UUNET SPONSORED SURVEY FINDS INTERNET POTENTIAL UNTAPPED BY LOCAL BANKS AND FINANCIAL INSTITUTIONS

HONG KONG, 13 July, 1999 In what is believed to be the SAR's first survey on Internet usage and application trends in the banking and finance sector, UUNET , an MCI WorldCom Company and leading Internet communications provider for businesses, together with regional publication, Internet Asia, reveal that while the Internet is commonly used by the banking and finance sector in Hong Kong, most institutions are still using retail or domestic service providers; their use of Internet is constrained by this; and the application of Internet as a potential business tool remains largely untapped.

"The banking and financial services sector, which is so vital to maintaining Hong Kong's role as a global and regional financial centre, is falling behind its American and European counterparts in the exploitation of the Internet as a business tool," said Simon Phoon, Managing Director of UUNET Hong Kong Limited.

The survey interviewed a targeted group of 60 executives with information technology (IT) management responsibilities from 53 companies. The survey aimed to explore existing Internet usage and evaluate plans for its future use, like Internet banking and e-commerce.

Internet penetration rate and access mode
The survey revealed that Internet penetration rate of the target sector is high with 97% of respondents having Internet access. It was found that 52% of respondents from the banking sector have secure and guaranteed bandwidth access using a local leased line connection or a leased line connection through International Public Leased Circuits (IPLC). However, it is revealed that over 33% of respondents are still using dial-up/modem for access - a means more commonly used by home users who require less reliability and security compared with business users.

"It is remarkable that so many of these institutions are still attempting to operate on the Internet via providers of domestic Internet services designed for home use," said Mr. Phoon. "The financial sector needs the much greater speed, capacity and reliability available through specialised business Internet Service Providers."

The survey found that all departments within banks and financial institutions do have access to the Internet, although a higher percentage of use is recorded for the IT department. Internet usage, however, is not intensively used amongst executives, with over half of respondents (58%) indicating that only a quarter of their executives use the Internet at all.

Current and future Internet usage
Web browsing (88%), e-mail (68%) and downloading of software (33%) are the most common Internet applications. To understand local financial institutions' plans and readiness to offer services over the Internet, the survey covered the implementation schedule of these organisations in four key business areas: -

• Mission-critical applications; (e.g. fund transfers or on-line brokerage)
• Internet banking;
• Business to business e-commerce; and
• Business to customer e-commerce

Looking ahead, the survey indicated that 70% of financial institutions have either no plans or have not decided to use the Internet as a means to offer these services. Most of the remainder, however, will be offering services like mission-critical applications and Internet banking soon, and plan to do so in the next 3 to 12 months. This compares favourably with implementation of business to business (8.3%) and business to consumer (18.3%) e-commerce applications which are given a lower priority.

"I think Internet access among banks as evidenced by our survey is abysmal. Banks ought to do a lot more to get themselves on the Internet and to learn about Internet commerce in order to give their customers what they want," said Internet Asia publisher Larry Campbell. "It's the same for financial institutions like brokerages."

Requirements for Internet access
In terms of users' expectations of local ISPs, the respondents see network reliability (70%) and technical support (38%) as the most important considerations, although cost (35%) is also an important element.

Over 30% of local banks and financial institutions hope that their existing ISP can improve on speed of access, and some 20% seek price and reliability improvements.

"There are over 130 ISPs in Hong Kong and the vast majority of these are consumer rather than business ISPs," Mr. Phoon said. "If local banks and financial institutions want to compete with banks in US and Europe and launch Internet banking and other online services, they will need to ensure they have heavy duty, reliable and secure Internet access in place. This means availability of extensive network capacity; dedicated and guaranteed access; round-the-clock monitoring of their network, and comprehensive technical and customer support."

* TeleChoice 1998 business ISP customer satisfaction survey (TeleChoice is a business and marketing consulting firm in the US specializing in the converging telecommunications industry) .