According to the survey bank brokerage firms that provide customers with an online investing option contribute 13% more profit to the retail bank than those that have no self-directed investment channel.
Further, revenue generated per household was 16% higher in the accounts at banks that provided an online brokerage, and the revenues generated per million dollars of core retail deposits were 33% higher than their peers that did not offer online investment services.
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"With increased competition from traditional and online brokerage firms, banks are being challenged to retain and grow their existing client relationships," remarked Joe Stensland, senior vice president, MD of wealth management solutions, Scivantage.
"As investors continue to demand higher levels of service and greater access to the latest technologies to manage their investments, banks must reevaluate their online investment offering in order to capture a greater share of assets," he further added.
Of the banks that queried in the survey, 77% already offered online brokerage services, 4% were in the planning stages and 19% had no current plans to offer online brokerage.
While 83% of banks claimed online brokerage to be important to their client segmentation strategy, 67% of banks claimed that they realize the importance of online brokerage as an important component of their client acquisition strategy.
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By GlobalDataFurther, among the banks that offered online brokerage, the targeted client segments were primarily high net worth, affluent and emerging affluent, secondarily the mass market and finally, about 40% of the banks said they also targeted the lower income markets.
The survey has also revealed that online investment offerings will help banks attract and retain the Generation Y and Generation X segments.
