Only about 5% of New Zealand’s Internet users are ready to bank online — a figure that would give New Zealand’s first “virtual bank” a maximum of 5000 users, says IDC Research’s Graham Penn.
“It may well be premature to launch an Internet bank under current circumstances,“ says Penn.
BankDirect, a subsidiary of ASB Bank, was launched last week promising to offer faster customer service whilst undercutting competitors’ interest rates on a wide range of services. BankDirect’s general manager, Jane Freeman, hopes it will be used by people who are computer-literate, have no time to spare for queuing in banks and aren’t worried about not dealing with a bank teller.
ASB already offers an Internet service — Fastnet — but sees BankDirect complementing rather than competing with this service. Countrywide Bank also intends to launch a Web bank pilot program by the end of the year, making the new market a crowded one.
ANZ Bank is launching its own virtual bank in Australia in the next few months, but has no plans to do so here in New Zealand.
“We are following all the developments, but we’ve decided not to move at this stage,” says ANZ spokesman Steve Eaton. “There are a number of reasons — the cost of delivering such a service, the size of the market and the fact that the Internet is so young and the technology is moving so rapidly.”
That belief is echoed by the BNZ. It is aiming its Internet strategy not at the banking market but at “enabling e-commerce to happen”, says Bruce Gordon, the BNZ’s chief manager of electronic banking payments. “Our job is to enable New Zealand merchants to sell and settle payment for goods and services,” says Gordon.
Freeman is happy to be first in this new arena. “Our research has identified an increasing number of people who are dissatisfied with traditional banking.” Although she expects to see the majority of customers initially coming from the phone banking side of the business, Freeman expects the NetDirect customer base to grow rapidly.
Recent figures from Consumer magazine seem to support her view. A survey of nearly 4500 people showed customers believed the banking industry’s performance had declined over the past three years. In its first day of operation, BankDirect received thousands of enquiries about its service and recorded 45,000 hits on its Web site.