The Financial Services industry has been transformed by the growth of e-commerce. The advent of the Internet and then the World Wide Web coupled with innovation in communication technologies has allowed faster data transfer over improved networks within and between businesses, their partners, and consumers. This has enabled the retail banking sector the opportunity to reduce the cost of service transactions and increase revenue whilst providing more convenient banking services to their customers. Financial services such as online trading and online foreign exchange are now prevalent on the web as well as banking tools such as an online currency converter fed with real-time exchange rates data.
Financial services such as Internet Banking have not only encapsulated traditional banking services such as opening an account and balance inquiries but also offers online bill payment options, and the ability for customers to manage their own bank accounts and funds online. Transferring between accounts is now a simple and straightforward process that takes only moments, much more preferable than a trip to the local branch. The major change for consumers is not only the convenience of these new services but the range of choice that are now available to them. This has been enabled through the restructuring and streamlining of retail banking processes for online servicing and the commoditisation of financial products ranging from credit cards to current accounts, loans, mortgages and insurance, savings and investment products.
Information – online currency converter, mortgage and insurance comparisons
Consumers now know exactly what it is they are looking for, how much it costs and how much they expect to pay. They are empowered by choice in an ever-increasing price-based market, particularly for insurance, mortgages, bridging loans and credit card products. Consumers expect information to be freely available online over a range of different financial products, and they want to be able to search for preferable alternatives. This has meant that businesses within the financial sector have had to offer more personalised products to consumers and differentiate the pricing and benefits of particular products targeted to a range of consumer needs – quickly moving away from a one-size-fits-all ethos.
The online bridging finance and loans market is highly competitive as many individuals now invest in a second property loan for buy to let, and property development purposes. With the ability to research at the end of our fingertips, consumers are now able to assess mortgage and loan companies from the many customer reviews available online. So, instead of visiting one financial lender and feeling pressured into a transaction we feel unsure of, we are now able to make our own choice without feeling pressured, and once that decision’s made we can enjoy the ease of applying immediately online with an immediately response to our request.
Online financial information and news, coupled with comparison and rating services inform consumers of the relative advantages and disadvantages of varying complex financial products such as insurance and mortgages. In the past the process of purchasing insurance and mortgage products was renowned for being branch-based and broker-serviced. However, with the huge selection of mainstream providers now online consumers are able to search for not only a mortgage lender or insurance provider but also obtain the most competitive rates and premiums for these services. Banking tools such as online mortgage calculators allow customers to calculate their potential repayments and evaluate their ability to spend before ever having to submit an online application. Coupled with this information is the prevalence of information about the quality of the suppliers as well as their products. This affords consumers the opportunity to make their own purchasing decisions prior to signing on the dotted line, and without having to step inside the bank manager or insurance broker’s office.
Previously these service based businesses have had to focus their marketing attention in just one area but now in the modern age their expertise need to be aimed at both the highly competitive online business as well as old school traditional publicity and marketing campaigns.
When new businesses such as telecom providers, supermarkets and utility companies started entering the financial services industry then the high street banks and insurance providers really got a shake up and attention to detail became of prime importance to secure that new client over one’s competitors. As such, for certain products, competition in the market has increased and the need for suppliers to differentiate between the products they offer and those of competitors has become imperative. This is particularly seen with products that have a high profitability gradient such as with the credit card.
Whilst the credit card industry has been strongly competitive for some time, online applications offered new benefits to suppliers and consumers. Online credit card applications have cost and time savings for the supplier and the consumer. The online replacement of facilities and services such as credit card applications offers advantage to the supplier by reducing the need for paper processing and reducing the risk of human error. For the consumer, selecting a product is faster and more profitable as web-based companies that aggregate information about, compare and rate between products display consumers the top choices in the current market environment. Applying for credit cards online often provides consumers with an immediate decision over the outcome of their application whilst saving the supplier human resource overhead as the consumer inputs their own personal information directly into the system.
Other banking tools such as the online currency converter offer a similar range of choice advantages to the consumer. However, the new benefit to consumers of online foreign exchange is the time-based focus of the foreign exchange business. Whilst exchange rates rise and fall as foreign currency is bought and sold, consumers can shop around for the supplier who offers the best exchange rates in real-time.
The age of e-commerce has well and truly arrived and will only continue to grow as mobile phone technology develops further. Now with the launch of apps like the new Paypal mobile payment service, and Barclays ‘Pingit’, one is able to forget about one’s credit card and pay directly from their mobile phone. You may not yet be able to purchase a new home with these devices but don’t be surprised in the next few years to see where this technology might lead us!
Redrock Commercial Finance are UK business finance specialists. They provide a variety of financing including asset finance, bridging loans and property development finance. More information can be found at their website: www.redrockcommercial.co.uk