Product Type: Market Research Report
Published by: Business Insights
Published: February 1999
Product Code: R162-039Description The provision of on-line facilities is becoming a central issue for all financial services institutions, the cost savings and potential improvement in customer service making the development of the internet channel part of any forward looking company s strategy. Leading financial services providers cannot afford to compromise their reputation by not offering internet distribution. Early entry into internet financial services secures a number of advantages attracting younger customers, allowing the business model to be developed in stages and establishing a brand associated with service innovation. From Reuters Business Insight.Table of Contents 0.0 Introduction And Overview
- 0.1 ON-LINE ACCESS AND INFRASTRUCTURE
- 0.2 PRODUCT FAMILIARITY IS KEY
- 0.3 ON-LINE BANKING
- 0.4 ON-LINE BROKING
- 0.5 ON-LINE INSURANCE
1.0 Potential for Internet Usage in UK
Financial services
- 1.1 Sales And Customer Service
- PC penetration in the home will grow rapidly to 2003
- On-line penetration will increase at a proportionally greater rate
- PC's with modems will drive on-line penetration
- On-line PCs using ISDN will remain relatively few
- Network Interface Devices (NIDs) will not significantly influence on-line
penetration
- Total number of on-line households 1997-2002
- Interactive television will have a significant effect on access to on-line
financial services
- Current development of interactive TV
- Forecasts for digital television formats
- Digital satellite television (DST)
- Digital cable television (DCT)
- Digital terrestrial television (DTT)
- 25m households may have digital TV services by 2003
- Payments on the Internet
- Digital payment systems
- On-line credit card payment
- Security issues
- SET
- Micropayments
- Small payments
- Summary
- Financial services companies as Internet Service Providers
- The cost of becoming an ISP
- 1.2 Internal Communication
- Using the internet as an internal means of communication can reduce costs
- The internet as an intermediary support channel
- The internet as a delivery channel for bulk information
- 1.3 Conclusions
2.0 Provider Rationale
- Factors driving provision of internet financial services
- External drivers
- Change in demand from customers
- Growth in PCs
- Growth in use of the Internet
- On-line shopping and e-commerce
- Reduced telecommunication and computing costs
- Internal drivers
- Changing role of traditional distribution channels
- The imperative of cost reduction
- Growth of electronic transactions
- Arrival of new entrants
2.1 Incentives For Financial Institutions
- Cost savings
- Customer convenience
- Greater efficiency and speed
- Improved marketing
- E-commerce opportunities
- Cross-selling of financial services
- Decreased charges to the customer
- Expansion of customer base
- Increase product tailoring to customers
2.2 Other Provider Benefits
- Better communication with customers
- Ability to access timely information
- Broaden the customer base
- Recruit new employees
- Monitoring Internet usage
- Promoting on-line brand image and driving traffic through site
- Gaining new business through redesigned products and services
- Appeal to Internet users
- Invitation of competition and promotion of on-line services
- Differentiation of institutions
- Avoiding negative differentiation
2.3 Drawbacks Of Initiatives
- Security concerns are the primary brake on growth in financial services
transactions over the internet
- Media coverage
- Consequences of security problems
3.0 Consumer Benefits
- 3.1 Customer Incentives
- Increased convenience
- Customised visual representation of information
- Customer empowerment
- Better rates to on-line customers
- 3.2 Consumers Attitudes
4.0 Internet Banking
- Background
- Early Internet banking initiatives
- The UK Internet banking market competitive structure
- Nationwide has the longest established Internet banking service in the UK
- Growth of Internet banking
- The total number of customers using on-line banking
- The on-line split between PC and Internet banking
- Acceptance of Internet banking
- 4.1 Outlook For Internet Banking
5.0 Internet Broking
- 5.1 Background To On-Line Broking In The Uk
- Introduction
- Using direct distribution channels
- The search for more effective trading methods
- Setting up a system for on-line broking
- Stage of development of on-line broking in the UK
- Impact of US initiatives on the UK industry
- Changing attitudes to on-line broking
- 5.2 Potential Growth In On-Line Broking
- Methodology
- Number of execution- only and advisory / discretionary trades
- Value of execution- only and advisory / discretionary trades
- Value of on-line and off-line execution-only trades
- Implications of a move to on-line trading
6.0 Internet Insurance
- 6.1 introduction to Electronic Trading in Insurance
- Proprietary systems currently account for the majority of electronic
insurance transactions
- Developing EDI/internet compatibility will increase access to the market
- On-line insurance legal issues
- 6.2 The Internet and Personal General Insurance
Lines
- The internet as part of a multi-channel delivery strategy
- Internet distribution will pressure other channels' margins if widely
accepted
- Cost savings will allow prices to be reduced and margins increased
- Within insurance there is a need to link corporate strategy to on-line strategy
- The use of the internet as a direct channel
- Marketing advantages
- Policy flexibility
- Accessibility
- Claims handling
- Cost savings
- Customer service
- Efficiency gains for partnership marketing or tied agency arrangements
- Internet broking
- Internet broking case study - Screentrade
- 6.3 The Use of the Internet Outside of Personal
General Lines
- The internet and commercial and reinsurance risks
- Small business risks are most suited to internet distribution
- The internet can provide real time information to enhance risk management
- The internet and long term insurance products
- Annual life products are most suitable to distribution over the internet
- Pension product purchase requires face to face contact
- 6.4 Forecasts
List of tables
- Table 1.0: Number of UK households with a PC 1997-2003
- Table 1.1: Proportion of PC households with a modem 1997-2002
- Table 1.2: ISDN enabled PC households 1997-2002
- Table 1.3: On-line households in the UK, 1997-2002
- Table 2.0: Number of bank branches in the UK, 1997-2002
- Table 2.1: Transaction costs of distribution channels
- Table 3.0: Consumer attitudes towards the purchase of financial services over the internet varies by
product
- Table 3.1: Users of on-line financial services are likely to be high net worth
- Table 3.2: Males will have a greater take up rate of internet financial services
- Table 5.0: No. of execution-only and adv. / disc. private client trades, 1992-2003
- Table 5.1: Value of execution-only and adv. / disc. private client trades, 1992-2003
- Table 5.2: Value of on-line and off-line execution-only trades, 1992-2003
- Table 6.0: Product familiarity is key in determining take up rates
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