Slow Adoption on Internet Banking, Online Shopping
There were many interesting questions that arises out of our Filipino Internet Banker report seeking for further clarification. Here are some insights which I hope will be helpful.
Question: Your report shows that it takes around 4 to 5 years for an Internet user to become an Internet banker and/or online shopper. Can that be used as a base as well in determining how soon will a PC user start accessing the Internet?
Answer: Well I don”t think so. One thing that delayed the adoption of Internet banking and online shopping in the country is the readiness of the local market. For online shopping, this is greatly influenced by credit card penetration.
For Internet banking, it relies heavily on the pushed of its brick and mortar counterparts. Two to three years ago, when banks started launching its Internet banking services (like BPI and UnionBank), several peers from the provinces immediately went to their nearby branches only to realize that the local new accounts officer (who is not an Internet user) is not competent in explaining the service or worst, not being available at all. Even today, not all local branches of banks with Internet banking services are really pushing for this service. The lack of readiness among banks is partly to blame on its weak propagation.
For the PC user, back in 1999, Web Philippines came up with a report on Internet usage in the country that states, 1% of Philippine households have access to the Internet. At this day and age, things have changed. Majority of households buy computers with the intent of accessing the Internet.
Question: What is your definition of a regular Internet user?
Answer: Hmmm….at least a person using the Internet an hour a week was an acceptable criteria on who is a regular Internet user. Although this definition is changing.
Saying that only those with Internet subscription at home can be classified as regular Internet users is not fair either. Simply because a person who accesses the Internet regularly in work, school, and Internet cafes does not make them any less of an Internet user from those who use it at home.
Question: If having a computer and Internet usage at home is an important factor that makes a person buy online, how come another research firm says that work access market is greater than home access market?
Answer: When we did our survey, we never got the chance to ask our respondents on where they usually do their Internet banking and shopping purchases. We”ll note of that for this year.
However, I believe that majority of shopping and online banking activity takes place at home as it provides a sense of security and privacy compared to work places where there are firewalls and activity logs being monitored by the organization”s computer department.
Even if the work market is higher, performing personal e-commerce transactions is highly unlikely to happen in the workplace as such may not be the right place to do so unless it is a transaction meant to be made in behalf of the organization.
Question: In your report, you said that the number of online bankers are far fewer compared to online shoppers. Does this indicate that Internet banking is perceived as more risky than shopping online? Why is this so?
Answer: It is an issue of disposable income. Online shopping may be higher because credit card is being used for these transactions.
As for Internet banking, as I shared earlier, it relies on the promotion of its brick and mortar counterparts. The types of services being offered through this medium has great influence. For example, fund transfer and bills payment may be more attractive to married individuals compared to single people. Therefore making such service more attractive to that segment.
Another issue is the reliability of the service. If the Internet banking site has too many error links and http error messages, the comfort level for a consumer to do Internet banking transactions will be very very low.
Do you remember those days when we make an ATM withdrawal, no cash comes out of the ATM machine and yet our accounts were debited? You ended up complaining and your funds were returned after two weeks. Well for those of us who”ve been through such experience, will be less inclined to perform fund transfer and bills payment online because of the agony that goes along in resolving those issues.
Take the case of a bank commercial where the beauty of Internet banking in emphasized. In an ideal world, everyone will be excited about the service. However, in the real world, one will ask what happens if the transaction does not get reflected? At least in the ATM machine, there”s a security guard or hotline phone accessible whom you can talk to and report the problem. But for Internet banking, you are the only witness and you”ll either email or call the bank and wait for so many hours for affirmation and correction. Banks will have to exert more in educating the consumer and make them feel comfortable about these services.
A lot of people think that once a bank offers Internet banking services, people will close their accounts with their existing banks and jump ship. Well it is not so. For example, those with checking accounts with their current banks (like me) will not transfer to another bank and move majority of money transactions if the same level of service can”t be given. Most banks don”t easily give checking accounts to individuals and require them to have at least a 6 months to 1 year “under observation” period with the bank. (That”s why I really hope my bank will have Internet banking soon)
Question: In your report, it appears that the big banks still have an edge versus the small banks. Does this indicate that it does not level the playing field at all as perceived?
Answer: There are two factors you have to look into here. First, the big banks tends to have clients with higher disposable income and are more inclined to try the service as they have a need to be in control of their money, as in the case of Citibank depositors.
Second, majority of banks who offer Internet banking services are not really doing a good job in promoting their online counterparts as I mentioned above.
The lack of variety and uniqueness in service offering makes this as just another of those services. The “surprise me” element hardly exist in these banks. BPI, obviously, has an edge in this area.