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Net banking fails to catch on in India
By siliconindia
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Friday, 23 January 2004, 20:30 IST
MUMBAI: Net banking has failed to catch on in India, which figures among the top five Asian countries in internet access. The usage of net as a banking channel slipped from 10.5 per cent in 02, to 8.5 per cent in 03, with ATM emerging as the most popular channel of transaction followed by branch banking. ATM usage recorded the strongest growth in 03.
This was indicated by Douglas A Jaffe, senior research manager of Financial Insights, at a seminar on retail banking organised by Cisco in Shanghai last week. He said that among urban internet users in Asia, the usage of internet as a banking channel is very low in India, after Thailands 5.1%.
A survey by Financial Insight showed that 42.4% of urban internet users preferred ATM channel in 03, as against 36.4% in 02. About 42.4% of them preferred banking through branches in 03, as against 45.4% in the previous year. Even in other Asia Pacific economies, ATM is a more preferred channel now. In Australia, which has the highest internet usage (33.8%) as a banking channel, ATM is still a preferred channel with a share of 40.3% among urban internet users.
Jaffe said while banks are encouraging customers to use internet banking channels, there are dangers attached to it. For instance, customers may feel isolated since most of the banking is done through internet.
Moreover, their financial needs remain undetected and customers tend to become reactive to bank products than proactive. Jaffe also felt that it will be easier for poachers to reach out to the customers. Generally it is seen that foreign banks poach high value customers as these banks have no social obligation and thus can spend heavily on technology, he said. Jaffe said the survey also showed that rationalisation of branches was a very sensitive issue and was not much preferred in Asia. At the same time, he felt that there is a need to rationalise technology across different banking channels and leverage contemporary technology.