Banks insecure about ecommerce

UK banks' scepticism and hesitancy about the role of the internet within their businesses has placed the sector behind all others in Europe in ecommerce take-up, according to research commissioned by Cisco and Oracle.

The research, which has been endorsed by the Institute of Directors (IoD), has found that banking directors are aware of the internet's importance, but still lack faith in it as a secure business or customer support channel.

Although 62 per cent of banking directors said they would need to sell direct to customers over the internet, 57 per cent felt that it is still too insecure.

While seven in 10 respondents agreed that improving customer service was key to the survival of their business, 40 per cent thought internet service and support was not suitable.

Indifference to learning about best practices in ecommerce was also revealed by the survey, which found that nearly half of UK directors have never had a technology briefing, despite the opinion of 83 per cent of respondents that the internet could make their bank more competitive.

Jim Norton, director of ecommerce policy at the IoD, said: "This 'net scepticism', which has made banking lag behind all other sectors in ebusiness, should be a surprise."

"The banking sector is usually noted for the early adoption of technology. Many e-investments are large but hampered by a lack of end-to-end integration," he added.

Norton said institutions were investing in maintaining existing systems, and sometimes regard replacement projects as "too hard, risky or daunting". This conservative and traditional approach amongst retail banks must be overcome if they are not to run the risk of losing business, he said.

Steve Rogers, vice president of financial services at Oracle, said: "While many UK directors in retail and investment banks recognise the strategic importance of the internet and technology, they run scared of true implementation throughout the organisation."

Rogers added that this "hesitancy paradox" prevents them attracting and retaining customers or streamlining their operations through internet technology.

The research involved a survey of senior managers from more than 2000 companies of 500 employees or more, within five sectors: banking, telecommunications, local government, manufacturing and retail.