Online Financial Services - Convenience vs Personal Service - Ireland - December 2007

Table of Contents

• Issues in the MarketKey themes in the report
• Penetration deemed to be growing significantly
• Can' t go, won' t go online
• Spooked by the phishers
• The lure of the best deals
• Online users still testing the waters
• A branch-less future?
• Online option is extremely appealing for some
• Contrast between RoI and NI consumers
• Definitions
• Abbreviations
• Market in Brief
• Steady -- but unremarkable -- growth
• Banks doing their best -- but obstacles remain
• Many consumers still to be convinced
• Increase in e-shopping to drive growth
• Young consumers less active on all counts
• Range of transactions conducted online remains limited
• Internal Market Environment
• Key Points
• Strenuous promotion of online channel
• Pricing strategies
• Cutting back on fees
• Green incentives
• Providers offering better terms and rates to online users
• Greater freedom for RoI consumers
• Enthusiastic uptake by business clients leads the way
• Small business appeal
• Other factors
• The downside: difficulty, confusion and frustration
• Security Concerns -- Still There (and Getting Worse?)
• Key Points
• The big issue: Phishing
• The extent of the problem worldwide
• The extent of the problem
• Counting the cost in financial terms
• The real costs -- in terms of public confidence
• What has been done?
• Individual initiatives
• Sector initiatives
• National initiatives
• International initiatives
• What hasn' t been done?
• Effective precautions could include:
• Broader Market Environment
• Key Points
• Demographic factors
• Population growth & changes
• Projected growth in 35-44 group a boon for online financial services sector
• Growth in 55+ demographic -- coming round to online arrangements
  • Figure 1: People using online banking by age group, UK, 2001-06
• Influx of immigrants of working age
• NI projections
• RoI projections
  • Figure 2: Non-nationals resident in RoI, 2006
• Increasing Internet usage
  • Figure 3: Adult population who have used the Internet in the last 12 months, NI and RoI, 2001-06
• Growth in trust placed in Internet as source of information
  • Figure 4: Agreement with statement "I often refer to the Internet before making a purchase", NI and RoI, 2006
• Growing embrace of e-commerce by consumers
• Increasing numbers of consumers engaging in online shopping
• But increasing numbers unhappy with the experience
• Modern lifestyles and online banking -- a perfect match
• Economic strength bouys financial services sector
  • Figure 5: Health of the economy, NI and RoI, 2003-08
• Sustained GDP growth: NI and RoI
• The overall economic picture
• Broadband penetration
• Is poor broadband penetration obstructing online growth?
• Availability in NI
• ...in contrast to availability in RoI
• Take-up of broadband in RoI
  • Figure 6: Broadband subscribers per 100 inhabitants as of December 2006
• Take-up of broadband in NI
  • Figure 7: Household in NI with Internet access by type, NI 2006 and 2007
• Reasons for poor take-up of broadband: NI and RoI
• Measuring Market Potential
• Key Points
• Overall penetration not spread equally across services
• Growth in online banking site traffic
• Trade views on current and future growth
• Recent rates of growth exceed previous years
• It' s all going according to plan
• Growth compares reasonably well with other online activities
• Obstacles remain to greater penetration
• Strength and value: from the particular to the general
• AIB
• Bank of Ireland
• Permanent TSB
• The NI situation
• Tipped for growth: arrangement of mortgages online
• Future outlook -- The real impact of the online channel
• Not just online but mobile
• Branches as financial services boutiques
• The phenomenon of the rate chasers
• Segment Performance
• Key Points
  • Figure 9: Financial services used online, NI & RoI, 2006
• Online channel used to monitor and manage
• Initiation of financial arrangements generally done offline
• Can this be explained by evolution?
• The concept itself
  • Figure 10: The evolution of the e-consumer
• How this applies to online financial services
• Challenges ahead
• How the concept fits with Mintel' s findings
• Companies and Products
• Key Points
• Clicks-and-mortar institutions
• Abbey National
• Alliance & Leicester
• Allied Irish Bank (trading as First Trust Bank in NI)
• First Trust Bank (trading as Allied Irish Bank in RoI)
• Bank of Ireland
• First Active
• Halifax
• HSBC
• National Irish Bank (operates as Northern Bank in NI)
• Northern Bank (operates as National Irish Bank in RoI)
• Northern Rock
• Northern Rock-ed by US sub-prime fallout
• Permanent TSB
• Ulster Bank
• Pure-play operators
• Cahoot
• Egg
• First Direct
• Intelligent Finance
• RaboDirect
• Supermarkets/Retailers
• Tesco
• Sainsbury' s
• Marks & Spencer
• Advertising and Promotion
• Key Points
• Incumbents v newcomers: fighting it out through the billboard
• Choice of medium
• Reaction of big two in RoI to newcomers
• Outdoor doubles in 2006
• RaboDirect and Halifax: the approach of the newcomers
• Online advertising not yet mainstream in RoI
  • Figure 11: Top 10 online advertisers, RoI, January 2007 to July 2007
• Financial sector a perennial big-spender in NI
  • Figure 12: Total spend by media type, UK, January 2005 to September 2006
• The proven success of online advertising of financial services
• The Consumer- Identifying the Target Market
• Key Points
• Measuring online activity
• Targeting young consumers
• Greatest interest among 25-44-year-olds
  • Figure 13: Accessing banking services, NI & RoI, 2006
• Higher social grades more keen on online financial services...
• Appendix
• Broader market environment
  • Figure 18: Population trends by age group in thousands, RoI, 1998, 2003 and 2008
  • Figure 19: Population trends by age group in thousands, NI 1998, 2003 and 2008
  • Figure 20: Population change by age group, RoI, 2000-20
  • Figure 21: Population change by age group, NI, 2000-20
• Economic growth
• Consumer expenditure
• RoI consumers getting the jitters...
• NI consumers feeling a little more secure...
• Inflation -- rising in the south, stable in the north
• Continued low unemployment and sustained employment growth
• Interest rates
  • Figure 22: Short-term interest rates, UK and Eurozone, 2006-08
• The future of broadband in RoI
• The requirements include:
  • Figure 23: Number of Internet users who have made an online purchase in the past 3 months, RoI, 1993-2003
  • Figure 24: Agreement with statement "When I need information, the first place I look is the Internet", NI and RoI, 2006
• Accessing banking services
  • Figure 25: Accessing banking services, RoI and NI, 2006
  • Figure 26: Accessing banking services, RoI and NI, 2006
  • Figure 27: Type of financial service used online by age, NI, 2006
  • Figure 28: Type of financial service used online by social grade, NI, 2006
• Financial products held
  • Figure 29: Financial products held, NI & RoI, 2006
• Internet use
• Do you have access to the Internet at home, at work or at school/college?
  • Figure 30: Access to the Internet, NI, July 2007
• MORI data
• Attitudes towards online financial services
  • Figure 31: Attitudes towards using online financial services, NI, July 2007
  • Figure 32: Financial services used online by demographic breakdown, NI, July 2007
  • Figure 33: Further attitudes towards financial services used online, by demographic breakdown, NI, July 2007
  • Figure 34: Financial services used online by demographic breakdown, RoI, July 2007
  • Figure 35: Attitudes towards financial services used online, by demographic breakdown, RoI, July 2007
• Typologies
  • Figure 36: Consumer typologies relating to online financial services, NI, July 2007
  • Figure 37: Consumer typologies relating to online financial services by demographic breakdown, NI, July 2007
  • Figure 38: Cross-analysis of consumer types of online financial services used, NI, July 2007
  • Figure 39: Consumer typologies based on attitudes towards online financial services, RoI, July 2007
  • Figure 40: Consumer typologies relating to online financial services by demographic breakdown, RoI, July 2007
  • Figure 41: Cross-analysis of consumer types of online financial services used, NI, July 2007