Report on the internet economy Outlook for the mobile commerce market II. 2003
november 18, 2003
- In the second quarter of 2003, the GKIeNET-Westel E-Economy Index, reflecting the role of the internet in the business world and the expectations of the corporate sector, rose modestly to 3.3.
- In line with the general decline in business confidence and the deteriorating economic outlook, expectations regarding internet use and electronic business applications started falling in mid-2002, as well. The downward trend came to a halt in the first quarter of 2003, and the second quarter brought a slight increase in the value of the GKIeNET-Westel E-Economy Index.
- The GKIeNET-Westel E-Economy Index and GKIeNET Business Confidence Index have shown parallel trends over the past two to three years, which indicates that future perspectives on electronic or web-based applications are not independent from the unfavorable trends in the business environment. In fact, the instability in the business sector surfaces at an above-average rate in issues related to the electronic economy, as companies tend to assign lower priority to investment projects aimed at developments in e-economy or e-commerce (if they are included in their plans at all), viewing them as postponable investments.
- While expectations regarding online commerce improved only marginally and mobile communications have been rapidly improving, mobile business and commerce solutions are not gaining much popularity. Although the general belief is that companies are open to mobile phone-based business applications (fifty percent of company executives think that mobile commerce could be a successful business model in the short term, too), respondents are generally less confident that their companies will launch a mobile commerce platform.
- 26% of the companies would order goods or services from their suppliers over mobile phone, if this was made possible by their partners.
- The success and prevalence of mobile commerce are conditional upon managers’ readiness to change their approach and to overcome their negative attitudes.
- Security is the most important issue when it comes to mobile payments. Another key requirement is the ability to track and monitor the transactions. In addition, the proper documentation of transactions is also an essential component.
- In Hungary, mobile banking is undoubtedly the most successful model among mobile phone-based business applications. The number of mobile banking customers in the household segment increased 67% over a year to exceed 320 thousand by the end of June 2003, surpassing the number of internet banking customers (275 thousand). The number of corporate mobile banking customers was over 42 thousand at the same time, reflecting a 90% growth.
II. Detailed report
1. Bottomed out? In line with the general decline in business confidence and the deteriorating economic outlook, the GKIeNET-Westel E-Economy Index, synthesizing expectations regarding internet use and electronic business applications, started falling in mid-2002. The downward trend came to a halt in the first quarter of 2003, and the second quarter brought a slight increase in the value of the index.
The GKIeNET-Westel E-Economy Index and GKIeNET Business Confidence Index have shown parallel trends over the past two to three years, which indicates that future perspectives on electronic or web-based applications are not independent from the unfavorable trends in the business environment. In fact, the instability in the business sector surfaces at an above-average rate in issues related to the electronic economy, as companies tend to assign lower priority to investment projects aimed at developments in e-economy or e-commerce (if they are included in their plans at all), viewing them as postponable investments.
GKIeNET-WESTEL E-ECONOMY INDEX VALUES
Note: The GKI business confidence index is based on the value measured in the final month of the quarter.
2. Present and future of mobile business applications
The majority(89%) of domestic businesses with five or more workers subscribe to mobile phone services. The widespread use of mobile phones as well as the relatively high level of user skills provide a solid foundation for the implementation of mobile phone-based business applications.
One out two company executives said that mobile commerce could potentially be successful in the short term, while one out of three respondents thought that mobile phone-based commercial applications would prove to be a feasible solution in the medium term. Only 18% were skeptical about the medium-term viability of commerce built on mobile handsets.
While the majority of businesses were optimistic about the future of m-commerce in general, a smaller percentage was upbeat about prospects for their own products or services. One-fourth of businesses thought that it would be possible to sell their products or services over mobile phones in the short or medium term. Mobile phone advertising will be more popular: more than one-third (37%) of all businesses indicated that they would consider using this new marketing tool.
Do you see your products or services as being suitable for mobile phone-based …?
26% of the companies indicated that they would order products or services via mobile phone if this was made possible by their partners. It is a widespread opinion (51%) that the traditional commercial channels are sufficient and cannot be replaced by new technologies. Many are skeptical about the security of mobile phone transactions. At the same time, the fact that the latter issue has been raised by significantly fewer respondents than a year ago indicates a growing confidence in mobile commerce. The documentation and recording of transactions for future reference is also a key requirement underlined by companies.
Would you order from your suppliers via mobile phone?
Whether or not companies are open to mobile commerce depends largely on the readiness of executive decision makers and not so much on the companies’ actual products or activities. This became evident when respondents listed a wide range of products and services (including unprocessed materials, parts, supplies and accessories) as potential merchandise in the mobile commerce landscape. Companies tend to predict greater success for lower-priced standard products and materials. In the domain of services, repair/maintenance as well as transportation/transport –related services appear to be associated with brighter m-commerce prospects.
3. Mobile payments
Companies’ opinions on mobile payments have not changed much over the past year. As earlier, 3% of businesses claim that their customers would definitely take advantage of this payment method, while a little more than one-fourth of the companies think that this is likely but not certain. 70% of the firms believe that their customers would refuse to use mobile payment solutions.
Do you think your customers would use mobile payment solutions if they had the option?
As of today, only a few companies offer mobile payment options, charging purchases on mobile phone accounts. Companies expect to see further drops in the percentage of cash transactions, while the prevalence of credit card payments and money transfers is predicted to increase. Company executives think that mobile payments will become popular in the medium term: as low as 2% project growth in the percentage of mobile payments will rise in the short term, while 7% believe that this will take place in the medium term only.
Security is the most important issue when it comes to mobile payments. Another key requirement is the ability to track and monitor the transactions. In addition, the proper documentation of transactions is also an essential component. The transparency of the mobile payment system seems less significant, and relatively little importance is attributed to factors such as convenience, functionality, speed, or low cost.
4. Mobile banking Mobile phone-based financial services have long been the mainstay of mobile business applications. In addition to the typical information services, transaction services (transfer, account management) have also emerged and gained popularity. Currently, twelve banks offer SMS banking services and five provide WAP-based services. According to the survey results, one more bank is planning to implement SMS banking service and two are looking to launch WAP service over the course of this year, with five additional banks planning to add WAP services at a later time.
The number of mobile banking customers in the household segment increased 67% over a year to exceed 320 thousand by the end of June 2003, surpassing the number of internet banking customers (275 thousand). Thus, 3.8% of the adult population are mobile banking customers. In the category of banks offering mobile financial services, 7.5% take advantage of these services.
Number and percentage of mobile banking consumers
Mobile banking services have been popular in the corporate segment, as well: more than 42 thousand companies subscribed to some form of mobile financial services by mid-2003. The number of firms using mobile banking services almost doubled over the previous twelve months, accounting for 8% of corporate customers at banks providing mobile financial services.
Number and percentage of corporate mobile banking customers
III. About the research methodology
The survey was conducted over the period of July-August via mail. The target group included businesses with more than five employees. The survey covered the entire area of Hungary and all sectors of the economy. The results were based on 954 corporate responses which were weighted to be representative of the entire segment in terms of size and economic sector.
1 : As in numerous other research projects of GKIeNET Internet Research and Consulting Ltd., the results of this survey are synthesized in one index, called the GKIeNET-Westel E-Economy Index. This sentiment index, representing the expectations of certain segments of the economy regarding the market impact of internet use and internet applications, is comprised of responses to four questions. The questions relate to the following issues: expectations regarding internet sales and procurement, the impact of the internet on the market of the company, as well as the utilization of business opportunities provided by the internet in the present and in the future.