Financial service firms have realized that technology is a solid investment, as research finds a high incidence of usage and adoption in the industry. A summer 2002 survey by the Association for Financial Professionals (AFP) of 346 members and prospective members found that almost all respondents indicated that the Internet played a role in their company’s use of financial services, with a majority using the medium to transact business.
“We find that there is an expanding role for the Internet in financial services, and that it continues to be increasingly important for the day-to-day responsibilities of financial professionals, even during a period where there have been some notable setbacks for the technology industry as a whole,” said Jim Kaitz, AFP’s president and CEO.
|Role of the Internet in Accessing Financial Services|
|Any financial service||80%||64%||70%|
|Letters of credit||19%||23%||11%|
Despite a growing reliance on the Internet, the survey indicated little change as to how financial service professionals used the medium for activities over the last year. Cash management was the only category that respondents reported significantly increased usage of the Internet at 62 percent, with 71 percent expecting to use the Internet even more next year.
Two other categories – investments and foreign exchange – showed increased usage among one-third of the respondents, while the majority’s usage remained the same as last year. Almost half of the financial service professionals that were surveyed expected to use the Internet more next year for these activities.
For the remaining categories – bank loans, bonds/commercial paper issuance, derivatives/hedging, insurance, and letters of credit – this year’s usage was largely unchanged from the previous year, but approximately one-quarter of the respondents plan increased Internet usage for these services next year.
AFP attributes the year-over-year stagnancy to security concerns, with 98 percent of the respondents indicating that the security of information and communication are highly important or somewhat important. Other issues that were minimally “somewhat important” are authentication of counterparty (97 percent); enforceability of contracts/repudiation (93 percent); inability to integrate data with internal systems (92 percent); credit quality of counterparty (90 percent); company reluctance to conduct e-commerce and online transactions (70 percent); and lack of personal advice (68 percent).
The survey also found that the most popular online sources for treasury and finance related news and research were bank and financial institution sites with 56 percent reporting at least a weekly visit, followed by newspaper sites (32 percent); Bloomberg.com (30 percent); Wall Street Journal online (24 percent); CBS Marketwatch (19 percent), Bloomberg Professional (terminal) (18 percent); and others.
Financial service firms are also found to be on the cutting edge of technology adoption, as an Aberdeen Group report indicates that the industry is leading in implementing innovative applications and business practices, including CRM and outsourcing, perhaps as a result of Y2K planning and euro compliance.
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