High costs and lack of direction are the main inhibitors to electronic banking, according to a new report from International Data that examined the global banking market.
There is considerable uncertainty as to the banks' ultimate objectives, says IDC's Electronic Delivery Channels Study. For the most part, banks are being pulled into online services by client demand or competitive threats rather pushing forward on their own initiative with a positive strategy.
"There has been a me-too attitude to electronic banking," says Alyson Prior, director of banking and financial services at IDC in London.
Some countries have been quicker than others to identify a market in this area. For instance, both Citibank in the US and Royal Bank of Scotland in the UK have had online offerings for more than five years, according to Prior.
"In the US, UK and Scandinavia, banks have had a hands-on approach, but in countries like Italy even credit cards have a relatively low penetration," she says.
Banks cited as their major problems the high cost of investment in electronic channels and the difficulties of integrating these with existing legacy systems. The study also found that a large number of banks in Europe are still treating all their customers as a single demographic instead of targeting customers.
The report identified six key competitive forces in electronic banking: globalisation, industry convergence, deregulation, disintermediation, segmentation and customisation. These forces are challenging banks to integrate new electronic delivery channels, the report says, urging banks to embrace new technology such as electronic cash and the Internet.
The report recommends that banks offer online home banking and financial reports, drive technological innovations such as electronic money, subsidise early home and small business users and act as business consultants for the small office/home office sector.