Electronic commerce and the marketing of Internet banking in the UK: THE CHANGING MARKET

THE CHANGING MARKET FOR FINANCIAL SERVICES PROVISION

To assess the changing market for UK provision of financial services a review of the findings of market researchers in this area is a very worthwhile exercise.

Recent evidence points to the significant growth in the use of the Internet by consumers for their financial needs. A MORI study (1998) demonstrated that 13 per cent of UK current account holders, 4.3 million people, have access to the Internet. This is a significant increase from 1996, when only 5 per cent of the UK population had such access. In addition, 36 per cent (nearly 12 million people) expect to use the Internet to arrange their finances within ten years, although the current figure for those who actually do this is believed to be only 1 per cent. A more recent MORI study (1999) found that 26 per cent of people use the Internet for sourcing financial services’ information and 10 per cent use it for their personal banking.

Meanwhile, NOP (1999) research suggests that the Internet is attracting 10,900 new adult users every day in Britain with some 10.6 million adults accessing the Internet at least once during 1998; a 48 per cent increase since 1997. In terms of how consumers use the Internet, the study revealed that 1.9 million users read newspapers online, 1.3 million users shopped online and 1.3 million users searched for financial information. The survey also found that new Internet users were not simply drawn from the younger age groups and ABC1 social groups, but were generally older and from the C2DE social groups.

Fletcher Research (1999) similarly provide a profile of existing personal finance browsers. Their research suggests that 68 per cent of such users are male, with an average age of 39. Moreover, they tend to be educated to a higher level than general Internet users, with 55 per cent having a degree. In addition, 90 per cent of personal finance browsers were in the ABC1 social category in comparison with the whole population where this group constitutes only 48 per cent. Finally, the research suggests that personal finance browsers tend to be ‘active’ users of financial services with an average per household income of over £2,500 per month, with a quarter earning over £3,301 per month. The typical users of the Internet for financial services are thus revealed as a potentially very attractive socio-economic group to financial providers in terms of their profit potential.

BMRB’s Internet Monitor revealed that nearly 7.5 million people (16 per cent of the UK population) used the Internet in the period April—October 1998. This was an increase of 29 per cent on the previous six months when 12.4 per cent or 5.4 million people used the Internet. This study also revealed that the main Internet users can be found in the 25—44 age group, although the proportion of under 25s and over 55s using the Internet are increasing faster than any other age group. This raises a question over the implications for financial providers of the shift towards electronic commerce.

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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