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Online
Banking Goes Mainstream
By Michael Alan Hamlin
April 7, 2003
By the end of the year, a bit more
than half a million Filipinos will be banking online regularly,
according to the latest Digital Filipino report, "The Filipino
Internet Banker." And while they may be far outnumbered by
Internet users in general, those who do bank online are a pretty
impressive lot. For example, about 34 percent of them make around
or substantially more than half a million pesos a year. A significant
13 percent make about a million and up annually. That suggests quality
makes up for low quantities of online banking clients.
In fact, a whopping 96 percent of
respondents to the latest survey - conceived and implemented by
local Internet icon Janette Toral - are college graduates. An impressive
32 percent also have a master's degree. This well-heeled group of
personal money managers says that convenience and time and resource
savings are the principal catalysts for leveraging online banking
services, which include account inquiry, funds transfer, and bill
payment.
It's no surprise, of course, that
most Internet users who bank online are young: 92 percent of respondents
are 40 years old and below, and 44 percent are single. That probably
explains why 52 percent of respondents have no children, despite
enjoying the financial capability to responsibly nurture a family.
Somewhat surprisingly, males clearly dominate the ranks of Internet
users who bank online, making up 68 percent of respondents.
That's surprising for a couple of
reasons. First, Internet users as a whole are pretty much evenly
divided between male and female in the Philippines. Second, anecdotal
evidence - and some formal surveys - indicate that it is the women
who generally manage the family's financial resources. The skew
in favor of males when it comes to banking online may reflect the
large number of single males who don't have a partner to handle
this chore.
Most respondents - 71 percent - who
bank online are comfortable with the Internet and have been using
it for more than five years. They are also comfortable with technology
in general, with 95 percent saying they own a PC. Because 81 percent
of respondents access the Internet from their offices, they also
are likely to have on-all-the-time access to online banking services.
A further indication of the tech-savvy,
financially independent character of Internet users who bank online
is the infatuation of a significant segment with personal digital
assistants, or PDAs. Ms. Toral found that 35 percent own a PDA,
and an impressive 29 percent use them to send and receive e-mail
on-the-go. That may help to explain why most Internet users who
bank online subscribe to Globe. Fully 67 percent are Globe customers,
compared to just 22 percent for Smart. Globe has pushed its online
Internet service aggressively, and sees it as a key growth area
in the maturing mobile telephony sector.
Internet users who bank online are
also ready to spend money. Almost 85 percent have credit cards,
and 56 percent have purchased products online, mostly from Amazon.com.
Around 60 percent have purchased books, but 44 percent have purchased
software, too. Other favorite purchases include domain names, web
hosting services, and computer hardware.
Although 36 percent of Internet users
who bank online are IT professionals according to the results of
the survey, the majority isn't, and that's particularly true for
women, with 75 percent of female respondents indicating that they
work in non-IT related and non-engineering fields. That suggests
that women without technical skills are actually somewhat more receptive
to the notion of technology's role as a tool to enhance lifestyles,
rather than an end in itself.
When it comes to banking institutions,
Bank of the Philippine Islands (BPI) is the clear winner, perhaps
indicating that its strong promotional push of its Internet banking
services is paying off. Almost 60 percent of respondents bank with
BPI. Citibank comes in a far second, with less than 20 percent,
followed by Union Bank with slightly better than 10 percent of respondents.
Equitable-PCI and HSBC rounded out the pack.
What all this means for banks is
pretty clear. Many banks have decided that the road to greater and
sustainable profitability lies in recruiting customers who have
significant financial resources, and value value-added financial
services that help them manage and grow those resources. Clearly,
Internet banking is emerging - despite the present small number
of users - as an effective tool for recruiting clients with significant
levels of expendable income.
And if you consider that half a million
Internet users who bank online is equivalent to about 20 percent
of all Filipinos who have credit cards, this group becomes even
more interesting in the Philippine context. That's in part because
it appears from Ms. Toral's results to account for a very high percentage
of credit card holders who use their cards regularly, and enjoy
above-average credit ceilings.
That makes it a group we'd all like
to target.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian Professionals
into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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