A lack of understanding by consumers and suppliers towards e-business is the biggest barrier to online growth within the financial services industry, according to the latest quarterly survey of firms in the sector conducted by the CBI (Confederation of British Industry) and PricewaterhouseCoopers.
Results of the survey show business on the Internet to be growing more slowly than expected. Fewer than one in three respondents recorded an increase in the total value of online business during the preceding three months. That compares with 39 per cent in March and 41 per cent in June. Just five per cent of those that reported an increase said it had been faster than expected, while 21 per cent said it was slower.
The speed at which the Internet works has replaced fears about Internet security as the second most cited barrier to online growth.
When firms were asked how they are developing their e-business, 78 per cent said they were putting current business activities online which is down slightly from 83 per cent in June. Fewer firms (22%) said they had launched an online brand compared with 28 per cent in June, and eight per cent are planning to, compared with 10 per cent in the last survey.
Business confidence in general amongst financial services companies has fallen more sharply than at any time for three years and business levels are well below normal, says the CBI. Barely seven per cent of the 133 respondents said they were more optimistic about the overall business situation than three months ago while 47 per cent said they were less.
The survey was conducted between 28 August and 13 September 2001. Eighty-seven per cent of replies were received before the terrorist attacks in the United States.
Sudhir Junankar, CBI associated director of e-commerce says the sharp slowdown in the world economy had damaged business confidence even before the attacks on the US. "It is significant that financial services companies are markedly more concerned about future demand than they have been at any time in the last five years," he says.