More than half of the UK's building societies have yet to take their first steps in e-commerce because they say they can't afford it, according to research commissioned for Deloitte & Touche and e-business solutions provider iE.
The survey, carried out by Byline Research, covered 35 of the 67 remaining building societies. Of these only 43% have an e-commerce capability of any kind and only a few go beyond basic online application forms. Most rely on information-only websites. Some don’t even have that.
The biggest barrier to e-commerce, singled out by 66% of respondents, is the cost of implementation. Technology issues ranging from system integration to reliability and performance are also high on the list of concerns.
Those surveyed gave surprisingly low estimates when asked the cost of building an e-commerce platform: 40% put the figure between £20,000 and £100,000, a further 29% said they would expect to pay up to £250,000. Only two firms put the cost of building a strategic e-commerce platform at £1m or more.
Jerry Mulle, director of iE, said: “Some societies are looking at nothing more than brochure-ware, while others are considering full on-line servicing.
If they are not willing or able to throw money at the problem individually, these organisations have to exploit their collective strengths to reach a solution.”
Gordon Carr, director at Deloitte & Touche, said: “Building societies’ greatest strength lies in their ability to collaborate. The costs of a common e-commerce platform could be easily spread across a number of societies.”
The main motives for building an e-commerce capability are improved customer service and customer retention, which the report argues, are two sides of the same coin. Societies make more money from existing customers than from new ones and therefore put a higher priority on keeping customers in the fold than on acquiring new ones. Cross selling, however, came low on the list of e-commerce drivers.