Online Banking Grows at BofA and Chase, But Who Is Active?””

Second-quarter earnings reports from Bank of America Corp. and JPMorgan Chase & Co. show strong online-banking growth at both giant institutions. BofA also reported today that its base of active bill-payment accounts is up nearly 15% from mid-2007. But subjectivity could be an element in the numbers as banks try to burnish their reputations among customers, especially younger ones, as being tech-savvy. “It's all for bragging rights,” says Ron Shevlin, a senior analyst at Aite Group LLC in Boston who follows marketing and technology in retail banking. Both banks use the term “active” to measure their online-banking customer bases, but Shevlin notes that there is no standard industry definition of active. In a supplement to its latest financials, BofA said it had 25.3 million active online-banking accounts as of June 30, up 14% from 22.2 million a year earlier. The number of active bill-payment accounts, 13.3 million, grew a bit faster, 14.7%, from 11.6 million in 2007's second quarter. While the share of active bill-pay accounts among active online-banking accounts nudged up only slightly?from 52.1% as of June 30, 2007, to 52.4% in 2008's second quarter?BofA's ability to get that many people using bill-payment services nonetheless is notable, according to Shevlin. “The fact that they're around 50% of their base is pretty darn impressive,” he says. “Those numbers reflect a very concerted effort by the organization to encourage customers to use bill pay.” Chase, meanwhile, on Thursday disclosed in its second-quarter report that its number of online-banking accounts hit 7.18 million, up 31.8% from 5.45 million a year earlier. That means the share of active online-banking accounts among the 11.3 million total checking accounts was 63.3%, up from 52.6% in 2007's second quarter when Chase reported having just shy of 10.4 million checking accounts. The bank didn't report online bill-pay data. While acknowledging that Chase too has been a leader in online banking, Shevlin takes the 32% growth rate in active online accounts?more than triple the 9% increase in total checking accounts?with a grain of salt. “That seems like huge growth,” he says. He has a similar assessment of the apparent 63% online-banking penetration rate among Chase's checking account base. “How do they define what active means?” he asks. A Chase spokesperson says he didn't think Chase had changed its definition of active, but was checking. “We are trying very hard to point out value of online banking when a new customer signs up with us,” he says via e-mail. No answer regarding the definition question was available by late Monday afternoon. Meanwhile, Chase reported that its 51%-owned merchant-acquiring unit, Chase Paymentech Solutions LLC, processed $199.3 billion in bank card transactions in the second quarter, up 11% from $179.7 billion in the year-earlier period. The joint venture with 49% owner First Data Corp. processed 5.6 billion transactions, up 17% from 4.8 billion in 2007's second quarter. Chase and processor First Data are splitting up the company on Chase's initiative (Digital Transactions News, May 27).