From: jeremy.compton@stonebow.otago.ac.nz (Jeremy Compton) Subject: SNET: Plans for internet banks in Australia, says Ernst & Young Date: Sat, 12 Sep 1998 03:04:23 +1200 To: snetnews@world.std.com -> SNETNEWS Mailing List Plans for internet banks in Australia, says Ernst & Young Sydney, Sept 9 AAP - Offshore and local companies have strategic plans to establish stand alone Internet banks in Australia to compete with the existing banking network, financial services consultants Ernst & Young said today. Ernst & Young partner Andrew Keene, who specialises in technology strategy for financial institutions, said the international consulting firm was aware of both overseas and domestic companies with plans for internet banks. "There are some plans that we are aware of," Mr Keene told reporters. "I believe most of the plans are formative." He declined to name the companies. Ernst & Young yesterday released its latest report on technology in banking and financial services, with more t0 of the world's largest financial institutions in 26 countries participating in the seventh global study. Entitled Electronic Commerce and Connecting to the Customer, the report analyses the technology spending plans of banks, insurance companies, asset management and brokerage institutions in the United States, Europe, Asia and Australia. The report found that technology spending priorities of Australia's financial institutions to develop new customer channels have been surpassed by the "more immediate issues" of mergers and acquisitions, the millennium bug and the Euro. Kevin Hall, the national leader of Ernst & Young's Australian financial services consulting group, said that the new spending priorities "have meant that spending on the critical area of improved customer services has been delayed". He said that the report found that financial institutions are "anticipating heavy increases" in technology spending, with technology budgets rising 14 percent in calendar 1998, tapering off to six percent by 2001. "But while spending rates will decline over time, the actual budget amounts will continue to increase, with actual budgets project to double between 1992 and 2000," he said. However, technology budgets are predominantly being spent on mandated projects such as computer upgrades to avoid the Year 2000 software date problem. The survey also found that only 12 percent of Australian institutions believed that the internet will help them retain customers and business, compared to 47 percent of US respondents and 34 percent of European respondents. Russell Ives, a data warehouse specialist at the firm, said that Australian banks view Internet services such as electronic commerce or e-commerce as cost-saving devices whereas US banks used it to "focus on retaining customers". "The great opportunity that exists for financial institutions in Australia is to refocus their e-commerce strategy towards customer retention," said Mr Hall, adding that some institutions are "unsure how to use" e-commerce. Australian financial institutions are also behind their overseas counterparts in integrating customer data to develop sophisticated knowledge of customer needs to enhance the cross-selling of products and target services. "Nobody has really integrated its completely," Mr Hall said of Australian financial institutions. Mr Ives said that banks have to advance data integration rapidly, especially when it comes to refocusing e-commerce strategies on customer retention. Overseas banks such as Wells Fargo, Bank of Montreal and ING Bank are some of the leaders in e-commerce and internet. "So our conclusion is that the most effective financial institutions will develop alliances to deliver electronic commerce," Mr Keene said. AAP pjg 10/09/98 08-09NZ © New Zealand Press Association -> Send "subscribe snetnews " to majordomo@world.std.com -> Posted by: jeremy.compton@stonebow.otago.ac.nz (Jeremy Compton)