Wealthy Canadians Use Net for Finances, But Need Human Touch

The Internet is rapidly becoming the communication channel of choice among wealthy Canadians, but it has not replaced the role that human beings play when it comes to financial information, found a study by Ipsos-Reid. The study was commissioned by Optus, Symcor’s Customer Communication business, and supported by Sun Microsystems of Canada Inc.

Canadian high-net-worth investors have shown increased use of the Internet for information services, such as account balances and financial reporting. But increased consumer use of the Internet to gather financial information has not diminished the role of financial advisors in the management of their investments.

Among consumers surveyed, 83 percent have Internet access and more than 69 percent of those connected have visited a financial Web site. However, consumer expectations of online communications do not preclude the use of traditional services or channels. Many of the Canadian consumers surveyed prefer to continue to use face-to-face or other channels to complement their Internet activity.

Common online activities conducted by consumers are: gathering information about financial services (67 percent); checking bank accounts and account histories (56 percent); viewing financial statements (56 percent); and tracking investment performance (49 percent). While 44 percent have purchased a nonfinancial product or service online, only 19 percent have bought or sold investments online and just 9 percent have applied online for loans, mortgages or credit cards.

In the past year, only 32 percent of consumers with Internet access tracked investment performance from an independent financial Web site, 14 percent used a wireless device to conduct financial activities, 13 percent downloaded information from a financial Web site to personal financial management software and no one conducted an insurance transaction.

“Clearly, consumer use of the Internet for financial services is no longer a budding trend. The Internet is now entrenched as a highly effective information-gathering tool,” said Jon Hantho, president of Optus. “Some newer Internet activities have been slower to catch on, but usage will likely grow as consumers become more comfortable with the technology and as more companies offer these services. For organizations who target higher-net-worth investors, creating a strategy that incorporates the Internet to provide differentiation in customer communication is no longer an option, it has become a basic business requirement.”

According to the survey, financial institutions have differing adoption levels for online activities. However, most have already implemented Internet-based communications. Many industry respondents think the Internet will improve transaction capability, and enhance and personalize customer service. But some industry respondents fear the Internet could commoditize financial products and services and potentially undermine traditional sales channels.

“Interestingly, this view is unsupported by the consumer research findings,” said John Wright, senior vice president at Ipsos-Reid. “Two-thirds of consumers say that expanded use of the Internet to communicate with financial institutions will have no impact on their use of professional financial advisors. And while 11 percent suggest they may use financial advisors less, almost as many (8 percent) say they will use financial advisors more often.”

While the survey found that financial advisors continue to be the preferred source of information and advice, the wealth of information available on the Internet means that today’s consumers are much more informed about their investments. “Financial advisors likely will find that these more savvy consumers have much higher expectations of them,” Hantho said.

Financial institutions are ahead of many Canadians in terms of anticipated services and functionality. Still, most consumers are interested in adopting new Internet tools and applications. More than two-thirds of consumers surveyed say they would be interested in receiving bills, financial statements and other financial information by email. More than half said they would be very interested in using a financial institution’s Internet portal to get information about their financial transactions and account histories.

Expectations for wireless Internet access in the near to medium term are limited, however. Only one-third of the industry professionals surveyed expects a significant level of adoption for mobile financial transactions in the next few years. Adoption expectations for wireless banking or investing among consumers is also relatively low. Only one in 10 of higher-net-worth consumers expects to conduct such wireless transactions in the near term.

“Overall, it’s apparent that the Internet and technology have had and will continue to have a positive impact on the financial services industry,” Hantho said. “Consumers will ultimately benefit in many ways, including 24/7 availability, self-service access, faster communication and personalized value-added services.”

The consumer portion of the Ipsos-Reid survey was conducted by mail among a total of 433 high-net-worth adult Canadians by mail in March 2001. Industry interviews were conducted among 50 executives representing the leading Canadian mutual fund companies, banks, investment dealers, advisors and insurance companies.

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