Consumers Surf the Web to Compare Credit Offers But Still Favor Traditional Methods to Apply for Loans: PSI Global Says Price and Relationships Will Boost Online Lending.

Business Editors

TAMPA, Fla.--(BUSINESS WIRE)

March 23, 2000 - Many consumers routinely surf the web to shop for the best credit offers. But when it comes time to apply for a loan, less than half of web credit shoppers will click on the application form.

According to a new study of online lending released today by PSI Global, credit cards currently account for the majority of online credit applications. "Consumers' willingness to apply for credit online differs widely among various types of products," said Roger Swales, PSI Global President and Chief Executive Officer. PSI Global is an NFO Worldwide Company (NYSE:NFO).

"Consumers readily respond online to offers for new credit card accounts, but are far less willing to complete the more detailed applications required for other types of credit, such as mortgages," Mr. Swales said. "Customers want assurance that their personal financial information will be handled in a secure, confidential manner."

The PSI study also identified price and the reputation of the lender as key factors in increasing online applications for credit. "The importance of price is undeniable, and relationships matter in the online space," Mr. Swales said. "Eighty-three percent of online consumers said saving money would motivate them to apply for credit online, and 80%, said an offer for credit from a known, trusted provider would be important in their decision."

According to the PSI Global Financial Services Research study, 47% of web credit shoppers applied online, but in the case of those who were looking for a new card account, 61% filed applications via the Internet, In contrast, only 23% of consumers who researched mortgage loans applied online, and even fewer, just 16%, of those who shopped for auto loans or leases applied online.

Maria Erickson, PSI Global executive vice president, research, said that consumers were divided in their preference for a high-tech versus a low-tech approach to lending. For example, almost as many online credit shoppers would prefer to complete the application face-to-face as to continue the automated process. The ability to speak to a lending specialist during the process was important to 38% of online credit shoppers in the PSI Study and to 47% of those who did not apply online," she added.

PSI Global's research also found that privacy and security issues have stymied online lending activity. Fully 44% of online credit shoppers said that too much confidential information is required in an internet application, and 56% percent of shoppers who do not apply online share this belief. "These concerns cannot be considered overblown," Ms. Erickson observed, " when 86% of consumers who had used the internet to research or apply for a loan online said they would be likely to do more business with a company if they were confident about how private information would be used."

Sixty-eight percent of internet credit shoppers said they would continue to compare offers online. However, fewer of these consumers are "very likely" to apply for loans online this year. Among consumers who anticipate shopping for credit online in 2000, 15% said they were "very likely to apply for a credit card; 7%, a mortgage; and 7%, other types of loans.

PSI Global, an NFO Worldwide Company, is a marketing information firm focused exclusively on financial services. For more than 30 years, PSI has provided unique "voice of the customer" insight and analysis across all types of market research. PSI products cover all aspects of retail and corporate financial services, including continuous studies devoted to brand equity, card services and strategies, payments, delivery services and online financial services. PSI Global has offices in New York, London, Singapore, San Francisco and Tampa.

NFO Worldwide Inc. (NYSE:NFO) is a leading provider of research-based marketing information and counsel to the worldwide business community. With almost 15,000 full and part-time employees operating in 38 countries, in-depth expertise in all research methodologies, and in-field marketing experience across multiple market sectors, NFO provides clients with trusted insight into the behaviors, attitudes and opinions of customers around the globe. Key services include comprehensive counsel on market evaluation, product development, brand management, customer satisfaction, pricing, distribution and advertising effectiveness. The Company delivers custom and syndicated marketing information and counsel to over 4,000 clients in key market sectors such as packaged goods and foods, healthcare, financial services, high-tech/telecommunications, travel and leisure, automotive and business-to-business. NFO is the largest custom marketing research firm in North America and among the top three in the world. Together with its subsidiary and affiliate companies, NFO is the world's largest provider of Internet-based custom marketing research services. Visit NFO Worldwide on the Web at http://www.nfow.com.