Money is now digital, so why not your bank? Financial institutions large and small are rushing to open virtual branches, offering higher savings yields and lower interest rates to entice consumers.

And the competition is heating up, according to eMarketer‘s report “Banking and Bill Paying Online: Chasing Those Digital Dollars.”

But growth in the US online banking population is slowing. eMarketer estimates the number of consumers who have accessed their bank account online at least once in the past six months will grow 9.5% this year, to nearly 80 million, with growth falling to 6% through 2011, when 48% of US Internet users will conduct some form of banking online.

Even so, there is still great potential for banks to find customers online. Two-thirds of US adults between the ages of 18 and 34 do not bank online, according a survey by Minitel International Group.

For many, security is still a major issue. Gartner Inc. estimates that 32.7 million US adults have stopped or will not start banking online due to security concerns.

“Consumers must be courted and convinced, through enhanced security measures, easy to navigate Web site design and the usual higher saving rates and lower banking fees than the next bank’s Web site,” says Lisa Phillips, senior analyst and author of the report. “Internet population trends, as well as consumer attitudes and behavior, impact the potential for success or failure of a bank’s online offerings.”

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