Online banking customers - especially those 55 and older and those whose household income exceeds $100,000 - are increasingly turning to e-brokerages, according to research from Compete.
According to the report, banks should enhance their online offerings with features such as account aggregation tools, financial advice and simpler site navigation to prevent attrition of key customers.
Derick Sutton, vice president, Compete Advisory Services, says: "Companies like Schwab and Fidelity are rapidly improving their financial products and meeting all of their customers' financial needs online. They've begun to offset falling trading revenues by offering chequeing accounts, mortgages and other credit products which were formerly the sole domain of banks."
Compete conducted a study drawn from the clickstream data of more than eight million Internet users' online behavior between March and May 2001.
On average, more than one-third of visitors to a bank site during this period also visited a leading e-brokerage during that time. This included 45% of Fleet's online customers, 41% of Citibank's online customers, 38% of Wells Fargo's online customers, 31% of Chase's online customers and 27% of Bank of America's online customers. The most popular e-brokerage for online bank customers was E*Trade.
The study found older and more affluent online bank customers were more likely than their younger and less wealthy counterparts to use both their bank and an e-brokerage site. For example, 55% of Fleet's online customers who earn over $100,000, and 47% of Citibank's online customers age 45 and over, also visited a leading online brokerage between March and May.
According to Sutton, the most successful e-brokerages have become personalised financial portals, where customers can not only maintain all their financial accounts, but also obtain advice, track news and pay bills.
"Banks need to focus less on hawking individual products and more on serving the broader needs of their customers," he says.
"The opportunity exists for banks to increase share of wallet because they still control the majority of chequeing accounts, which are the banks' anchor for selling higher margin products," adds Sutton.
The research shows customers are drawn to brokerages for items they cannot find online at their bank's site. For example, 12% of E*Trade customers who also bank online and 8% of Schwab.com customers who also bank online accessed financial research. More than 1 in 5 Fidelity.com customers utilised the My Fidelity or Yodlee feature (My View), which offer account aggregation, analysis tools, and allow customers to personalise their interaction with the site.