Over a third of people in the UK used the Internet to get financial information in 2001. However, the number of people happy to carry out transactions online has reached a plateau. This creates a dilemma for Internet banks: should they focus on serving existing clients, or try to change the attitudes of the majority? The solution is not yet clear.
BT has published new research into the Internet banking industry.
BT Finance Industry Solutions and the Henley Centre have published new research, which seems to indicate that there has been a plateauing off of Internet banking in the UK.
Although the survey found that the proportion of consumers who bought financial products or services online over the last 12 months has trebled to 15%, it also found that the number of people actively banking online fell by 100,000 between May and August 2001. The survey estimates that the total number of consumers banking online in the UK now equates to 5.6% of the population.
The survey’s findings therefore seem to suggest that the Internet is establishing itself as an information-gathering tool, but not as a channel over which banking customers want to transact. It also seems that a gap has been reached between the early adopters of Internet banking services and the rest of the population. This explains the fall in the number of people actively banking online.
Internet banking service providers therefore face a challenge – to increase uptake, they need to make Internet banking services appeal to the majority of the population. But it is still far from clear whether they will be able to do this, or whether they should ‘cut their losses’ and concentrate on the section of the population that already uses their services.
Amid this uncertainty, providers need to adopt a combination of strategies. Following the UK’s Egg into foreign expansion is one option worth exploring, as is forming an alliance with a bricks-and-mortar player to deliver a multi-channel offering. The likely winners will be the companies that adapt best to changing conditions.