Online savings accounts and checking accounts grow in popularity

A growing number of bank customers prefer to manage their checking and savings accounts online, according to a new survey by the American Bankers Association. For the second year in a row, more customers would rather bank online compared to any other method. This year, 36 percent of survey respondents said they preferred online banking, up from 25 percent who preferred it last year.

"Clearly, online banking has fully penetrated the market," American Bankers Association Vice President Nessa Feddis said in a statement. "Online banking is the future of banking as more Generation Y-ers enter the marketplace. This means the industry will need to continue investing in technology that supports online banking because consumers see it as quick, convenient, accurate and safe."

It's also cheaper in many cases. Online banks offer free checking accounts, and some big banks, such as Bank of America, are willing to waive checking account maintenance fees if customers with an online checking account conduct all of their business either online or through ATMs.

The brick-and-mortar branches still important

Consumers who cited online banking as their favorite banking method were more likely to be under 55 years of age, make more than $75,000 a year, and live in the West. Many consumers over 55, however, still prefer visiting the branch. Among them, 33 percent said they preferred branch banking, while only 20 percent said that online banking was their favorite way to keep their accounts in order.

Among all consumers, online banking preference was followed by a preference for visiting branches (25 percent), and using ATMs (15 percent). Just 8 percent said that they preferred banking by mail, 6 percent preferred using the telephone and only 3 percent of consumers said they preferred mobile banking -- using cell phones or PDAs to manage their accounts. As mobile banking has become increasingly popular among younger users, most of that 3 percent was comprised of customers in the 18- to 34-year-old age segment. Seven percent of consumers, meanwhile, didn't know which method they preferred.

Interestingly, the popularity of ATMs was down in all age groups. Only two years ago, 25 percent of consumers preferred banking by ATMs, versus this year's 15 percent.

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