Banks looking to increase their market share and retain customers are taking to the Internet, and will continue to do so in 1999. According to a report by International Data Corp. (IDC), sales of Internet banking applications topped $93 million in 1998, and will reach more than $326 million in 1999.
IDC attributes the strong growth in this area to the wide acceptance of Internet banking, which has taken down geographic barriers and leaves banks, insurers, and brokers in a free for all for market share.
“Not only can banks use these applications and services to quickly set up an Internet branch, they can also rely on the medium to up-sell and cross-sell products previously unimaginable in the banking world,” said Albert Pang, research manager with IDC’s eCommerce software applications program.
More than 1,200 banks and credit unions in the US signed with online banking applications vendors and providers to build fully transactional Web sites in 1998, IDC reports. In 1999, IDC expects 7,200 more institutions will join the rush to bank online.
By the year 2000, IDC expects to see Internet banking applications to account for approximately one-third of the overall US banking applications market. As banking sites attract more users, IDC expects the revenue from Internet banking service to surpass the revenue of applications.
In-house development efforts are seen as competition for banks looking to go online. The trend toward outsourcing, the need to compress time to market, and a shortage of skilled programmers make internal development an unattractive option for banks, according to Pang.