Report on the internet economy In focus: The financial sector Q1. 2003

2003. 11. 17.

In association with Westel Mobile Telecommunications Co. and Sun Microsystems Hungary, GKIeNET Internet Research and Consulting Ltd. conducts 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.

Summary:

  • The GKI-Westel e-Finance Index was at 20.8 in the first quarter of 2003, which continues to reflect moderate optimism regarding the future of electronic financial services.
  • At March 31, 2003, the number of online banking customers at domestic credit institutions totaled 264 thousand in the household segment and 44 thousand in the corporate segment.
  • The number of customers with online banking agreements increased by 60% in the household segment and by 110% in the corporate segment over the previous twelve months.
  • According to preliminary data, the number of individual internet banking customers rose to 275 thousand by June 30, 2003.
  • The online sales of insurance companies was still marginal in early 2003, and no major breakthrough is expected during 2003.


II. Survey findings

The GKIeNET-Westel e-Finance Index, synthesizing corporate expectations regarding the role of the internet in the financial sector, the ability of financial institutions to take advantage of the internet’s potential, as well as the projected advances in online sales, was at 20.8 in the first quarter of 2003. This reflects no change since the previous quarter, nevertheless, it indicates that financial service providers are moderately upbeat about the prospects of electronic financial services.

A GKIeNET-WESTEL e-FINANCE INDEX

2003-i-jelentes-penzugyi-egazdasag_eng

Online banking customers

At March 31, 2003, banks and savings cooperatives offering checking account services had approximately 264 thousand personal internet banking customers, reflecting a 12.5% increase over the period of three months and a 60% rise over the past twelve months. At the same time, online banking customers in the corporate segment totaled 44,560, up 35% from the previous quarter and 110% year-on-year.

Based on these data, 3.1% of the adult population have internet banking contracts, which indicates that 15% of all internet users take advantage of online banking services.

According to preliminary data, the number of consumers with internet banking contracts rose to 275 thousand by June 30, 2003.
INDIVIDUAL ONLINE BANKING CUSTOMERS OF BANKS OFFERING INTERNET BANKING SERVICES

2003-i-jelentes-penzugyi-iblak_eng

Online banking transactions

Banks predict that transfer requests and account inquiries will continue to be the fastest growing services in the household and corporate segments alike. Respondents also expect increasing demand for online securities transactions in the household segment.
CHANGES IN THE PERCENTAGE OF ONLINE TRANSACTIONS IN THE HOUSEHOLD SEGMENT OVER THE NEXT TWELVE MONTHS AS PREDICTED BY BANKS

– balances on a scale of –

2003-i-jelentes-penzugyi-megbizasok_eng
Internet sales of insurance companies

In the first quarter of 2003, mandatory liability insurance for drivers  was the only category in which premium revenues from online sales accounted for more than1% of total sales at one insurance company. Premium revenues from all other online products remained at a marginal level, below 1%.

The responding insurance companies predict that revenues from online sales will remain negligible throughout 2003. This is due to two factors: first, only a small percentage of insurance companies offer online products; second, according to the mainstream business philosophy, agents can sell more complex and more valuable insurance policies.

Insurance companies expect the most substantial growth in the online sales of mandatory liability insurance policies as well as home insurance and travel insurance products over the next twelve months.

A somewhat less substantial but still significant growth potential is attributed to collision insurance, while companies expect limited success in the online sales of casco indemnity insurance and health insurance.

The online sales of life insurance products are not expected to grow significantly until these products are included in the online sales portfolio as planned.

III. About the research methodology

The survey was carried out in June 2003, covering all credit institutions, online savings cooperatives and insurance companies. The survey  was highly representative: banks were represented at 80%  in terms of total assets, and  insurance companies were represented at 92% in terms of premium revenues.