Care to seek online financial advise or arrange a credit card via the Internet? No thanks, says nearly 4.2 million Australians.

New research from Datamonitor show that Australian consumers are divided regarding online financial services. Around 27 per cent of 2000 respondents - corresponding to 4.2 million Australians - would never arrange any financial product online.

The culprit is the notion of security: how safe is an online transaction compared to conventional pen and paper contracts?

"Despite the introduction of more comprehensive security measures such as two factor authentication by the banks, there is still a significant proportion of consumers that does not use internet banking due to concerns about security," noted the report.

According to Datamonitor financial services analyst Petter Ingemarsson, the issue boils down to "perceived security" rather than the actual security safety nets in place.

"Many current security initiatives are as much intended for consumers to feel safe as for conferring meaningful real security advantages," said Ingemarsson.

Despite the negative sentiment, tech savvy Gen Yers are expected to lead the way in fuelling online financial services growth across Australia.

"The younger generations, financial consumers of tomorrow, are much more positive about using the internet for financial affairs. In the long term this will provide online financial services with a slow but steady boost as younger generations supplant elder ones as the banks' core customers," said Ingemarsson.