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Top of the internet tree

The UK is now the most internet based economy of the G20 group, according to the Boston Consulting Group. As a nation, the Brits have emerged top in terms of how much of their hard-earned cash is spent online, ahead of Denmark, the United States and Germany.

The UK has clearly has caught the online shopping bug and by 2016 nearly 25 per cent of all retail spending will take place online compared to just 11 per cent in the next highest country – Germany – and 6 per cent as an average across the G20 nations. Government and investment spending is also set to rise online.

Electronic payments overall are also growing fast. According to the most recent World Payments Report, the global volume of non-cash payments transactions grew by five per cent in 2009 to 260 billion – and it would be a safe bet to assume this will continue to grow. With these two factors in mind, it’s clear that the role of cash in the economy will continue to decrease.  

So what’s behind this trend? In terms of the internet economy, it’s because UK consumers have the confidence to shop online safe in the knowledge that their payments are secure thanks to the backbone network provided by the card schemes. It is also because financial institutions have made significant investments in fast and effective fraud detection systems, which have been promoted to and proven with customers in the UK.

It’s also interesting to see that that banking and investment activity was in the top three uses of the internet along with email and research. As we look to the future, retaining that confidence is going to be vitally important – especially as we see the growth of multiple screens being used by consumers such as mobiles and tablets. Ensuring confidence in banking through any channel, such as internet, mobile, branch or ATM will be paramount if we are to stay at the top of the internet tree in the future.


Comments: (2)

A Finextra member
A Finextra member 22 March, 2012, 09:17Be the first to give this comment the thumbs up 0 likes

Interesting views - but I'm not sure I completely agree with your thesis. On-line shopping is rapidly increasing, but this is more fuelled by improved on-line shopping experiences and higher bandwidth. I disagree with your views on the banks investing in fraud prevention - I think that much of the growth is despite fraud levels and PayPal is also picking up a significant share of online shopping revenues.

PayPal is also focussed on providing customers with the ability to shop in-store and via their mobiles. Unless the banks get their acts together they will be left behind and disintermediated by their more commercial competitors.

Nick Collin
Nick Collin - Collin Consulting Ltd - London 22 March, 2012, 10:55Be the first to give this comment the thumbs up 0 likes

Nice post Andy!  It's interesting that the UK is so "e-friendly" and contrary to the other comment (from PayPal?) I agree with your analysis that much of the credit should go to the UK banking and card payments community.  I'd add the high penetration of 3D Secure (SecureCode; VbV) and Remote chip Authentication (PINSentry etc) to your factors.

On a similar note, yesterday I came across a statistic that, according to a First Annapolis survey, a huge 40% of UK MasterCard/Visa payments were card-not-present transactions.  Can this be true - anyone have any similar global statistics?

Meanwhile, looking at the original Boston Consulting piece you referenced, it seems that 70% of us brits would rather give up alcohol for a year rather than their broadband, and 25% sex!  Irational exuberance, surely :-).