More than 31 percent of consumers who engage in online financial transactions trust that their personal information will be safe, compared with 27 percent at the end of 2001. Similarly, the number of people using the Internet for financial transactions rose to 41.5 percent from 38.9 percent at the end of 2001.
7. Banks become primary provider of presence services by 2007 Presence services can manage your preferences, personal information and experience on the Internet. Gartner consider what it calls "one-click Internet" as essential to bringing convenience and mobility to the Internet. Microsoft (Passport), the Liberty Alliance, AOL, and Yahoo (among others) are vying for a piece of your presence--if not all of it. But Gartner's Claunch said that the future belongs to independent companies or financial service providers, such as the banks. Banks have had to deal with security, privacy and issues of trust for centuries, and that legacy is a particularly relevant in the digital age. Gartner gives the banks a 70 percent chance of succeeding in the presence business by 2007. I am not sure that we will have the standards and politics worked out by that time, but Gartner predicts that the banks will play a major role and adopt something like Liberty or Passport as the underlying framework for the trust broker business.
Chairman and CEO Jon L. Gorney commented, "We are operating in an increasingly challenging business environment given the overall sluggish economy and competitive factors. Several factors have modified our view of the Company's near term outlook. We are experiencing weakness in overall volumes, particularly in the retail segment. In addition, our pricing strategy has been to sell a premium service for a premium price and we have been cautious to match current pricing in the marketplace. We did make an adjustment in the second quarter and have actually signed more deals this year than last, although they have been smaller in terms of volumes and margins. We are still seeing significant price compression as we compete for new national business as well as in retaining our existing base of national customers. Also, due to the seasonality of our business, our revenues and profits for the year are heavily dependent on the fourth quarter due to holiday shopping volume. Based on the weakness that we saw in our business in September and bleak economic forecasts for holiday shopping volumes, we are not optimistic about the chances of a robust holiday season."On a conference call to discuss earnings, management reported they would be putting even more emphasis on regional (vs. national) merchants.
On Tuesday, the Cabinet passed a bill that allows non-financial companies to operate online banking services. The new rules, drafted by the Ministry of Finance and Economy, will be effective from early next year. Among the online financial business areas opened up are electronic money transfers, the issuance of debit cards, and online transaction settlement. The law requires non-financial companies with over 500 million won in capital to register with the Financial Supervisory Commission (FSC) before initiating online banking services. This is expected to encourage the expansion plans of telecom operators into the financial field.