Banks Are Cashing in on the Online Craze to Increase Their Market Share, According to IDC

FRAMINGHAM, Mass., Feb. 2 — Internet banking applications are quickly becoming the panacea for banks hoping to increase their market share and retain customers. A new bulletin from International Data Corporation (IDC) shows that sales of these applications topped $93 million in 1998 and will jump to over $326 million in 1999.

IDC attributes the strong growth to widening acceptance of the Internet and seismic changes in the financial services industry that leave banks, insurers, and brokerages competing for customers in a free-for-all environment. "Not only can banks use these applications and services to quickly set up an Internet branch, they can also rely on the medium to up-sell and cross-sell products previously unimaginable in the banking world," said Albert Pang, research manager with IDC's eCommerce software applications program.

More than 1,200 banks and credit unions in the United States signed with online banking applications vendors and providers to build fully transactional Web sites in 1998. In 1999, 7,200 more will acquire online banking applications.

By the year 2000, IDC expects Internet banking applications to account for almost one-third of the overall U.S. banking applications market. In addition, Internet banking service revenues will outpace applications sales as bank Web sites attract new users, which in turn generate higher recurring fees for service providers.

The biggest competition for companies that provide online banking applications comes from in-house development efforts. "Conservative financial institutions have long considered internal technology development a sacred part of their operations because of its strategic importance. However, the need to compress time to market, the shortage of skilled programmers, and the trend toward outsourcing are all making internal development an increasingly unattractive option for banks," Pang said.

Ultimately, the key to success for online banking applications vendors will lie in their ability to allow banks to offer real-time data to their customers, who will be able to log onto the site and conduct simple or complex transactions.

Seismic Changes in Financial Services Industry Spur Strong Demand for Internet Banking Applications (IDC #B18187) includes brief profiles on Internet banking applications vendors and Internet banking service providers. To order a copy, contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com. Additional information on IDC can be found on its Web site at http://www.idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

IDC is a division of International Data Group , the world's leading IT media, research, and exposition company.

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