The trend suggests a direct response to banks' increasing service charges, which represent billions in annual revenues for the big two - Scotiabank and National Commercial Bank (NCB).

Bank of Nova Scotia Jamaica (BNS), which upgraded its online service in the first quarter of this year, has already seen a 25 per cent jump in the use of online banking only halfway through year, according to Maya Walrond, senior vice-president of customer experience at the institution.

Some 37,000, or 10 per cent, of its active customers use the e-banking service of the bank, which is the local sector leader in deposits.

NCB, the largest bank by assets, is reporting that e-banking represented 46 per cent of all transactions in May this year, up from 42 per cent recorded in January.

Together, BNS and NCB control 70 per cent of the commercial banking market.

easier than telephone banking

"As more people get access to Internet
, more are using it as their primary way of banking. It is the easiest of all our channels, even easier than telephone banking," said Walrond.

She is quick to underscore the savings being realised by those who bank online.

"They are saving the fees they would normally pay for transactions within a branch, bill-payment charges and most important, they are saving time. They also get the additional convenience of being able to do their banking normally pay for transition within a branch, bill-payment charges, and most important, they are saving time. They also get the additional convenience of being able to do their banking anywhere, any time," she told the Sunday Business.

According to the bank officer, the most popular use to which BNS customers put the bank's online system is to "check whether their money is still there, and making sure that transactions are accurate."

Meanwhile, Claudette Rodriguez, assistant general manager of the card services and e-channels unit at NCB, said during the January to May period, the bulk of online transactions were for the transfer of funds between accounts, an activity which grew 15 per cent.

NCB also offers transfers free through telebanking, while BNS charges $12 per transaction.

second-most popular

NCB also said its online portal or e-banking facility was second-most popular for the payment of bills, which saw a 35 per cent rise over the same period.

Utility bill-payment costs $140 at NCB, but is free online. Scotiabank discontinued the service about a year or more ago.

Only a minority - 36 per cent - of users who log on to NCB's e-banking service actually do a transaction, leaving the bank official to speculate that the other 64 per cent are checking bank balances or utilising the email option to make service requests.

Last year, several banks, including BNS and NCB, embarked on the aggressive marketing of their e-banking services.

But the growth in the number of persons turning to banks' free online services could threaten bank profits in coming years.

Last year, for example, NCB raked in $5.9 billion in fees and commissions charged against customers' accounts for transactions with the bank, but spent only $1.2 billion on their collection.

The upshot is that for every dollar of fee/commission income collected, the bank retains just under 80 cents as profit.

penalty charges

In the case of Scotibank, it spent $1 billion to collect $4.86 billion in fees - retaining 78 cents as profit.

Its fees as a proportion of operating profit was 29 per cent; for NCB it was 44 per cent.

A sampling of bank charges, contained in a recent survey done by the Consumer Affairs Commission and released earlier this week, revealed no standardisation of fees among the banks.

For example, closure of an account within 90 days attracted penalty charges ranging from a low of $356 at FirstCaribbean International Bank, to a high of $2,000 at First Global Bank.

Interest charged on overdraft ranged from a low of 21.5 per cent, charged by BNS, to a high of 50 per cent, charged by First Global.

Five of Jamaica's seven commercial banks participated in the survey - BNS, FirstCaribbean Jamaica, First Global, NCB and RBTT Bank. Citibank NA and Pan Caribbean Bank Limited did not.

Banking officials believe the growth in the use of their online service will continue to increase as customers overcome security concerns.

"Security in the past was one of the hurdles, but now they know the system is a world-class system in terms of world-class protocols." said Walrond.

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