Globally, access to the online channel has grown at a rapid pace, presenting huge opportunities for Financial Services providers to access the global community.  Data from the International Telecommunications Union (ITU) show that 45% of the world’s internet users are currently from Asia or Africa compared to 40% in North America and Europe combined.  However Datamonitor’s Financial Services (FS) Consumer Insight survey reveals very different consumer appetites for FS products within these regions.

In terms of day-to-day management of current accounts, consumers in the Asia-Pacific region have keenly adopted these online technologies. Registration levels for online current accounts are higher in Asia-Pacific overall than in France, Spain or Italy.  The situation in India is even starker Ð whilst having one of the lowest levels of internet penetration as a country, over a third (37%) of those with a current account are registered online for it.

One the whole, Asia-Pacific consumers are far more engaged with the online banking channel than those in the rest of the world. They also perform a broader range of tasks, and are more inclined to seek a somewhat closer relationship with their bank through the online platform – 26% of Asia-Pacific consumers have used the online channel to set up email or SMS alerts in the last six months, compared to only 10% in the Eurozone and US, for example.

Mobile banking is expected to take the same upwards trajectory as online banking and is expected to grow faster, and has become especially popular in some Asia-Pacific countries in providing basic current account tasks for both the unbanked (e.g. in India) and more remote consumers who may not be internet users.

Security of online banking is a concern for consumers in Asia-Pacific

However, there remains a significant proportion of internet users not registered for their current account online. Security concerns are the main deterrent to consumers’ use of the online channel Ð and such concerns appear to be far higher in AP. When asked why they don’t bank online, 75% and 61% in China and Japan respectively sited security concerns as a factor (59% of Asia-Pacific consumers overall), in comparison to 39% of Eurozone and US consumers.

Savings products a key growth opportunity in Asia-Pacific

The popularity of the online channel in Asia-Pacific is not restricted to day-to-day banking activities.
Asia Pacific also holds a higher rate of online saving activity than any other region in the world, taking the top three spots in Datamonitor’s recent Financial Services Consumer Insight survey. Japan shows the highest level of online savings activity with rate of 72%, followed by China at 65% and Australia at 57%. Singapore follows closely in fifth place on 50%. These rates are significantly higher than many other Western regions, including the US at 45%, Germany at 39% and Italy at 13%..

This shows that there is still a lot of room for growth through growing internet access in regions such as China, or by focusing on reaching those not yet saving online in Australia and Singapore.

Online savers tend to be affluent and prepared to make their own financial decisions, making them a highly profitable market for financial service providers to target.

Online borrowing levels restricted by cultural forces

Online borrowing products provide an interesting and surprising opportunity for lenders in the region. Overall, despite an unwillingness to borrow amongst some consumers in the region online appetites are high. Overall consumers in Japan are the most conservative in the world when it comes to borrowing: 5% currently have a loan, compared to 28% on average worldwide and 23% across Asia Pacific as a whole. In complete contrast, 34% of Chinese online consumers are borrowing at present.

Australia and Singapore both lie within these extremes, on 19% and 24% respectively.  Despite this, attitudes towards online uptake in this area of personal finance yield surprising results. Japanese consumers are highly averse to borrowing, but when they decide to borrow, they are very happy to apply online. Consumers in Australia, too, are relatively willing to take out loans online should they feel the need to borrow.

However in Singapore, a very low proportion of borrowers have proved willing to exploit the online channel, instead preferring to use more traditional channel methods that involve at least some degree of personal contact.

The future lies in personalising the online experience

The rise in Web 2.0 technology and interactive communication has allowed banks to provide a far more effective 2-way interface for consumers.  In doing so, banks have succeeded in shifting preferences and quelling some consumers’ concerns. Use of social media in the FS industry is fast gaining pace particularly in Asia-Pacific, and banks such as UBank in Australia have pioneered its use as a key customer retention tool, customer service and feedback platform.