Report on the internet economy In focus: The financial sector III. 2003 (Summary for the press)

01. 12. 2003.

Number of online banking customers exceeds 300 thousand

In association with Sun Microsystems Hungary, GKIeNET Internet Research and Consulting Ltd. and Westel Mobile Telecommunications Co. conduct quarterly surveys on corporate internet usage and the development of the electronic economy in Hungary.

The present report outlines the financial sector’s position in the internet economy.

I. Summary

  • The GKIeNET-Westel e-Finance Index, which represents  the anticipations of financial institutions regarding web applications, was at 17.2 in the third quarter of 2003, reflecting no change from the previous quarter.

  • By the end of September 2003, the number of online banking customers exceeded 300 thousand in the household segment and 55 thousand in the corporate segment.

  • According to preliminary data, the year-end number of online banking customers was between 330-340 thousand in the household segment and 61-62 thousand in the corporate segment.

  • Online securities services are playing an increasing role in the development plans of banks. By the end of September 2003, approximately 20 thousand individual customers had agreements  covering internet securities services.

  • Online sales by insurance companies were still low in the first three quarters of 2003, except in the categories of automobile liability insurance and travel insurance.

II. Survey findings

The GKIeNET-Westel e-Finance Index, describing the internet use of financial service providers, was at 17.2  in the third quarter of 2003. This reflects no change since the previous quarter. However, the stable value is a composite of modestly increasing optimism and confidence among banks and a slight downturn in the online sales prospects of insurance companies. The index, which represents  the internet-related anticipations of financial institutions, has been fluctuating in the lowest quartile of the positive range, reflecting modest expectations, which, compared with other sectors, project the most upbeat outlook.

GKIeNET-Westel e-Finance Index
On a scale between -100 and +100

Online banking customers

At September 30, 2003, banks offering checking account services had approximately 304 thousand individual internet banking customers, reflecting an 8.7% increase over the period of three months and a 48% rise over the past twelve months. At the same time, online banking customers in the corporate segment totaled 59 thousand, up 7% from the previous quarter and 74% year-on-year.

Number of online individual banking customers at banks providing internet banking services*

* Since March 31, 2003, including savings cooperatives offering online banking services

According to the preliminary data of credit institutions and GKI’s estimates, more than 330 thousand individual customers and over 60 thousand corporate customers had internet banking agreements at year-end 2003.

GKI predicts that in 2004 the number of internet banking customers could increase by another 28-30% in the household segment and even more substantially, by as much as 40%, in the corporate sector.

Internet securities customers

As electronic services are gaining momentum, banks are expanding the range of services available via electronic channels. More and more banks are expected to enter the market of online securities services in the future.

Banks offering online securities services at present had approximately 20-21 thousand individual customers at the third quarter of 2003. Based on the expectations of banks and the estimate of GKI, the number of customers could exceed 27 thousand by the end of 2004.

Internet sales by insurance companies

A number of insurance products suitable for online sales are already available on the websites of Hungarian insurance companies. Most insurance companies sell home insurance and mandatory automobile liability insurance products online, followed by travel insurance and casco indemnity insurance policies.

Based on the projections of insurance companies, more firms are likely offer travel insurance and casco indemnity insurance products via the internet over the next twelve months. A significant growth in the online sales of life insurance products is not expected until later.

In the first three quarters of 2003, mandatory automobile liability insurance generated the highest rate of premium revenues from online sales, accounting for more than 1% at certain companies.

Travel insurance ranks second in terms of the rate of internet sales. The online sales of this product group also accounts for more than 1% of total revenues at certain insurance companies.

The online sales of home insurance policies accounted for 0.5-1% of total sales in the first three quarters of 2003. Collision insurance and casco indemnity insurance policies are also available online, but they generate negligible revenues, with online sales rates close to zero during the period under investigation.

1 : Currently 13 banks and two savings cooperatives offer internet checking account services.

III. About the survey

The survey was carried out in November 2003 by means of questionnaires, covering all credit institutions, online savings cooperatives and insurance companies. Banks were represented at 78%  in terms of total assets, and  insurance companies were represented at 60% in terms of premium revenues.