SA retail banks in danger

South African retail banks today are in danger of using the web only as a cost-saving channel instead of a means of building businesses.

According to Jay van Zyl, Technology and Research Director of Rubico, the internationally focused financial services business component provider, some banks are too focussed at delivering basic statement, balance and transfer facilities on their internet banking sites.

"They should be looking beyond these functions, if they do not want to lose online clients to more savvy financial services companies", says van Zyl.

"Banks want to do more transactions online because it`s cheaper than over-the-counter banking, but that`s not all that web-based banking is all about. Forward thinking banks are now looking to take online banking to the next level. This is about content delivery, personalisation, customer advice and giving clients access to best-of-breed products, event if they don`t happen to be the bank`s own," he says.

Van Zyl maintains that next-generation internet banking users are not going to put up with what they are being offered today and if the banks are slow in responding to their needs, then someone else will - and it could well be competition from outside the financial services sector.

Some SA banks are aware of the danger and responding to the challenge. Encouraging, he says, moves are being driven from the top down. "Senior management realises they have to have they systems in place which allow them to respond to changing market needs and new technologies. Just look at all the channels the banks are currently supporting or investigating - branch, call centre, we, mobile, kiosks and, on the horizon, Internet television (iDTV). This is why infrastructure flexibility is so critical," he says.

According to Van Zyl, banks that fail to grasp the importance of the promotion of online banking to a higher position whereby it becomes the primary customer channel, could quickly fall prey to outside competition. The whole face of banking is changing radically. There is a whole new banking paradigm emerging.

"You already have Pick `n Pay setting up in opposition and becoming more aggressive in the market. Furniture stores make more money on providing credit than they do on furniture. And what`s to stop large companies with huge work forces moving into banking. They have a captive market and could easily provide staff services such as asset-based financing? And look at what Twenty/20 is doing in this field.

"SA banks are not taking this lying down. They realise that the PC-based online experience must become exceptional and are making sure they are not viewed as an adjunct to other channels. They also realise on-line must accommodate all forms of distribution methods including pda`s, cell-phones kiosks, etc," concludes van Zyl.