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09 July 2012

Internet-banking vs bank affiliate: who will win?

People, who being now  adult,  used to live  in soviet  times, certainly remember  what any bank transaction  looked like in  that times. It was needed to  come  at certain time to the affiliate of  Saving bank, stand in a line for certain time, fill up a  heap of forms and only then one could pay  some tens of soviet roubles for  municipal services, etc.

Certainly, both western banks and first commercial banks in  CIS countries tried to  search possibility to free clients, and employees from papers and handwork.

First projects,  connected with control of bank accounts  from the client’s PC  appeared  in the middle of  the eightieth years. Having connected through a modem with the  bank’s host computer, a client could obtain information about his  account’s balance. Such systems got the name ‘Home banking’. With growth of availability of the Internet for the wide user, leading banks began to develop account control systems  through the Network. Interestingly, that already in 1997 the first fully virtual bank  was opened  - Security First Network Bank. However, it did not work long, because failed to deserve the trust of customers without real bank infrastructure. Other similar banks  failed too.

Internet-banking should substitute bank affiliates

At present  any large bank offers services of Internet-banking (IB). In most cases, the electronic digital key may be needed  for using IB services. However,  some banks for use  authorization offer two-factor authentification ( as usual a password and SMS).

Internet-banking has to gradually substitute “brick”  bank affiliates, many bankers say. Ukrainian banks have to gradually decrease the number of affiliates, because their number is much higher then in western banks. Online banking should substitute “brick” bank affiliates.

Internet-banking will never replace the “brick” bank affiliates

But, in spite of seeming simplicity and comfort of  Internet-banking -  access to the account 24/7 from any place - the number of its users  is not too great in Ukraine yet. Accordingly to the data of GFK Ukraine, 1.3%  inhabitants of Ukraine  used Internet-banking  in the end of 2011. It is the lowest index among all European countries.  Some experts say that the reason is in peoples’ habit. New technologies  did not succeed to break ice of mistrust among the bulk of populations. Though all  security problems while working  with Internet-banking are already solved. Most customers are simply accustomed go to  the  bank’s affiliate  to make  any payment, even if its  amount  is very small.

Internet-banking will never replace  “brick” bank affiliates, some experts say.  To pay for the apartment  one can via  the Internet. But to get  a large loan, or put  money on deposit one has to go to the bank. For this reason some banks increase the number of  their affiliated until now.

Low popularity of IB  could be  explained as well by low penetration of Internet in Ukraine (ap.  40%). Together with the increase of the level of Internet penetration, it will also grow the number of users of Internet-banking. In addition, getting electronic digital signature needs additional expenditures. Therefore, banks should offer suitable conditions of IB for their  clients.

Translated by Valeriy Stepanenko


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