Table of Contents
Issues in the Market
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- Key themes in the report
- Definitions
- Abbreviations
Insights and Opportunities
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- Broadening the online experience
- Security remains an issue that won’t go away (unless it’s dealt with head on)
- Need for a more personal online experience
- Older – not younger – consumers embracing online banking services
Market in Brief
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- Growing broadband penetration key to increased use of online banking services
- Internet now a mainstream channel for accessing banking services
- Volume of transactions processed online increasing significantly
- Mobile banking services – the next development
- Cheque usage remains high, but is in (slow) decline
- Move to ‘less cash’ – rather than cashless – society
- Drawbacks to increased online usage, while branches remain crucial
- Security remains a high-profile issue
- Technology-enabled banking fits with modern lifestyles
- Increasing account ownership likely to grow use of remote channels
- Irish consumers extremely ‘positive’ about online banking services
- Strong rate of participation in ‘core’ online banking activities
- Online comparison increasingly popular among all consumers
- Simplicity key to online purchasing
- Three distinct consumer groups in each market
Fast Forward Trends
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- Trend 1: Eye on Government
- What's it about?
- What we’ve seen
- What next?
- Trend 2: FSTR and HYPR
- What's it about?
- What we’ve seen
- What next?
Internal Market Environment
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- Key points
- Enduring importance of branch network
- Branch presence important in maintaining consumer confidence
- Most consumers want an ‘understanding’ bank
- Online banking services of increasing importance to consumers
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- Figure 1: Agreement that telephone/internet banking facilities are an important factor when choosing a current account, NI & RoI, 2004-09
- Internet users more ‘interested’ in advertising for financial services
- Growing account ownership suggests increased need for online services
- Alongside benefits, downside to online banking for providers
- High usage among businesses of technology when banking
- Huge incentive for businesses to bank online
- Recognition that technology improves quality of life
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- Figure 2: Preferred method of communication, RoI, 2009
- Technology a god-send for time-poor consumers
- Technical glitches highlight dependency
- Security concerns persist (and not helped by media hype)
- Security breaches often down to carelessness of retailers/suppliers
- Importance of electronic capability to increase with SEPA
Broader Market Environment
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- Key points
- Both NI and RoI economies remain in recession
-
- Figure 3: Economic outlook, RoI & NI, 2008-10
- RoI
- NI
- Inflation to remain low into 2010
- RoI
- NI
- Interest rates unlikely to fall any further
- RoI
- NI
- Rising unemployment in both economies
- RoI
- NI
- Disposable income levels in decline
- RoI
- NI
- No likely increase in consumer spending
- RoI
- NI
- Marginal improvement in consumer confidence
- RoI
- UK (including NI)
- Growing optimism about future income among NI consumers
- Impact of recession on consumers’ financial arrangements
- Youth of population bodes well for new technology adoption
Branch Network vs Online Channel
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- Key points
- Internet now a mainstream channel for accessing banking services
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- Figure 4: Methods used to access banking services, NI and RoI, 2009
- Online channel gaining ground on main alternatives
- Online options attracts key demographics
Online Banking
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- Key points
- Internet access and usage
- Over half of homes have internet access, two thirds have gone online
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- Figure 5: Percentage of consumers with a broadband internet connection at home, RoI and NI, 2004-09
- Around four in ten are regular internet users
- Government investment growing broadband availability
- Growing functionality enhances online channel’s appeal
- Increasing fraud losses (and risks)
- Online banking fraud losses up by 132% in UK
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- Figure 6: Online banking fraud losses, UK, 2004-08
- Phishing incidents continuing to occur
- Fraudsters’ arsenal bolstered with malware and spyware
- Industry efforts to protect online banking
- Different banks taking different approaches to security
Online Banking Services: Use and Volume (RoI)
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- Key points
- Over two million now registered for online banking services in RoI
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- Figure 7: Number of consumers registered for online banking services, RoI, 2007-09
- Surge of new registrations in 2008
- Users accessing accounts online more often
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- Figure 8: Average number of times accounts accessed online per registered user, RoI, 2007-09
- Online transactions outpacing growth in users
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- Figure 9: Number of payments/money transfers through online banking services, RoI, 2007-09
Mobile Banking
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- Key points
- High mobile phone penetration in NI and RoI
- Internet access the next phase in mobile phone use
- Launch of smartphones likely to generate interest in mobile banking
- Some Irish institutions making tentative foray into mobile banking…
- … but even this amounts to progress of sorts
- So far, so good in terms of consumer response
- Banking crisis has curtailed mobile banking plans for many
Contactless and Mobile Payments
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- Key points
- Contactless cards seen as the future
- How does it work?
- Over three million (and counting) contactless cards issued in UK
- Retail outlets have central role to play
- Security dominates UK consumers’ thoughts on contactless cards
- Potential core market for contactless cards in Ireland
- Mobile payments – a little further down the line
- Most focus on concept of the mobile wallet
- … but some obstacles remain
- Low consumer awareness of mobile possibilities in RoI
- Commercial benefits of cashless systems
Strengths and Weaknesses
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- Emergency cash facility from Permanent TSB
- Ulster Bank’s proactive defense against online fraud
- Nokia Money: Bringing banking to the “under-banked”
- ‘Smart’ plastic to eradicate online fraud
- Online ‘Healthcheck’ draws consumers closer
Competitive Context
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- Key points
- The cheque is in the past
- Irish consumers almost alone in day-to-day use of cheques
- Over a third of Irish consumers have a chequebook
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- Figure 10: Cheque usage, any frequency, NI & RoI, 2005-09
- … but frequency of use in decline
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- Figure 11: Frequency of cheque usage, NI & RoI, 2006-09
- Eventual demise of cheques is inevitable
- Sound economic rationale to eliminate cheques
- Some consumer resistance may emerge
- Cheque fraud remains a reality
- A cashless society… but not just yet
- Excessive reliance on cash in NI and RoI
- Cashless society not yet imminent
- But shift away from cash already underway
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- Figure 12: Changing payment methods, actual and forecast, UK, 1997, 2007 and 2017
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- Figure 13: Value of ATM withdrawls and debit card payments, RoI, 2005-08
- Strong growth in debit card ownership among Irish consumer
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- Figure 14: Plastic card ownership, NI and RoI, 2003-08
- Retailers not enthused about move away from cash
The Consumer – Perceptions of Online Banking
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- Key points
- Consumers overwhelmingly ‘positive’ about online banking
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- Figure 15: Percentage of consumers that associate selected POSITIVE words/terms with online banking, NI & RoI, 2009
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- Figure 16: Percentage of consuemrs that associate selected NEGATIVE words/terms with online banking, NI & RoI, 2009
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- Figure 17: Average response rate to association of positive and negative words/terms with online banking, RoI & NI, 2009
- ABC1s, 25-34 and full-time workers most positive about online banking
- Branch users less convinced about safety of online banking
The Consumer – Finance-related Activities Conducted Online
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- Key points
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- Figure 18: Banking/personal finance activities conducted online, RoI & NI, 2009
- The core activities: Checking balances, transferring money and paying bills
- Majority engaging in ‘core activities’ online
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- Figure 19: Core banking/personal finance activities conducted online, NI & RoI, 2009
- Core activities no longer the preserve of early adopters
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- Figure 20: Selected finance activities conducted online, selected demographic groups, NI & RoI, 2009
- One third compare financial products and services
- Older consumers have caught up with 25-34s as ‘online comparers’
- Women and C2DEs seeing the merits of an online comparison
- Purchasing online determined by simplicity of product
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- Figure 21: Applications for selected financial products online, NI & RoI, 2009
- Variation across demographics in applying online for products
- Men more likely than women to apply online
- ABC1s dominate online applications
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- Figure 22: Application for selected financial products, by socio-economic background, NI, 2009
- Consumers aged 16-24 least likely to apply online
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- Figure 23: Application for selected financial products, by age, RoI, 2009
- Insurance products as ‘gateway’ to broadening online purchases
- Those ‘holding out’ dwindling in number
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- Figure 24: Consumers with above-average tendency not to use the internet for banking/personal finance needs, NI & RoI, 2009
- Day-to-day banking online, advice and queries in branch
Consumer Typologies
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- Key points
- NI
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- Figure 25: NI consumer typologies, 2009
- Potential Converts
- Traditionalists
- Online Embracers
- RoI
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- Figure 26: RoI consumer typologies, 2009
- In-Betweeners
- Online-philes
- Branch Attached
Appendix
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- Internal market environment
- Financial fraud
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- Figure 27: Plastic card fraud losses on UK-issued cards, NI, 2004-08
- Figure 28: Forms and extent of plastic card fraud losses, UK, 2008
- Impact of technology on quality of life
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- Figure 29: Impact of technologies on quality of life, RoI, 2009
- Use of online banking services by businesses
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- Figure 30: Standard online services or applications currently used by SMEs and Corporate Businesses, RoI, H1 2009
- Consumer desire for an understanding bank
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- Figure 31: Agreement with: “It’s important that my bank understands my individual needs,” by socio-economic background, NI & RoI, 2009
- Preferred means of receiving information on banking needs
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- Figure 32: Preferred means of receiving/gathering information about banking needs (new or existing), RoI, June 2008
- Figure 33: Preferred means of receiving/gathering information about banking needs (new or existing), by age, RoI, June 2008
- Figure 34: Preferred means of receiving/gathering information about banking needs (new or existing), by socio-economic background, RoI, June 2008
- Current account ownership
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- Figure 35: Current account ownership, NI & RoI, 2007-09
- Broader market environment
- Consumer confidence
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- Figure 36: Consumer sentiment index, RoI, 2004-09
- Figure 37: Consumer confidence index (seasonally adjusted), UK (incl. NI), 2008-09
- Figure 38: Consumers’ view of household income in six months’ time, UK (incl. NI), 2008-09
- Population
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- Figure 39: NI & RoI populations, by age group, 2007
- Figure 40: Population projections, by age group, NI, 2006-26
- Figure 41: Population projections, by age group, RoI, 2006-26
- Branch vs. online channel
- Methods used to access banking needs
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- Figure 42: Percentage point change in methods used to access banking services, NI & RoI, 2006-09
- Figure 43: Use of branch vs. internet to access banking services, by socio-economic background, NI & RoI, 2008
- Online banking
- Internet access
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- Figure 44: Percentage of consumers who have accessed the internet in the last 12 months, NI & RoI, 2003-09
- Figure 45: Number of subscribers to internet connection, actual/estimated/forecast, RoI, 2004-13
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- Figure 46: RoI internet providers segmentation, volume %, 2008
- Online banking fraud
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- Figure 47: Number of phishing websites targetting UK banks and building societies, 2005-08
- Figure 48: Number of mule recruitment advertisements, UK, 2005-08
- Online banking services: Use and volume
- Online banking registrations
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- Figure 49: Number of new registrations for online banking services, 000s, RoI, 2007-09
- Figure 50: Percentage growth (year-on-year) in number of consumers registered for online banking services, RoI, 2007-09
- Accessing of accounts online
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- Figure 51: Number of occasions accounts accessed online, RoI, 2007-09
- Online payments/money transfers
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- Figure 52: Number of online payments/money transfers, RoI, 2007-09
- Figure 53: Online payments/money transfers, by type, RoI, Q1 2009
- Mobile banking
- Number of connections
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- Figure 54: Number of mobile phone connections, NI & RoI, 2004-09
- Competitive context
- Cheque usage
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- Figure 55: Average number of cheque transactions per capita, EU15, 2007
- Figure 56: Cheque usage trends, selected markets, 2002-07
- Changes in payment methods
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- Figure 57: Annual change in various payment methods, number of transactions, RoI, 2007-08
- Figure 58: Number of cheques and other paper debits, RoI, 2003-08
- Figure 59: Annual change in various payment methods, number of transactions, UK, 2008
- Figure 60: Annual change in various payment methods, total value of transactions, UK, 2008
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- Figure 61: Number and value of cash and debit card payments, UK, 2008
- Losses through cheque fraud
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- Figure 62: Cheque fraud losess, UK, 2002-08
- ATM withdrawals
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- Figure 63: Annual number of ATM withdrawals per capita, EU15, 2008
- Payment type segmentation
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- Figure 64: Number of payment transactions, UK, 2008
- Consumers’ perception of online banking
- Variation across demographics
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- Figure 65: Average response rates to association of POSITIVE words/terms with online banking, selected demographic groups, RoI, 2009
- Figure 66: Average response rates to association of POSITIVE words/terms with online banking, selected demographic groups, NI, 2009
- Figure 67: Financial activities respondents conduct online, NI, September 2009
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- Figure 68: Words respondents associate with NI and RoI, September 2009
- Figure 69: Percentage of consumers who prefer to visit a branch (rather than banking online) that associate selected words/terms with online banking, NI & RoI, 2009
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- Figure 70: Financial activities respondents conduct online, NI, September 2009
- Figure 71: Financial activities respondents conduct online, NI, September 2009
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- Figure 72: Words respondents associate with online banking, NI, September 2009
- Figure 73: Words respondents associate with online banking, NI, September 2009
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- Figure 74: Words respondents associate with online banking, NI, September 2009
- Figure 75: Financial activities respondents conduct online, RoI, September 2009
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- Figure 76: Financial activities respondents conduct online, RoI, September 2009
- Figure 77: Words respondents associate with online banking, RoI, September 2009
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- Figure 78: Words respondents associate with online banking, RoI, September 2009
- Consumer typologies
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- Figure 79: Typologies, by agreement with financial activities conducted online, NI, September 2009
- Figure 80: Typologies, by words associated with online banking, NI, September 2009
- Figure 81: Typologies, by demographic breakdown, NI, September 2009
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- Figure 82: Typologies, by agreement with financial activities conducted online, RoI, September 2009
- Figure 83: Typologies, by words associated with online banking, RoI, September 2009
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- Figure 84: Typologies, by demographic breakdown, RoI, September 2009
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