A CGEY report says eCommerce is not displacing old-fashioned financial services practices.
Cap Gemini Ernst and Young’s report, which includes a survey of 120 banks, insurers and asset managers, states eCommerce has failed to reduce costs in line with forecasts by UK financial service organizations, mainly because customers have failed to embrace the online experience.
This confirms Datamonitor’s findings that face-to-face dealings are what the majority of consumers really want when dealing with the finances. Datamonitor has found that 63% of UK consumers say a personal visit is their preferred method for dealing with banking products.
Banks already seem to have realized the perils of a heavily online-focused strategy. Royal Bank of Scotland is recruiting 600 new staff after the majority of its customers rejected its voice response service, and Abbey National has launched a program of branch redevelopment introducing coffee shops into its branches. It still makes 80% of its sales over the counter.
Even standalone Internet banks realize that delivering products and services via the Internet alone is insufficient. Intelligent Finance, the standalone Internet bank part of the HBoS group, remains committed to providing a telephone banking service. Smile too offers back-up telephone facilities particularly for new customers.
If any further proof was needed, the collapse of First-e provides it. First-e had hoped to take the lead in pan-European Internet based services. However, it paid the price for having a heavily Internet focused strategy. Its telephone helpline could only be used for queries and not to access products and services.
All is not lost for Internet banks – as long as they’re prepared to compromise and follow a multi-channel strategy. Smile has doubled the number of its account holders in a year to 400,000. Intelligent Finance has seen its volumes double since its Internet service went live in November 2000, and Egg now has over 1.8 million customers including 625,400 deposit customers and more than 1.2 million credit card customers.
Overall, Datamonitor estimates that 13.4 million consumers will be banking online in the UK by 2005.
