MADISON, Wis. - All the hype about credit unions needing to offer more Web-based products and services may be on target. More than half of all credit union members (55%) are online, compared to just 37% of non-members, according to preliminary data from a CUNA/PSI Global study. "What we're finding is that credit union members in general are online more than the general public," said Mark Condon, senior vice president of association services for CUNA & Affiliates. "Our point of view is that if credit unions are going to continue to grow they have to have an online strategy." Similar to overall U.S. demographics on Internet usage, usage rates increase among members as household income increases. Seventy-five percent of online credit union members have income of $75,000 or more. Right behind that group is the 62% of members with income of between $50,000 to $74,900. Members between the ages of 25 and 44 are the most likely to use the Internet, with 63% of them online. Next came members between the ages of 45-54, with 61% of them online. Most online members engaging in online banking are new to the service. The study found that 28% of the online members using online banking have been doing it for six months or less; and 35% have been doing if for less than a year. But most online members were aware of their credit unions' online services. "They're very aware of online banking. We asked about knowledge of online banking services, and 75% of them said they were aware of the services," said Maria Erickson, senior vice president for PSI Global, a research and consulting firm located in Tampa, Florida. PSI randomly surveyed 1,330 credit union members to represent national age and income demographics. Erickson said most members are using online banking to check account balances; see if checks cleared; and download statements-yet only about 6% of online members are paying bills online. "Even though we see a lot of hype about buying things online and making transactions, most credit union members aren't doing it," said Erickson. But credit union members are utilizing online brokerage services. The study found that 20% of credit union members surveyed are buying and selling securities online. It did not break down how many of those members are using a credit union securities system, but the number is likely to be low. Erickson said there are a few solid reasons to point to that explain why credit union members are more online-oriented than non-members. "Credit union members tend to be part of dual income households, generally married with both spouses having salaries. They have money and are of working age," said Erickson. And of course income is one of the biggest indicators of Net usage. A 1999 study by the Commerce Department titled "Falling through the Net" found that Internet usage is directly correlated with income. It found that almost 60% of Americans with income of $75,000 or more have access to the Net. As for gender, online credit union members are following the national trend of all Americans. The number of male and female online members is split about 50/50, as it is nationwide among all Americans. Nationwide, women Net users are growing faster than men. According to a just-released Nielsen NetRatings report, the number of women online grew 32% in 1999, while the number of men online grew by just 20%. The CUNA/PSI Global study also found that 49% of credit union members between the ages of 18 and 24 are online. Condon said credit unions need a strong Web presence to attract these younger members because they can't rely on them becoming members through the old-fashioned route of being hired by a large SEG company. "A lot of younger Americans might not be exposed to the old-fashioned way of joining a large SEG. Many of them start working at small businesses out of college or even high school," said Condon. He said these younger members are more willing to bank online and make purchases online, so CUs need to have their Web storefronts set up and functional. But if credit unions have to rely on their Web efforts to attract members, over 75% of the nation's CUs may be in trouble. Despite all the talk about the affordability of developing a Web presence and of credit unions as early adopters of Web technology, according to Callahan & Associates, only 2,322 credit unions, or 21% of all CUs, have a Web site. Only 704 credit unions, or 6%, offer members Internet banking. Credit unions may want to act fast in bringing Internet banking services to members. According to Dataquest Inc., a unit of Gartner Group, Inc., the number of U.S. households using online banking systems is expected to more than triple in the next five years, from 7 million at the end of 1998 to more than 24.2 million by 2004. Dataquest also believes that approximately 57% of these, or 13.7 million households, will be paying bills online in 2004. Erickson said the study also found that Net banking has overcome dial-up systems. "We see a definite trend away from the proprietary software to almost total use of the Web browsers for Internet banking," said Erickson. And a stat that many CU leaders might find disheartening is that one-third of members surveyed said their most important short-term financial goal is to get out of debt. The most important long-term goal was saving for retirement. The full CUNA/PSI Global study, "CU Members Today & Tomorrow: A Guide to Future Marketing Opportunities & Threats" will be available on Feb. 25 from CUNA. -
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