Competition is a bigger fear than security for internet banks

The 1999 survey showed that competition is the greatest concern for e-commerce in 36% of financial services firms, while only 17% cited security. Despite recent scares, the situation is more extreme in Europe where only 11% of firms are most concerned about e-commerce security. The firm surveyed 125 financial institutions in over 20 countries.

Yet in too many cases, the survey suggests that internet banking is failing consumers. In Europe, up to 50% of e-mails are not responded to within eight hours and the level rises to 64% in the US. There is also an urgent need for integration as 30% of firms in Europe and 40% in the US give customers inconsistent information about their finances through different delivery channels.

Jonathan Charley, Vice President Financial Services of Cap Gemini Ernst & Young, said:

"Financial services companies are under intense pressure to produce an e-commerce offer as quickly as possible and there is a danger that many are compromising the quality of that offer. It is essential that they focus on a multi-channel strategy that enhances the customer experience and helps to increase customer take up of e-commerce.

"Many firms – one third in Europe and half in the US – are not even offering an incentive to encourage their customers to migrate to Internet banking. Given the benefits that the banks themselves will realise, it seems unusual that this opportunity is being missed."

Globally, only 9% of firms cited decreasing the cost of operation as the main reason for implementing e-commerce, a reduction from 23% in 1997. This shows an increased understanding that cost savings are taking longer to realise and are significantly lower than originally anticipated.

Europe outnumbers the US in on-line transactions in the financial services market, the predicted increase being from a current 4% in Europe to a predicted 25% by 2003. In the US, a rise from the current three per cent to 12 per cent is expected.

"It is interesting to note," said Jonathan Charley, "that despite the hype, internet banking is not expected to replace the need for branches. Although transactions are predicted to decrease through this bricks and mortar channel, respondents in our survey still believe that the number of transactions through branches will be 4% greater than those made via the internet in 2003."