FRAMINGHAM (03/13/2000) - Bank of America Corp. last week touted that some 2 million customers, or 7% of its depositors, have signed up for its online services. Analysts said that percentage is about average for large banks, but they added that Bank of America is a leader in terms of the services it offers.
The Charlotte, N.C.-based bank, the second largest in the U.S., has more than 30 million retail customers and said it is the first bank to have reached the milestone of 2 million online customers. It attributed that figure partly to a large presence in California, where consumers are technology-savvy, a bank spokesman said.
But David Stumpf, an analyst at A.G. Edwards & Sons Inc. in St. Louis, said 7% is still a small figure. And a Feb. 1 report from Donaldson, Lufkin & Jenrette Inc. (DLJ) in New York said Bank of America is squarely in the middle among large-capitalization banks when it comes to signing up online customers.
PNC Financial Services Group in Pittsburgh leads the charge, with more than 15% of its customers using online banking, the DLJ report said. PNC has fewer total online customers because it has fewer customers overall.
But Bank of America customers can check balances, pay bills, apply for loans and even invest online. As of the end of last year, only three other large-cap banks offered as wide an array of online services as Bank of America did, according to DLJ analyst Susan Roth, who issued the Feb. 1 report.
None of the mid-cap banks even came close, according to Roth's report. Online bill presentment was unavailable, online loans were rare and even bill payment was still pending at several of those banks.
Bank of America officials wouldn't say how much online banking was costing - or saving - the bank, but they did say that it required a "tremendous" initial investment to get the system up and running.
But Senior Vice President Susan Baumann said Bank of America is already seeing online banking bear fruit.
"We're finding that customers who have online banking have more accounts with us, are more profitable and stay longer," she said.
Such growth is exactly what Stamford, Conn.-based Gartner Group Inc. analyst George Barto said he expected.
"People don't change their banking habits overnight unless there's a truly compelling reason to do so," he said. "Bank of America is a real success story.
It's an indication that they're providing the service that their clients want."