March 2000 are based on telephone interviews with 1,002 national adults, aged 18 and older, conducted during March 2003. For results based on these total samples of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3%.
