Online banking yet to win many votaries

By Shanthi Kannan

CHENNAI, NOV. 30. The emerging Indian Internet scenario has already been witnessing some disturbing developments for a while now. The venture capitalists are no longer an excited lot. They have become tight-fisted and all funding proposals are put to microscopic scrutiny. No doubt, questions have been raised regarding the viability of most of the business-to consumer e- commerce models. Nevertheless, there are some clear areas within the B2C space in India, which promise a lot of activity and potential. One such area is online financial services. This one has had a proven track record in the West and is an area which is just about beginning to find its feet in the sub-continent.

However, there are still a few questions that await answers. For instance, are off-line investors taking to online banking? What is the relative usage of various features on financial sites? What is the projected future user base for online banking? What is the likely volume of online trading in the years to come and so on. To find answers to all these queries, Pune-based Renaissance Management Consultants recently conducted a survey of Internet users in six cities -- Mumbai, Delhi, Calcutta, Chennai, Hyderabad and Pune. The survey is the second in a series of studies being done by the consultants. The first was a comprehensive study on the usage and attitude of Internet users in India.

The survey on online banking has found State Bank of India to be the leading offline bank among non-users of the Internet. ICICI Bank is the most popular among Internet users in online banking while ICICI has a clear lead in online stock trading. Internet users rate the ATM facility and provision of e-banking as important factors in the selection of an off-line bank. The survey has found that over 40 per cent of adult Internet users visit financial sites. Of this, 22 per cent spend more than 20 per cent of their time on these sites.

An interesting revelation from the survey is that Internet users do not see `human touch' as a significant factor in selecting an offline bank. Rather, they rank convenience and speed as the primary benefits sought. Nearly 10.8 per cent of adult Internet users bank online, but only 1.9 per cent have traded stock online.

The survey forecasts that over 26 per cent of Net users will be banking online by December 2002. For the online trading component, the figure is 11 per cent of the total traded volume on that date.

Ironically, the respondents feel that lack of human touch is proving a significant barrier to the growth of online trading. Reputation and recommendation of friends are cited as the two most important factors in picking an online broker. Indiainfoline, ICICI, Sharekhan, Walletwatch, MyIRIS, Indiabulls occupy the top five spots for financial sites in terms of preference, according to the survey findings.

A total of 1,500 Internet users and 500 Internet non-users were polled for the survey. It was conducted to understand the current penetration levels of online financial services in India in banking and stock trading. Further, the objective was to understand the barriers to the spread of online financial services among Internet users.

Send this article to Friends by E-Mail

Section  : Business
Previous : Rane (Madras) to sell stakes in 2 JVs to group co.
Next     : Promote smaller power projects - Alstom India
           chief