Asian Banks Not Giving Enough Attention To Online Customers

IDC has released the findings of a major end user study looking at Internet banking penetration and channel usage of Internet users across Australia, China, Hong Kong, Korea, Singapore and Taiwan.

In its study, it found that the transaction volumes over the Internet are increasing at a faster rate than the decrease in transactions through the branch.

This inverse relationship has led to a situation where a sizable portion of Internet banking customers is still relying heavily on the branch. This is an expensive, but short-term phenomenon because once these customers are more comfortable with the online channel, their transaction volumes via the branch will decrease.

However, banks have so far done a poor job in addressing the concerns and needs of their online customers. It also found that the assumption that online customers tend to be young is no longer valide. It stated that a bank’s best Internet customers (high Internet activity, low branch activity) fall within the age group of 25 and 55 and they are at the highest income levels.

Although financial services have become the rage in Asia, with various players pushing account aggregation, e-customer relationship management and wealth management, banks need to better segment their customers according to channel usage. There is a growing segment of customers who are both unappreciated, yet are ready for more specialized online services. More importantly, there are customers, who with a little bit of encouragement, would drastically reduce their branch visits.

In all the surveyed countries, respondents said that they would increase their online activities with banks if there were more incentives to do so. Lacking in incentives can pose as a serious problem for banks because many of them have already tapped their supply of early adopters. The next wave of customers will not be as easy to pull online, and incentives must play a part.

The respondents also feel that banks have done a poor job on educating and convincing them that Internet banking is safe. The banks have also failed to make the sites easy to use.

If banks can devote more attention to their best Internet customers’ needs and develop a good quality, informative site, they could develop a large, loyal Web-using customer base.