Most recently, I found a survey by Sue Diamond, marketing and business development, in conjunction with Compass Research and Mori Financial Services most encouraging.
The research, carried out in June, examines the size of the internet audience for personal finance and the experiences and desires both of early adopters and more novice users of on-line financial sites.
Mori identified that 38 per cent of all UK internet users have searched for financial products or information on-line. This figure is close to the 36.6 per cent of home internet users, amounting to 3.6 million financial surfers reported by NetValue for May.
This represents a significant increase from the 30 per cent of all net users identified as financial browsers by Fletcher Research last November.
In addition to the number of people using the internet growing dramatically, the percentage of that growing community can be seen to be increasingly converted to using the internet as a key part of their financial buying process. Also, no less than 70 per cent of those who have gone surfing for financial products have gone on to buy such a product through some channel.
Clearly the majority ofpeople now looking for financial products this way are serious buyers and even if, as Sue Diamond points out, only 10 per cent of them are buying products this way, this further supports the massive client acquisition opportunities that the internet presents.
One area in which this report differs from recent research is in the emphasis placed on the age of financial surfers. It suggests that financial purchasers are typically in the 25 to 35 bracket.
By comparison, a recent NetValue study highlightsthe considerable growth in the so-called silver surfer market. This shows the over-50s accounting for nearly a fifth of all UK internet use, the 50-64 market has grown by 12 per cent since January with the65-plus market having leapt by a staggering 53 per cent.
Not only are more silver surfers coming online but they connect more often, spend more time online and look at more pages than other age groups. NetValue also shows that financial sites are high on their priorities, accounting for three of the top 10 most visited sites both for the 50 to 64 and 65-plus markets.
Not surprisingly, security continues to be the single biggest concern among all users although experienced users seemed to overcome their concerns based upon their preference to buy on-line. Security is always going to be an issue but I detect that the extent to which this may stop consumers operating on-line is diminishing.
Barclays' recent security fiasco will not have inspired confidence but I found it noticeable that the mainstream personal finance press seemed far more forgiving of the breaches than they might have been previously.
As there is increasing publicity of the risks of using credit cards and other everyday financial tools, inter-net security may become less of a barrier. This would be helped if more institutions indemnified consumers in the same way over internet transactions as they do over other fraud. Actual use of financial web sites can rapidly convert those who may have been initially cynical. The Sue Diamond research included reconvened group meetings with a number of novice users.
Although initially only a quarter felt they would be attracted to using a financial site, when they met again a week later having visited a financial site, virtually all were happy to make the use of such services a core part of their financial arrangements.
A number of those interviewed expressed similar fears over impartiality and commission bias of Internet brokers as some consumers express using more traditional channels. Clearly, this is an area which will need to be considered by e-IFAs.
At the same time, the ability to access at least quotations online was seen as essential and users were frustrated by sites which gave them valuable information but did not allow them to assess costs.
As if to reinforce the message, in my column last week, strong preferences were exhibited for preferential products or pricing for internet distribution. Seeing high-street products available online at the same cost was felt by many to be unacceptable and would not justify additional work by the consumer. Clearly, it is not just IFAs who feel they need to be rewarded for moving theirbusiness practices to a model that creates economies for financial institutions.
This research provides evidence of the ever increasing effect that internet financial services are going to have on the mainstream market.
It shows that sophisticated internet users are increasingly using the web as their preferred starting place for financial shopping and that once they have made a financial purchase online, several more are likely to follow quickly.
Even in the area of complex products where some human interface is still preferred, they will begin shopping online and select a suitable adviser in this way for the personal contact.
Those who are less experienced with the web or financial products are reporting they find it an empowering experience – somewhere they can gain knowledge and grow their confidence before proceeding to buy an investment or other financial vehicle.
This research, combined with the recent evidence from Forrester that users with over five years internet experience are increasingly prepared to conduct regular personal finance transactions online, really brings home to me the fact it should not be too long before we can make a stab at the date by which the majority of financial services business will be conducted online.
In a recent predication in the US, Forrester suggested online banking will be in the majority in the US by 2005.
I cannot imagine that anyone could read the full research presentation and not conclude that the days of considering the internet as a channel that can be ignored are long gone and that if you do not have ane-commerce strategy you probably do not intend to be in business for many more years.