Although in the U.S., investors have embraced the use of the Internet for trading, account information, and commercial banking, this has not necessarily been the case in Asia and in Europe. "They have not been dot.comed to death, so to speak," says Ed Kountz, analyst at the Tower Group. Financial services in Europe and Asia may have missed out on the first phase of the Internet revolution, but they certainly understand the need and benefit of having any time access to financial information. And they are making up for lost time, by quickly adopting wireless strategies.
TowerGroup expects there will be approximately 10.1 million users of wireless financial services content and transactions--globally by the end of this year. And this access is to financial content, financial transactions, or both, and will come either via the wireless Internet or through a non-Internet-based data delivery or messaging system. Kountz points out that of this global number, 4.8 million will be in Asia and nearly 4 million will be in Western Europe.
There are a few reasons why both Europe and Asia had been somewhat slow to adopt the Internet, but are now picking up steam. Kountz says, "There are two things to consider here, both in terms of Europe and Asia. One is the lower rates of PC penetration in Europe and the second is because the landline telecommunications infrastructure is not as good in Europe and Asia as it is in the U.S. and it is more expensive than wireless." As a result these regions missed out on the first phase of the Internet revolution, but are very comfortable using wireless devices.
That said, Kountz points out that the TowerGroup expects strong growth in wireless use in financial services in both regions particularly in retail banking earlier on. "These are environments that are much less focused on check or paper-based transactions or paper-based bill payment. "I expect an uptick in interest in Smartcards and other transactions much earlier there than here. In addition, in Europe and Asia, to a degree, they are dealing with a universal banking module and haven't had Glass Steagall-type restrictions, he says, explaining that they would be more apt to get involved in other areas than just banking with their wireless devices.
He adds that retail brokerage is poised to take off as well, especially in Asia, particularly due to the Big Bang reforms-deregulation--of 1999. With the rising Internet and wireless penetration, Asia is starting to develop an Internet and wireless sector in retail brokerage. In Europe, however, retail banking remains dominant. Several European banks that are well positioned to succeed in wireless banking include MeritaNordbanken, Citigroup, Deutsche Bank, Foreningsparbanken, SEB-Sweden and Leonia, the report says. Although, the Internet brokerage sector has begun to evolve in countries such as Germany, Scandinavia and the U.K., it hasn't truly taken off. Kountz says he expects that by 2005, 75 percent of financial services firms in Asia and Europe will be offering wireless services.