Asian banks to give more attention to e-banking customers: IDC

BANGALORE: In its latest report, IDC has released an end user study looking

at Internet banking penetration and channel usage of Internet users across

Australia, China, Hong Kong, Korea, Singapore and Taiwan.

The findings indicate that commonly held perceptions about the relative

positions of each market might be flawed. The results also provide powerful

evidence for the viability of more advanced services like account aggregation

and online wealth management. However, these are contingent upon banks gaining a

better understanding of the online customer.

"Until today, there have been few comparative studies examining consumer

adoption trends of Internet banking and channel usage. The results provide the

first top-level segmentation of various customer groups and show that targeted

marketing strategies can help derive additional value from Internet banking

beyond just cost savings. This study gives the clearest picture yet of what is

happening in the online realm, and this changes everything," notes IDC Asia

and /Pacific, senior analyst, online financial service, Douglas A. Jaffe.

As a result of this study, IDC has identified scopes for other trends that

warrant further study. These include:

• Internet channel will increase transaction volumes in the short-term:
  
  Growth in transactions through the Internet channel is increasing at a
  
  faster rate than the decrease in transactions through the branch. This
  
  inverse relationship has led to a situation where a sizable portion of
  
  Internet banking customers still rely heavily on the branch, while
  
  concurrently using the Internet channel. This is an expensive, but
  
  short-term phenomenon. Transaction volumes via the branch will decrease as
  
  customers get more comfortable online.
• Customers with the fewest branch visits are the most active online:
  
  Customers who visit the branch one or fewer times per month have the highest
  
  Internet banking usage. This indicates that there is a growing segment of
  
  customers who interact almost exclusively through self-directed channels.
  
  Banks have so far done a poor job addressing the concerns and needs of this
  
  group.
• Age and income assumptions no longer valid: Internet banking usage is not
  
  the province of the young and young people are not the most active Internet
  
  banking users. A bank’s best Internet customers (high Internet activity,
  
  low branch activity) fall within the 25-55 age group and are at the highest
  
  income levels.
• Education and incentives are the key to success: In all surveyed
  
  countries, respondents indicated a strong desire for more education and said
  
  they would increase online activity as a result. They feel banks have done a
  
  poor job on education, convincing them Internet banking is safe, and making
  
  sites easy to use. Incentives are also lacking, which is a serious problem
  
  because many banks have already tapped their supply of early adopters. The
  
  next wave of customers will not be as easy to pull online, and incentives
  
  must play a part.
• More going on than just transactions: Respondents utilize Internet banking
  
  far more than transaction volumes indicate. Even customers, who do not login
  
  to a site, derive significant value from the site itself. Banks can develop
  
  a large, loyal Web-using customer base by offering a good quality,
  
  informative site. Online origination of offline purchases can also be
  
  achieved by using the Web to educate customers before they appear at a
  
  branch.

Online financial services have become the rage in Asia/Pacific, with various

players pushing account aggregation, eCRM and wealth management. IDC is

cautiously optimistic about the future of these advanced online financial

services, but urges banks to isolate and encourage their most promising Internet

customers first.