The UK's financial services providers have invested heavily in mobile phones, interactive digital television (iDTV) and personal digital assistants (PDAs). Despite hopes of customer acquisition and retention, very few consumers are likely to be early adopters, according to a report from Datamonitor.
Few customers are currently making use of iDTV, mobile phones and PDAs to manage their financial affairs. In the UK, more than 35% of consumers have digital television, and over the coming year only 13% intend to use it for online banking or financial broking services.
Datamonitor's new report New channels in European Financial Services 2002 looks at the role of these new channels in financial services, suggesting that although these channels have failed to meet expectations, both in functionality and consumer uptake, there is no reason to give up on them entirely. In some European countries levels of ownership of devices such as digital TV and mobile phones are high. Outside the UK, digital TV ownership in other European countries averages less than 20%, whilst over 80% of Swedish consumers have a mobile phone.
According to the report, a number of factors have restricted the success of the new channels in financial services. For example, while these channels are highly time-efficient (a mobile phone is the most time-efficient financial services channel), they offer poor transactional and after-sales care, and are not able to offer the same ease of accessing or inputting information as branch, mail or PC-based internet services.
Consumers associate TV with relaxation, leisure and entertainment but not financial affairs, with only 13% of UK consumers planning to use iDTV for online banking in the coming year. In Germany and France, less than 6% of consumers plan to do so. A television is perceived as an entertainment device, designed for relaxation and for creating a passive experience. In contrast, a PC is perceived as something with which an individual behaves actively. These perceptions may explain why consumers seem more willing to use PC-based internet financial services than iDTV-based services. A further contributory factor is likely to be that a TV is commonly located in a communal space whilst a PC is located in a private space (most consumers prefer to conduct their financial services with a degree of privacy).
Datamonitor suggests that web browsing will become a popular activity to carry out via digital television services. In Spain, 27% of consumers plan to use their digital television for web browsing during the next 12 months, and 18% of Italians also plan to do so.
The mobile phone is still seen as a communications device rather than as a transactional device. In Spain and Italy, more than 20% of consumers plan to use their mobile phones for e-mail over the next 12 months, with less than 7% planning to use them for banking or broking. The suggestion that mobile phones are seen as communications devices is reinforced by the popularity of SMS messaging. This underlines the fact that the new channels need to be positioned correctly within the financial services distribution and marketing mix. Relatively high numbers of consumers also plan to use their mobile phones for web browsing. In Spain, 16% of consumers - and 15% in Italy - plan to use their mobile phones for web browsing during the next 12 months.
"It is no good trying to get consumers to use these devices for functions that they are obviously not suited for. Expecting consumers to input large amounts of information via a remote control handset is a non-runner. Financial services providers need to ensure that using the new channels becomes more straightforward whilst simultaneously ensuring that there is really something there for consumers to get excited about" says Alex Boorman, Datamonitor's Financial Services Technology Analyst.
An opportunity for FSIs
Datamonitor also says that 'mPayments' may be an opportunity for European financial services suppliers to exploit. But in doing so they must be careful not to lose ground to mobile operators who may be able to take control of the payment process. A number of mobile payment systems have been introduced in Europe, some of which re-position financial services suppliers in the value chain (such as Paybox). In contrast, Mobipay should be regarded as an example of best practice in the mPayments space where financial services providers and mobile operators have come together to drive the market forward and create an open payment system.
In the medium term, financial services providers should look to establish a presence on European i-mode services as part of the broad array of content that is likely to be available. The larger screens of i-mode-enabled handsets should provide a more user-friendly interface than traditional handsets and hence a more viable interactive medium. And, although the range of i-mode-enabled handsets available in Europe is currently very limited, it is likely to increase if the first interactive services are successful.