European Internet commerce will be worth more than $5 billion by 2001, according to a report by London-based consultancy Datamonitor.
The report, ?IT in digital payments?, claims that European Internet commerce is set to sky-rocket in the next few years. It says that by 2001 10.5 million households will be conducting transactions online.
?Germany and the UK will lead the growth in shopping activity conducted in the virtual marketplace,? the report said.
Datamonitor spokesperson Sophie Smith said digital payments were set to alter the bank-customer relationship. ?The Internet will introduce a level of abstraction between the user and the bank,? she said, adding that Internet commerce will outgrow all other delivery channels, with a growth rate of 63 per cent a year.
Datamonitor did not expect growth to be confined to encrypted credit card transactions, which comprise the majority of transactions today. ?New payment methods for low value purchases will emerge, which demand particular responses from IT suppliers and content providers,? the report said.
Smith warned that the banking sector must become more innovative to counter the competitive pressures of new methods of payment and profit from digital cash. ?Banks will start to look to the digitalisation of commerce as a way of reducing costs and increasing the efficiency of their operations,? the report said. This would enable them to exploit digital technologies better, increase their visibility in the transaction process, attract new customers and improve their information resources, added Smith.
The report identifies France as the fastest growing European market followed by the Netherlands. The UK and Germany, which have a higher online customer base, are expected to grow less quickly.
Smith said that to capture the growth, banks must target the home user. ?Direct access to the home is a tremendous inducement for the retail banking industry to establish online transactions and make all their services available electronically,? she said.
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