Electronic-Banking Creates a Paradox

An electronic-banking channel provides a bank with a low cost offering that the financial institution can leverage to target at low-value customers.

However, research carried out in Singapore by business advisory consultancy, PircewaterhouseCoopers, has shown that this is only happening in theory, not in practice.

The reality is that although electronic-banking is geared for use by low-value banking customers, it is the high-value clients who have taken to the channel, said Alan Gemes, managing partner, financial institutions consulting, Asia, Coopers & Lybrand (now part of PricewaterhouseCoopers).

"The paradox is that those who adopt e-banking first are the value creators," he said. "Low-value customers like to use the branch instead. Their reason is security."

They also find that using the branch is easier for them.

"They see e-banking as inconvenient. They have got to do things like setup and login," he added.

Gemes, however noted that in time, even such users should find electronic-banking easier to use.

"The PC is another form of restriction for them, but in the future, tools like interactive televisions will take away this restriction," he said.

But existing electronic-banking customers choose to bank in this manner because they perceive it as a convenient way to do so, he added.

"They can do their banking anywhere, anytime, and the service is very information-intensive," Gemes said.

He stressed that banks should not just sit back and wait until electronic-banking gets easier to use. They have to start offering such services now. "The strategy is how to overcome the restrictions now and make the technology easy," he said.

The profile of an electronic-banking customer is generally a confident professional, which Gemes likened to the general population of Singapore. As such, electronic-banking should fit in well here, he said.

Gemes added that the electronic-banking user wants to exercise all banking functionalities, including his or her credit card account, online at one go.

"Don't make them use the phone," he said.

According to Gemes, his company did the survey from April to May of this year when participants were questioned orally about their electronic-banking perceptions and expectations.

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