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Past Symposium/ITxpo
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Thursday, 14 November 2002 Banks must resist the temptation to form third-party relationships to manage customers’ online identities because no one else is trusted to do the job properly. That was the view of Gartner Asia/Pacific analyst Greta James in her presentation, Beyond the Internet Bubble Burst: the Future of e-Payments, at the 10th annual Symposium/ITxpo in Darling Harbour, Sydney yesterday. Ms. James said a Gartner survey found 47 percent of respondents trusted banks to establish and look after online identities that are designed to improve security for online transactions. A big thumbs-down was given to the two key players in the market today – Microsoft with its Passport technology and the Liberty Alliance, based in the United States. Only six percent of respondents said they would trust Microsoft, Ms. James said. A surprisingly small three per cent would trust telecommunications companies despite their collective ambition to drive e-payments from mobile phones and personal digital assistants (PDAs). Some 19 percent of those surveyed would not trust anyone to hold their online identity. Ms. James said such skepticism among users is understandable. “Last year, a total 5.2 per cent of all online consumers were the victims of fraud, and it is believed US$700 million was stolen from them.” She continued: “Trust is the dominant factor when it comes to the establishment of online identities for e-commerce. The convenience of having an online identity is not seen as anywhere near so important. “Banks should not see either Microsoft’s Passport or the Liberty Alliance as a solution to their needs to promote e-payments. They will need to manage these issues for their own customers while at the same time keeping a watch on the market trends. “Perhaps at some point the banks will have to integrate these technologies, but not now.” Ms. James deftly illustrated the need for online identities by asking how many members of her audience had more than ten separate usernames and passwords. The majority did. However, she observed Australians and Americans viewed e-payments completely differently. The Australians have adopted a local system called B-pay, a business built by a consortium of the biggest local banks to promote bill payments over the phone and across the Internet. Almost every member of Ms. James’s audience indicated with a show of hands that they had used this system. “There is nothing like B-pay in the United States,” Ms. James said. “Americans are not used to paying their bills in this way. Changing their behaviour to embrace online identities will be much harder.” She said the fact the US had more than 10,000 large banks and 6,000 credit card issuers made the act of pulling together a consortium impossibly difficult. Nevertheless, for companies the adoption of e-payments can produce significant savings and business benefits, she said. An e-bill costs just 67 cents to produce compared to one dollar for a paper bill. A phone inquiry about an invoice costs a company four dollars, while a customer-oriented Web site to help solve a dispute costs a company one dollar per client visit. Ms. James predicts that by 2005 some 62 percent of companies would be receiving bills electronically, compared with 20 percent today. The increase will be driven by the fact that e-payments improve company cash flows, increase efficiency and make the customers happy, too. She recommends that financial institutions consider e-payment models that enforce as little change on customer behavior as possible. “Own your own customers’ ID verification, but work with Microsoft and Liberty Alliance to leverage their technologies over time,” Ms. James said. Competition in Asia is coming quickly from the leading credit card players, Visa and Mastercard, which are both looking to introduce their passport systems. “I believe we will see Australians continue to rely on the B-pay system in the short to medium term,” Ms. James said. However, she predicts the Australian marketplace could change demonstrably when Australia Post rolls out its electronic bill presentment system. “When this happens,” she said, “you will be able to click on the bill and have all your online identity details inserted securely. “This is the big evolution. It will change our lives – and make them more secure.” Mark Hollands Gartner Staff |
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