Asia-Pacific way behind bank e-ball

By CHRIS BARTON

Banks in the Asia-Pacific region show marked differences to their North American counterparts in e-commerce use.

A global study of 125 financial services companies and e-commerce by Cap Gemini Ernst & Young shows that 32 per cent of those surveyed in North America see retaining customers as a key e-commerce goal.

In Asia-Pacific that aim scores only 6 per cent - overshadowed by opening new markets (22 per cent), gaining new customers in existing markets (17 per cent) and improving service and the speed of delivery (17 per cent).

Differences also come to light when banks voice their greatest area of e-commerce concern. In Asia-Pacific, security (37 per cent) is the overwhelming e-commerce bugbear, whereas in North America that registers only 16 per cent response, with competition (24 per cent) and viability of the business case (24 per cent) being top of mind.

"While Asia Pacific is the leading region in terms of IT expenditure growth, it's generally in catch-up mode compared to Europe and United States, especially in back office and infrastructure development," says the New Zealand vice-president of Cap Gemini Ernst & Young, Dr Mike Ashby.

Financial services companies spent an average of 9 per cent of their IT budgets on e-commerce last year. This is expected to grow to 17 per cent by 2002.

The regional differences emerge again when those surveyed are asked about customer relationship management (CRM) - the primary means to retain existing customers.

In Asia-Pacific, 35 per cent have not implemented a CRM solution, compared with 17 per cent in North America.

The survey found companies were under intense pressure to produce e-commerce offerings as quickly as possible to maintain their advantage over new net-based competitors. That led to a "fail fast, fail cheap" approach - resulting in products that were only 40 per cent complete being launched in the market, where they were then tested and refined.

Dr Ashby said a "rapid attack" approach to e-commerce contrasted sharply with traditional methods of validating and marketing products.

"You're after first-mover advantage. There's no time for focus groups or market testing. We call it 'e-commerce in 30 days'," he said.

The study also found speed to market was related to a company's ability to form and maintain e-commerce related alliances and joint ventures. These improved ability to get new products and services out quickly and gain exposure to new markets.

Most Asia-Pacific companies had fewer than five international alliances each, if any, whereas 50 per cent of North American firms had between five and 50 alliances.

Cap Gemini said only 1 per cent of respondents in 1996 cited internet banking as their most important IT expenditure.

In 1999, 40 per cent gave priority to investment in net banking and this is predicted to grow to 58 per cent by 2003.

But while the focus is changing, banks are likely to remain a mix of channels, rather than become totally virtual operations. Customers still want face-to-face contact.

In contrast, internet transactions are expected to rise from 3 per cent in 1999 to 16 per cent in 2003.