Credit Card Shoppers Lead the Charge Online; Online Firms Redefine Traditional Value Proposition of Credit Cards; Credit Card Shoppers Warm to the Idea of Shopping and Applying Online

Business Wire, Jan 22, 2001

Business/Technology Editors

ORLANDO, Fla.--(BUSINESS WIRE)--Jan. 22, 2001

According to a study released today by Gomez Inc., the Internet quality measurement firm, the Internet is profoundly changing the way credit cards are solicited, applied for, managed, billed, and paid. The State of Online Credit Cards 2001 reveals that Internet start-ups are challenging credit card giants to redefine the traditional value proposition of a credit card.

The study also found that consumers are demanding innovative online services, as well as the integration of new credit card technologies, and that success will come to those firms who successfully exploit the Internet to acquire new accounts. The State of Online Credit Cards 2001 was released today at Gomez's inaugural Best Practices in Online Financial Services Summit at the Walt Disney World Swan Hotel in Lake Buena Vista, Florida.

"Gomez research indicates a steady, if not dramatic, growth in consumers' adoption of the Internet to meet their banking needs," explains Paul Jamieson, director of financial services research at Gomez. "A new type of online consumer is emerging, one who actively uses the Web and intends to apply online for a credit card within the next six months. Knowing what motivates these consumers, and how to communicate to them is critical in attracting and serving them."

The State of Online Credit Cards 2001 is an extensive research report that evaluates key trends in the rapidly evolving credit card market. The study identifies a group of active Internet users, called Credit Card Shoppers, who have expressed an intention to apply online for a credit card within the next six months. These users have embraced the Web as a major part of their lifestyle, have longer Internet tenures than other groups of Internet users, and are comfortable using the Web to meet their many personal and professional needs. Such online buying activity should be attractive to credit card issuers, as the vast majority of Credit Card Shoppers will use a credit card to buy online.

While both full-service banks and online credit card firms can capitalize on Credit Card Shoppers' near-term intention to acquire a credit card online, an even greater opportunity may exist for full-service banks because of this group's broader financial services agenda. Credit Card Shoppers are attracted to the convenience and simplicity of account consolidation, and one in four consumers in this group already uses the Internet as their primary banking channel, and uses an online brokerage account to trade on the Web.

"Regional and super-regional banks also hold a distinct advantage in conquering this market because many of them already have a large share of Credit Card Shoppers as retail banking customers," continued Mr. Jamieson. "Conversely, community banks and credit unions may be at a competitive disadvantage because many of them have abandoned direct issuing of cards, which may jeopardize their relationships with these customers as they seek cards from other issuers."

The State of Online Credit Cards 2001 also points out that Credit Card Shoppers are attracted to financial services innovation, such as online bill payment, person-to-person payment services, and account aggregation. Additional Gomez research also indicates the appeal of innovative credit card services that enhance the security and convenience of online shopping. To maintain category leadership, online credit card firms will need to continue to pursue innovative site features, and firms promoting "smart shopping techniques" that use cardholder transaction data to more accurately target relevant promotions and offers, will continue to increase customer loyalty and cardholder satisfaction.

Mr. Jamieson will be participating in a panel at Best Practices in Financial Services entitled "Customer Experience Measurement; On Site Resources and Relationship Services", along with Gomez financial services senior analyst Nick Karris and Fannie Mae E-Business president Mike Williams today at 3:00 PM.

To learn more about this report, including how to order it, please contact Mark Rudolph at (781) 768-2183 or mrudolph@gomez.com

About Gomez

Gomez is the Internet quality measurement firm, providing e-commerce customer experience measurement, benchmarking, and customer acquisition services to help firms build successful e-businesses and guide consumers in transacting online. GomezPro provides e-commerce customer experience measurement tools, analysis, and advanced data services to help companies build successful e-businesses. GomezNetworks enables companies to optimize customer experience with real time site performance measurement and diagnostic tools. Gomez.com provides Scorecard rankings and merchant certification of over 6,000 firms in 75 industries, helping consumers transact online with confidence, and through its Performance Media(TM) program, enabling merchants to reach desirable consumers at a guaranteed acquisition cost. For more information, visit www.gomez.com