The number of consumers doing business online has exploded in the past decade. Americans have shifted their business away from bricks-and-mortar stores to cover many of their needs. Some examples of this include using Amazon instead of bookstores, Expedia instead of a travel agent and Newegg instead of electronics shops. The financial services sector has also seen a marked increase in consumers moving to online offerings for their convenience, flexibility and options. Some of the fastest growing areas of the online financial services sector are banking, investment and tax filing.
Marketing news website ClickZ reports that, since 2002, online banking has grown nearly 50 percent. They note that nearly half of the Internet users in the U.S. now do at least some, if not all, banking online. The actual number is roughly 53 million, up from 14 million less than a decade ago. Pew Research stated that online banking has been the fastest growing online activity in the U.S. Unlike many other online activities, Internet banking's boom has not been led by the young. The American Banker's Association 2011 recent survey revealed that older Americans, for the first time, prefer doing their banking online. 62% actually preferred online banking over branches and ATMs (28%).
Introduced in the 1990s, online trading took the ability to analyze investments and buy stocks to the average Internet user. Anyone with a computer could get into the stock market and avoid the high fees stock brokers and investment advisors charged. Despite the burst of the dot-com bubble, the decline in popularity of day-trading and the economic downturn in the U.S., online trading sites are thriving. eTrade, for example, reports 8-10% increases in trades-per-day since 2003. From 2000 to 2003 alone, the number of Americans investing online grew from one million to seven million. Investing online has become a clear choice for many Americans due to its convenience and its low cost of trades. The popularity of online investment sites like eTrade and Scottrade even caused traditional firms like Charles Schwab and Fidelity to open their own online branches.
Turbotax software, a leading manufacturer of applications for tax filing, reports that 95 million Americans filed their taxes electronically last year. According to the Internal Revenue Service, 141 million returns were filed last year, so that means electronic tax filing, or "e-filing", represented 67% of all tax forms filed. Use of online tax preparation sites and software like Turbotax has increased 10-20% every year since 2004 according to Mulbrandon Research, Design and Insights. Just as in the investing sector, traditional tax preparers have found themselves looking for a piece of the online action. H&R Block, for example, purchased and rebranded the popular TaxCut software package and now offers online tax filing options through both this application and on their website.
Ten years ago, less than half of the population of the United States was online. Internet World Stats now reports that over 347 million Americans have Internet access. This means that almost 80% of the U.S. is online now. With this growth, it's no wonder that online services have exploded as Americans are increasingly looking to the Internet not just for leisure, but for necessities as well. The Internet offers a convenient way for consumers to shop, regardless if they're shopping for DVDs or investments. The resultant growth of online financial services sector has changed the way we bank, invest, file taxes and more. It has given regular people the power to better control their finances and has revolutionized the entire industry.