Most Web-based financial services have not won consumers, study says

NEW YORK -- Online stock trading barely raises an eyebrow, but a new study reveals most Web-based financial services - including ATMs -- have yet to win acceptance among consumers.

The Mercer Management Consulting study "Digital Business Designs in Financial Services" assesses the impact of the Internet on the financial services industry. The study identifies brokerage and banking firms as the industry's e-business leaders, achieving the highest Mercer Digital Quotient -- a weighted indicator of online customer interaction, internal use of information technology, and overall digital capabilities. More than 50 companies were evaluated.

The study found that since July 1999, online traffic of new customers or visitors at the Web sites of financial services firms has increased 150 percent -- more than twice as fast as overall Internet usage. It also found that consumers make online purchases of insurance, loans and mortgages far less often than they buy computer hardware, books, travel, clothing and other consumer goods and services online.

"Consumers still prefer to conduct a large percent of transactions over 'non-digital' channels," said Mike Riley, a Mercer vice president. "Even a mature channel such as ATMs shows a surprisingly low adoption rate of 50 percent," he said, adding, "this reluctance continues despite the fact that substantial segments of consumers -- in some cases more than 40 percent --express openness to the idea of purchasing financial services online."

"Relatively few" financial services companies have been able to translate digital capabilities into high levels of value, Riley said. Successful companies have the most effective digital business designs. These designs are not about technology, Riley said, "they're about leveraging digital capabilities to create unique offerings to customers in order to radically improve productivity and increase profits."