E-Banking Snapshot 39

Update on online and mobile banking

November 2011 Digital economy and structural change

47% of Germans will use online banking in 2012

More than 40% of Europeans will use online banking in 2012. For

Germany, the figure will probably be 47%. Growth trends have been mostly stable in Europe over the last few years noteworthy exceptions are France where online banking adoption jumped 11 pp in 2010 and the UK where adoption remained flat. chart 1
Northern countries lead the way. Consumers in Europes north from

Iceland to Estonia are well ahead in online banking adoption thanks to a combination of wealth and enthusiasm for technology. chart 2
Mobile banking rings a bell. Usage of mobile banking has jumped in Germany

thanks to better smartphones, affordable data plans and new banking apps. Research suggests that users of mobile banking are more loyal to their main bank, though reverse causality may be an issue here. chart 3
Online banking delivers highest channel satisfaction. Globally, 83% of

banking clients are satisfied with online banking (Germany: 80%). This is the highest score of all banking channels. chart 4
Clients are switching from branch visits to online banking for standard tasks. Nevertheless, quite a large number of German clients (40%)

still use bank branches on a monthly basis. chart 5

Branches remain key for closing sales. According to our recent study on

German consumers, almost 50% of all sales are being researched online but purchased offline chart 6 (see also E-conomics 79).
Banks and friends are the most important sources of information on financial services. Unsurprisingly, users of online banking are increasingly

turning to the internet for information even blogs are repeatedly named as main sources of information. chart 7
Yet, overall enthusiasm for financial issues is limited. Germans search
Author Thomas Meyer +49 69 910-46830 thomas-d.meyer@db.com Editor Antje Stobbe Technical Assistant Sabine Kaiser Deutsche Bank Research Frankfurt am Main Germany Internet: www.dbresearch.com E-mail: marketing.dbr@db.com Fax: +49 69 910-31877 Managing Director Thomas Mayer

online for Greece to make travel plans. Only in the last few weeks, interest seems to be driven increasingly by Greek crisis and Greek default in line with growing search volumes on euro crisis or EFSF (the latter mostly from users based in Berlin not Frankfurt). chart 8
Users of online banking are an active group of financial clients. They

are, in fact, eager to collect information, compare and discuss financial products in person. Such self-directedness thrives on financial literacy: online banking users are much more likely to consider themselves as savvy investors. chart 9
Many Germans have downgraded their financial literacy. The share of

clients who consider themselves savvy investors has declined over the last few years. As a consequence, clients may shy away from making informed choices. But therein also lies a responsibility for financial firms to explain what is going on. Contrary to the trend, a growing share of DB clients consider themselves in the know users of online banking in particular. chart 10

E-Banking Snapshot 39

Online banking 2012

More than 40% of European will bank online by 2012

Online banking adoption, % of all individuals 50 45 40 35 30 25 20 15 10 5 0 2012 1

More than 40% of Europeans will use online banking in 2012. For Germany, the figure will probably be 47%. Growth trends have been mostly stable in Europe over the last few year noteworthy exceptions are France where online banking adoption jumped 11 pp in 2010 and the UK where adoption remained flat. back to front page

2003

2004

2005

2006 EU

2007

2008

2009

2010 DE

2011

Sources: DB Research, Eurostat, 2011

European clusters of online banking

Online banking adoption, % of all individuals (2010)

Northern countries lead the way. Consumers in Europes north from Iceland to Estonia are well ahead in online banking adoption thanks to a combination of wealth and enthusiasm for technology. back to front page

77

Northern enthusiasts

45 83

75

76

65 47 71 34 45 77 51 25 43 23 33 38 53 18 19 29 20 2 27 6 Southern and Eastern Europe Holdouts

Sources: DB Research, Eurostat, Forrester Research, Pew, 2011

37

54 European core

19

Mobile banking rings a bell

Share of clients having used mobile banking during the last 12 months, % of German internet users 8 9 8 7 6 5 4 3 2 1 0 3

Mobile banking rings a bell. Usage of mobile banking has jumped in Germany thanks to better smartphones, affordable data plans and new banking apps. Usage is typically limited to simple tasks such as checking account balances and finding the nearest ATM. Research suggests that users of mobile banking are more loyal to their main bank, though reverse causality may be an issue here. back to front page

2009

2010

2011
Sources: Accenture, DB Research, 2011

November 2011

E-Banking Snapshot 39

Online banking 2012

Happiness is an internet connection

Share of banking clients worldwide, which are satisfied with these channels, % Online banking Branches ATMs Call Centre Mobile banking 0 20 40 44 60 80 100 4 50 83 79 79

Online banking delivers highest channel satisfaction. Globally, 83% of banking clients are satisfied with online banking (Germany: 80%). This is the highest score of all banking channels. The global score on mobile banking is relatively low mainly because of users in rich countries. A majority of Chinese (54%) and Indian (59%) users is satisfied. back to front page

Source: Ernst & Young, 2011

Fewer branch visits

Banking channel clients use at least monthly, change 2001-2011 (pp) Use online banking Use ATM Use telephone banking Go to branch -30
Basis: German adults Sources: DB Research, Forrester Research, 2011

22 6 -3 -19 -20 -10 0 10 20 30 5

Clients are switching from branch visits to online banking for standard tasks. Nevertheless, quite a large number of German clients (40%) still use bank branches on a monthly basis, often for routine transactions such as picking up account statements and making money transfers activities that could well move online, too, and will do so in the future. back to front page

Most sales are closed offline

Share of new financial contracts, by research and sales channel, (%)

Research online / Purchase online 10.8

Research online / Purchase offline 48.6

ROPO effect

Research offline / Purchase offline 37.8

Research offline / Purchase online 2.7

Source: GfK, Google, DB Research, 2010

Branches remain key for closing sales. According to our recent study on German consumers, almost 50% of all sales are being researched online but purchased offline (see E-conomics 79 for a full discussion of the ROPO effect). Another study on European consumers finds, similarly, that 62% of Europeans who bought a financial product researched both online and offline. A majority of them (65%) eventually closed the sale vis--vis a human consultant. back to front page

November 2011

E-Banking Snapshot 39

Online banking 2012

Most important source of info: banks & friends

Main sources of information on financial services, % (2011) Basis: German consumers (multiple responses allowed) Main bank (brochures) Friends Newspapers News magazines Online services Ads Business magazines Blogs 0 All consumers 5 10 15 20 25 30 35 40

Banks and friends are the most important sources of information on financial services. Unsurprisingly, users of online banking are increasingly turning to the internet for information even blogs are repeatedly named as main sources of information. DB clients rely more strongly on information provided by the bank as well as business magazines. back to front page

DB clients

Regular users of online banking 7

Source: DB Research, Communication Networks 15.0 (Hrsg. Institut fr Medien und Konsumentenforschung IMUK GmbH & Co.KG), 2011

Online researchers care for Greece mainly as a vacation destination until this autumn
Search volume at Google, by keyword(s) "financial crisis" "Greece" "EFSF"+"euro crisis" 120 Olympic Games Holiday time Lehman shock Forest fires 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 100 Greek crisis 80

Yet, overall enthusiasm for financial issues is limited. Greece, for instance, raises interest primarily as a holiday destination, not as a crisis hot spot. Germans search online for Greece to make travel plans. Only in the last few weeks has interest seemed to be driven increasingly by Greek crisis and Greek default in line with growing search volumes on euro crisis or EFSF (the latter mostly from users based in Berlin not Frankfurt). back to front page

Basis: Germany; respective keywords in German translation used. Search volume is relative to total search volume and normalised to 100. Sources: DB Research, Google, 2011

Online banking does not crowd out personal consultation

% of German consumers, 2011 Want more information on investment opportunities Accept higher risk in return for higher returns Shop around before taking a loan / making investments Regard comprehensive and personal consultation as important Prefer socially responsible investments Consider themselves savvy investors 0 Use online banking 6 20 40 60 16 13 16 6 37 24 54 51 22 12 12

Users of online banking are an active group of financial clients. They are, in fact, eager to collect information, compare and discuss financial products in person. Such self-directedness thrives on financial literacy: online banking users are much more likely to consider themselves as savvy investors. back to front page

Do not use online banking 9 4

Sources: DB Research, TdW (Hrsg. Institut fr Medien und Konsumentenforschung IMUK GmbH & Co.KG), 2011

November 2011

E-Banking Snapshot 39

Online banking 2012

German downgrade their financial competence

Share of German cosumers considering themselves savvy investors, rebased 2009=100 130 Online banking users (DB clients) 120 110 Clients of Deutsche Bank 100 All consumers Online banking users (all consumers) 2009 2010 2011 10
Sources: DB Research, TdW (Hrsg. Institut fr Medien und Konsumentenforschung IMUK GmbH & Co.KG), 2011

Many Germans have downgraded their financial literacy. The share of clients who consider themselves savvy investors has declined over the last few years little wonder perhaps, given that many old convictions have proved elusive. As a consequence, clients may limit their willingness to act autonomously on financial issues and shy away from making informed choices. But therein also lies a responsibility for financial firms to explain what is going on. Contrary to the trend, a growing share of DB clients consider themselves in the know users of online banking in particular. back to front page

90 80 70

Copyright 2011. Deutsche Bank AG, DB Research, 60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite Deutsche Bank Research. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt fr Finanzdienstleistungsaufsicht. In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange regulated by the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. ISSN Internet: 1619-4829 / ISSN e-mail: 1619-6465

November 2011