The national preoccupation last November and December had to be how long it was taking to get to work by train. What a contrast to the start of the year when it was the dotcoms grabbing the headlines.
The millennium burst into life with some very high-profile dotcom launches. IPOs followed, creating fabulous paper wealth for often very young entrepreneurs. Not a hint of envy here, well, not now, looking back with hindsight, as some of the meteoric stars became money-losing dotgones all within the space of a year.
In economic terms, the new digital economy really took off at the start of last year. It touched many of us in different ways. Some of us bought shares in high-tech start-ups and online business to consumer companies. Clients could not get enough of the technology funds and venture capital backers queued up to invest in a whole range of dotcoms.
Internet usage in the home grew strongly and is now projected by Forrester to reach 18.8 million users by the end of 2001. One of the fastest growth areas is in the 45-plus market or silver surfers.
These people show a keen interest in financial matters as they approach retirement or have taken retirement already. The internet gives them a fantastic information resource to do their research before buying direct or seeking out advice.
Internet banking started life as PC banking around 10 years ago. It is estimated there are now around two million people regularly using the internet for day-to-day banking. But why are there not more?
Banking by internet is better than going into a branch but it still has a long way to go in terms of the customer experience online.
Banks are not using customer data intelligently and rarely treat you holistically as a customer. Then there are the times people just have to go into a branch to pay in cash, cheques, get foreign currency or sort out the overdraft.
Last year was also meant to be the year of mobile internet, with Wap the latest buzzword. The attraction of mobile internet acc ess for financial services is obvious. But while download speeds are so slow, customers have dem onstrated limited interest.
In the home, digital TV is growing fast, offering more entertainment choices. The attraction of banking and buying other financial products via the TV has generated divided opinions. For those who do not own a PC, the TV offers an interface to the internet and other digital services so opening up the whole world of information to them. Whe ther people will sit in front of the set to do all their financial dealings is yet to be seen.
One of the biggest changes we have seen this year among product providers is the acc-eptance of the strat egic importance of the internet. Mindsets were changing during 1999 and evidence of implementation plans really came through in 2000.
One of the catalysts for change has been the realisation that product margins have to come down to meet consumers' demands for good value fuelled by the Government's need to shift the burden of provision onto private individuals. Over the last few months, we started to see the launch of stakeholder pensions and the commitment to e-business among product pro viders here is massive.
Among advisers, the uptake of the internet is still mixed. Many have produced brochure ware sites and some have star-ted separate online businesses. Setting up a new channel may work for early entrants but do not underestimate the competition and the money it takes to keep your proposition front of mind. Many of the dotgones found themselves running out of cash as they got sucked into the vicious circle of burning money on advertising.
This leads us to ponder the question of which direction advisers and IFAs should take their internet strategy.
Most IFAs do not have the money to risk on the extensive advertising inv olved in building a new online business. But this is not a reason to do nothing, nor should IFAs be put off by the high-profile failures of last year.
To do nothing will inevitably lead to IFAs losing the ability to compete as their cost base gets out of line.
Last summer, we were inv olved in workshops with Aifa where interested IFAs talked a lot about client acquisition but very little about the importance of looking after their most important asset – their client bank. This is one area where IFAs have tremendous experience offline and can use the internet to their advantage.
The latest buzzwords in the dotcom world are viral marketing. It is all about getting customers to spread the word about an IFA's services. A lot of advisers are already viral marketing experts offline as the lifeblood of their businesses is recommendation and referral.
Now, with the internet, IFAs can do this more effectively and with greater impact. Clients are more likely to tell friends to visit an adviser's site if the content is topical and adds value.
IFAs should make sure they are telling them something no one else is and are doing it in an engaging way. Inevitably, viral marketing works by friends and colleagues emailing each other with an IFA's website address because their content is good.
There are a number of tricks that advisers can incorporate on their site such as a “tell a friend” button, referral forms and stuff they can offer to send, such as a news letter, tax tips or a paper on a topical subject.
Looking forward to the next 12 months, it is the nature of the digital revolution that things will change rapidly. Now is the time to embrace the internet, focus on the areas where IFAs can do well and leave the expensive transactional stuff to the product providers.