An increasing number of financial services firms are developing specific e-business strategies and moving transactions to the Internet, according to a global study conducted by Computer Sciences Corporation (CSC).
The research reveals that the number of financial services firms with formal strategic e-business plans increased to 67 percent from 49 percent in 1999. Additionally, twice as many companies are now conducting external business via the Internet as compared to last year. The number of companies engaged in business-to-consumer and business-to-business Internet transactions rose from nine per cent to 19% and is projected to increase to 27% in 2001.
"Among those transacting over the Internet, investment firms are leading the charge, while insurance companies seem to be lagging behind," says Pete Boykin, president of CSC’s financial services group. "This may be partly because the insurance industry has a deeply seated belief that insurance must be sold, not bought, and because firms are concerned about potentially alienating agents – their traditional distribution channel – by any significant attempt to develop a direct-sales channel."
CSC’s '13th Annual Critical Issues of Information Systems Management Study', also reveals a gradual shift in e-business objectives and expectations. Compared to last year, a smaller number of companies in the financial services industry are using their Web sites to simply inform, signaling a maturing of the medium, according to Boykin.
"In prior years, companies considered participation in the online economy as a necessary price of doing business," he says. "Increased revenue or even profits were not foremost on their list of e-business objectives. But, as e-business has matured, we are beginning to see the stirrings of more traditional business expectations."
The top IT issues for financial services companies remain focused on how e-business and related technologies can improve operations. The top six issues include: seeking greater organisational effectiveness; developing strategic e-business plans; organizing and utilising enterprise data; integrating all enterprise systems with the Internet; optimising enterprise-wide IT services; and deploying the Internet to connect to customers, suppliers and partners.
"Not only do these findings suggest the importance of information technology to the entire organisation, they also point out the need to create an integrated end-to-end solution, rather than an uncoordinated collection of single-point tactics," states Boykin.
The growing importance of Internet-based capabilities and compatibility emerged as a common theme, with three in four financial sector respondents investing to create a straight-through processing path for e-business transactions, and another 74 percent developing Internet-based technologies. Sixty percent are searching for ways to further protect their customers’ personal information, while knowledge management – the collecting, storing and providing access to information – is the fourth priority area for investment.