Monday, May 26, 2003

SARS Boosts HK Consumers' Online Confidence

May 26 2003 : Banks and online retailers in Asia are hoping that once the worst of the SARS pandemic passes, new levels of online banking and sales will remain buoyant as Internet users overcome initial security fears. In Hong Kong, Datamonitor confirms Internet banking rates to have increased by up to 40 per cent as branch traffic shifts to a less 'risky' channel, whereas previous penetration rates were about 8 per cent. Similarly, Hong Kong-based retailer, Park-n-Shop, reports online sales to be "20 per cent higher since the onset of SARS, or 60 per cent higher" than a year ago, while its web traffic has grown by 161 per cent.

Datamonitor says these trends "show the positive potential of disruptive forces such as SARS", which has driven branch traffic down by more than 50 per cent in key Asian markets. As such, "many financial services consumers are retaining their ability to access their financial services products via the Internet", notes analyst, Virginia Garcia. "In the longer term, this channel shift will prompt strategic investments in associated support infrastructure", Garcia advises, and "financial institutions must quickly adjust their ... service strategy... or risk losing customers once convenience overtakes necessity as a critical driver".

With Bank of East Asia, Hong Kong's fifth-largest bank, reporting e-banking transactions in April to have increased to a "mid-double digit" month-on-month total, the next step for banks will be to add security to their online services to assuage users' concerns once the SARS crisis tails off. Internet use in Hong Kong rose 13 per cent in April, according to Nielsen/NetRatings, while the Bank of China's site gained a 58 per cent increase in surfers. Peter Steyn, of Nielsen/NetRatings, doubts that online shopping "usage will fall back to pre-SARS levels", while Yahoo! Hong Kong hopes Internet users will continue shopping online.

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