Electronic commerce and the marketing of Internet banking in the UK: INTERNET BANKING

INTERNET BANKING AND CONSUMER BEHAVIOUR

Notwithstanding the current use of ATMs and the stance and views of the aforementioned bodies, this section examines how consumers’ perceive these (planned) changes in the provision of financial services. An ICL study (1998) revealed that 35 per cent of the respondents would be interested in using either a PC or the television for their financial needs (see Figure 3).

However, 50 per cent of the respondents agreed that security concerns would prevent them from using the Internet for their financial needs. In addition, many of the respondents (24 per cent in each case) would have preferred financial providers to increase the number of branches and ATMs (see Figure 4). This might suggest that either consumers simply want more choice with respect to available delivery channels, or that they are very reluctant to change their current behaviour.

Recent research by MORI (1999) also suggests that the Internet is currently not perceived by consumers as a popular way of finding out about financial services. For example only 2 per cent of those surveyed said they would use the Internet to find out about car insurance, credit cards, a loan or a pension, and only 1 per cent would use the Internet to find out about mortgages.

Figure 3 If the service was available, would you be interested in banking through a PC or TV?

Previous academic research suggests that UK consumers’ adoption of the Internet to fulfil their financial needs will ultimately depend upon the following factors:

— The relative advantages of the new channels: what benefits do they offer to consumers? It could be argued that these are primarily those of convenience, increased control and greater flexibility in deciding how, when and where they fulfil their financial needs.
— The compatibility of the new channels with consumers’ values, needs and accepted ways of behaving: are consumers comfortable using such channels to acquire financial services? What about those consumers who desire face-to-face contact in this exchange? Does consumers’ lack of free time make them susceptible to the benefits of ‘direct’ acquisition?
— The complexity of service offerings: do consumers perceive the use and acquisition of services through these channels to be too complex?
— Trialibility: are consumers able to ‘trial’ such services? Invariably, the answer will be ‘no’ for financial services, although some financial providers, eg Barclays and First Direct, have offered consumers the opportunity to ‘trial’ their online banking facilities through ‘demos’.
— Observability: this refers to the extent to which the advantages of these new service offerings can be readily perceived and recognised by consumers.

The main reasons for the success of direct delivery methods can in part be attributed to broader societal developments. For example, consumers are increasingly ‘time- poor’ in their daily lives and welcome the opportunity of fulfilling their financial needs through such time-saving methods. Evidence from the Henley Centre, in their research for ‘Consumer and Leisure Futures’ (1999), clarifies this issue by arguing that today’s consumers have only finite resources of time in their daily lives:

‘Home shopping . . . is a clear winner from the need to save time, particularly in those areas where we have no real interest, which are relatively commodified and where we trust the overall brand of the supplier. Financial Services, where the products are in effect intangible, is an excellent example of this. Why waste your precious time queueing in a bank or visiting your insurance broker when most transactions can be done over the phone?’

Figure 4 Which of the following service options would you most like to see your financial provider move towards in the future?

This argument equally applies to the range of other ‘direct channels’ emerging for the fulfilment of consumers’ financial needs, such as the Internet and digital television. Moreover, one might add that many consumers no longer work or shop within easy access of branch facilities, while their broad acceptance of self-service automated channels, such as ATMs, is further fuelling this trend towards direct delivery. It might be suggested that a number of consumers enjoy the benefits of accessing their financial accounts when and how they choose; what the marketers have referred to as ‘any time, any where’ banking. The convenience appeals of using the Internet, telephone and television are furthered by suggestions that usage of such ‘direct’ channels will invariably lead to financial savings for consumers choosing to acquire financial services through these means. In this respect, articles in the ‘Money’ sections of the local and national newspapers continue to play a significant role in educating and providing information which will ultimately raise consumers’ awareness of the current price benefits to be obtained by acquiring and maintaining mortgage and savings products through ‘direct’ means.

This argument found support in a study by Ernst and Young (1999) which focused upon consumers’ acquisition of home mortgages via the Internet. In their study, although unable to find a lower mortgage rate, they did find that shopping online for such financial products was both significantly faster and more convenient than physical shopping. In addition, rate comparison was extremely fast, and sites featured tools and information that added value and convenience to shopping experiences, such as the use of calculators to help prospective buyers, instant pre- approval, online forms and ‘what if scenarios. As Ernst and Young suggest ‘online shopping can reduce the anxiety and reinforce the feeling of being in control of an otherwise anxiety-ridden process; no phone requests for information, no pressure sales tactics, no unsolicited phone calls. And of course, normal business hours were no impediment to obtaining accurate information.’

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

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