Mexico's Financial Services Get Web-savvy
The year is 2005 and you've just dropped by your local McDonald's for the usual snack; one large soft drink and medium fries. The queue is moving slowly, giving you enough time to check your savings-account balance while you're there, and to buy a couple of those bio-tech stocks you read about on the Internet that morning. You then sit down to eat, raising the drink to your mouth with your right hand, while your left hand keys information into your portable Web gizmo for the medical coverage you'll be needing for that ski trip next week.
Sound nutty? Well think again, says Kimberly Harris, an analyst for U.S.-based IT authority Gartner Group.
The Internet has and will continue to dramatically change the face of traditional financial-service providers, says Harris, adding that traditionally non-financial service providers, like department stores and restaurants, now have the opportunity to offer such products via Web portals and with the aid of other companies.
New Providers
In case you're wondering who in their right mind would hand over their life savings to a fast-food chain, well the answer is a lot more people than you might think. According to Harris, just about half of those questioned in a recent U.S. study on brand image said they would indeed consider banking with well-known and trusted household names such as McDonald's, were they to offer such services.
The Internet allows such companies to operate financial services themselves or through intermediaries, taking advantage of their customer base and reputation, but without incurring the costs implicit in creating brick-and-mortar units.
The Internet already boasts a sizable financial market: Twenty-two percent of U.S. Internet users are involved in some form of online banking activities, 18 percent of them are trading and 9 percent have gone online for insurance information.
So, even well-established financial-service providers, accustomed to having certain delivery channels for their products, are having to devise new Web-based services and strategies while deciding which and what aspects of these services will run better online. This is a trend already taking place in the United States, Europe, and Latin America.
Such services are being offered through intermediaries, portals or specialized websites, where potential customers can browse through a range of different financial products and compare prices and service terms as if they were comparing commodities.
"It is becoming more and more blurry (to say) who is a product creator and who is a product distributor," says Harris.
People Power
The advent of low-cost virtual companies in the finance sector has meant greater competition and efficiency in the market. But it has also meant a better deal for the customers who can now more readily compare information and product descriptions, which, in the absence of physical salespeople, should be tailored to unspecialized masses.
With cyber surfers being offered such a vast array of financial products, the quality and personalization of services will be paramount in attracting customers. "When a customer logs on, the website that comes up can be based on what we know about them, or on what they feel is important to them," Harris explains.
Tech Everything?
Those of you whose technology-tolerance threshold begins and ends at setting the clock on your VCR will be glad to know that online financial shopping and transactions are still unlikely to fully replace physical buildings and personnel anytime soon.
For example, bank branches still exist and are used by most customers, despite the presence of call centers and ATMs. People usually go to the branch to deposit a check, to the ATM to take out cash, and phone the call center to check on their balance, says Harris, so online financial-service providers will have to offer their customers a variety of solutions.
"We can't be 100 percent in the electronic world, eventually someone is going to want to talk to a live person. There has to be some sort of physical structure in place to allow face-to-face interaction," says Harrris.
Hear, hear!