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Online Banking - Ireland - November 2009

This report assesses the impact that technology and the internet are having on Irish consumers’ banking and finance-related activities. It considers recent developments in online banking services and trends in consumers’ use of these services. It also assesses imminent developments in the areas of mobile banking services and contactless payments. Mintel’s consumer research, commissioned exclusively for the purposes of this report, provides an insight into consumers’ perception of online banking services, their uses of these services and likely future developments.

This report has been produced as part of Mintel's Irish Series and is sold in Ireland exclusively through our sales agency, OCO Consulting, based in Belfast.

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Definitions
          • Abbreviations
          • Insights and Opportunities

            • Broadening the online experience
              • Security remains an issue that won’t go away (unless it’s dealt with head on)
                • Need for a more personal online experience
                  • Older – not younger – consumers embracing online banking services
                  • Market in Brief

                    • Growing broadband penetration key to increased use of online banking services
                      • Internet now a mainstream channel for accessing banking services
                        • Volume of transactions processed online increasing significantly
                          • Mobile banking services – the next development
                            • Cheque usage remains high, but is in (slow) decline
                              • Move to ‘less cash’ – rather than cashless – society
                                • Drawbacks to increased online usage, while branches remain crucial
                                  • Security remains a high-profile issue
                                    • Technology-enabled banking fits with modern lifestyles
                                      • Increasing account ownership likely to grow use of remote channels
                                        • Irish consumers extremely ‘positive’ about online banking services
                                          • Strong rate of participation in ‘core’ online banking activities
                                            • Online comparison increasingly popular among all consumers
                                              • Simplicity key to online purchasing
                                                • Three distinct consumer groups in each market
                                                • Fast Forward Trends

                                                    • Trend 1: Eye on Government
                                                      • What's it about?
                                                        • What we’ve seen
                                                          • What next?
                                                            • Trend 2: FSTR and HYPR
                                                              • What's it about?
                                                                • What we’ve seen
                                                                  • What next?
                                                                  • Internal Market Environment

                                                                    • Key points
                                                                      • Enduring importance of branch network
                                                                        • Branch presence important in maintaining consumer confidence
                                                                          • Most consumers want an ‘understanding’ bank
                                                                            • Online banking services of increasing importance to consumers
                                                                              • Figure 1: Agreement that telephone/internet banking facilities are an important factor when choosing a current account, NI & RoI, 2004-09
                                                                            • Internet users more ‘interested’ in advertising for financial services
                                                                              • Growing account ownership suggests increased need for online services
                                                                                • Alongside benefits, downside to online banking for providers
                                                                                  • High usage among businesses of technology when banking
                                                                                    • Huge incentive for businesses to bank online
                                                                                      • Recognition that technology improves quality of life
                                                                                        • Figure 2: Preferred method of communication, RoI, 2009
                                                                                      • Technology a god-send for time-poor consumers
                                                                                        • Technical glitches highlight dependency
                                                                                          • Security concerns persist (and not helped by media hype)
                                                                                            • Security breaches often down to carelessness of retailers/suppliers
                                                                                              • Importance of electronic capability to increase with SEPA
                                                                                              • Broader Market Environment

                                                                                                • Key points
                                                                                                  • Both NI and RoI economies remain in recession
                                                                                                    • Figure 3: Economic outlook, RoI & NI, 2008-10
                                                                                                  • RoI
                                                                                                    • NI
                                                                                                      • Inflation to remain low into 2010
                                                                                                        • RoI
                                                                                                          • NI
                                                                                                            • Interest rates unlikely to fall any further
                                                                                                              • RoI
                                                                                                                • NI
                                                                                                                  • Rising unemployment in both economies
                                                                                                                    • RoI
                                                                                                                      • NI
                                                                                                                        • Disposable income levels in decline
                                                                                                                          • RoI
                                                                                                                            • NI
                                                                                                                              • No likely increase in consumer spending
                                                                                                                                • RoI
                                                                                                                                  • NI
                                                                                                                                    • Marginal improvement in consumer confidence
                                                                                                                                      • RoI
                                                                                                                                        • UK (including NI)
                                                                                                                                          • Growing optimism about future income among NI consumers
                                                                                                                                            • Impact of recession on consumers’ financial arrangements
                                                                                                                                              • Youth of population bodes well for new technology adoption
                                                                                                                                              • Branch Network vs Online Channel

                                                                                                                                                • Key points
                                                                                                                                                  • Internet now a mainstream channel for accessing banking services
                                                                                                                                                    • Figure 4: Methods used to access banking services, NI and RoI, 2009
                                                                                                                                                  • Online channel gaining ground on main alternatives
                                                                                                                                                    • Online options attracts key demographics
                                                                                                                                                    • Online Banking

                                                                                                                                                      • Key points
                                                                                                                                                        • Internet access and usage
                                                                                                                                                          • Over half of homes have internet access, two thirds have gone online
                                                                                                                                                            • Figure 5: Percentage of consumers with a broadband internet connection at home, RoI and NI, 2004-09
                                                                                                                                                          • Around four in ten are regular internet users
                                                                                                                                                            • Government investment growing broadband availability
                                                                                                                                                              • Growing functionality enhances online channel’s appeal
                                                                                                                                                                • Increasing fraud losses (and risks)
                                                                                                                                                                  • Online banking fraud losses up by 132% in UK
                                                                                                                                                                    • Figure 6: Online banking fraud losses, UK, 2004-08
                                                                                                                                                                  • Phishing incidents continuing to occur
                                                                                                                                                                    • Fraudsters’ arsenal bolstered with malware and spyware
                                                                                                                                                                      • Industry efforts to protect online banking
                                                                                                                                                                        • Different banks taking different approaches to security
                                                                                                                                                                        • Online Banking Services: Use and Volume (RoI)

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Over two million now registered for online banking services in RoI
                                                                                                                                                                              • Figure 7: Number of consumers registered for online banking services, RoI, 2007-09
                                                                                                                                                                            • Surge of new registrations in 2008
                                                                                                                                                                              • Users accessing accounts online more often
                                                                                                                                                                                • Figure 8: Average number of times accounts accessed online per registered user, RoI, 2007-09
                                                                                                                                                                              • Online transactions outpacing growth in users
                                                                                                                                                                                • Figure 9: Number of payments/money transfers through online banking services, RoI, 2007-09
                                                                                                                                                                            • Mobile Banking

                                                                                                                                                                              • Key points
                                                                                                                                                                                • High mobile phone penetration in NI and RoI
                                                                                                                                                                                  • Internet access the next phase in mobile phone use
                                                                                                                                                                                    • Launch of smartphones likely to generate interest in mobile banking
                                                                                                                                                                                      • Some Irish institutions making tentative foray into mobile banking…
                                                                                                                                                                                        • … but even this amounts to progress of sorts
                                                                                                                                                                                          • So far, so good in terms of consumer response
                                                                                                                                                                                            • Banking crisis has curtailed mobile banking plans for many
                                                                                                                                                                                            • Contactless and Mobile Payments

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Contactless cards seen as the future
                                                                                                                                                                                                  • How does it work?
                                                                                                                                                                                                    • Over three million (and counting) contactless cards issued in UK
                                                                                                                                                                                                      • Retail outlets have central role to play
                                                                                                                                                                                                        • Security dominates UK consumers’ thoughts on contactless cards
                                                                                                                                                                                                          • Potential core market for contactless cards in Ireland
                                                                                                                                                                                                            • Mobile payments – a little further down the line
                                                                                                                                                                                                              • Most focus on concept of the mobile wallet
                                                                                                                                                                                                                • … but some obstacles remain
                                                                                                                                                                                                                  • Low consumer awareness of mobile possibilities in RoI
                                                                                                                                                                                                                    • Commercial benefits of cashless systems
                                                                                                                                                                                                                    • Strengths and Weaknesses

                                                                                                                                                                                                                      • Strengths
                                                                                                                                                                                                                        • Weaknesses
                                                                                                                                                                                                                        • Who’s Innovating?

                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                            • Emergency cash facility from Permanent TSB
                                                                                                                                                                                                                              • Ulster Bank’s proactive defense against online fraud
                                                                                                                                                                                                                                • Nokia Money: Bringing banking to the “under-banked”
                                                                                                                                                                                                                                  • ‘Smart’ plastic to eradicate online fraud
                                                                                                                                                                                                                                    • Online ‘Healthcheck’ draws consumers closer
                                                                                                                                                                                                                                    • Competitive Context

                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                        • The cheque is in the past
                                                                                                                                                                                                                                          • Irish consumers almost alone in day-to-day use of cheques
                                                                                                                                                                                                                                            • Over a third of Irish consumers have a chequebook
                                                                                                                                                                                                                                              • Figure 10: Cheque usage, any frequency, NI & RoI, 2005-09
                                                                                                                                                                                                                                            • … but frequency of use in decline
                                                                                                                                                                                                                                              • Figure 11: Frequency of cheque usage, NI & RoI, 2006-09
                                                                                                                                                                                                                                            • Eventual demise of cheques is inevitable
                                                                                                                                                                                                                                              • Sound economic rationale to eliminate cheques
                                                                                                                                                                                                                                                • Some consumer resistance may emerge
                                                                                                                                                                                                                                                  • Cheque fraud remains a reality
                                                                                                                                                                                                                                                    • A cashless society… but not just yet
                                                                                                                                                                                                                                                      • Excessive reliance on cash in NI and RoI
                                                                                                                                                                                                                                                        • Cashless society not yet imminent
                                                                                                                                                                                                                                                          • But shift away from cash already underway
                                                                                                                                                                                                                                                            • Figure 12: Changing payment methods, actual and forecast, UK, 1997, 2007 and 2017
                                                                                                                                                                                                                                                            • Figure 13: Value of ATM withdrawls and debit card payments, RoI, 2005-08
                                                                                                                                                                                                                                                          • Strong growth in debit card ownership among Irish consumer
                                                                                                                                                                                                                                                            • Figure 14: Plastic card ownership, NI and RoI, 2003-08
                                                                                                                                                                                                                                                          • Retailers not enthused about move away from cash
                                                                                                                                                                                                                                                          • The Consumer – Perceptions of Online Banking

                                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                                              • Consumers overwhelmingly ‘positive’ about online banking
                                                                                                                                                                                                                                                                  • Figure 15: Percentage of consumers that associate selected POSITIVE words/terms with online banking, NI & RoI, 2009
                                                                                                                                                                                                                                                                  • Figure 16: Percentage of consuemrs that associate selected NEGATIVE words/terms with online banking, NI & RoI, 2009
                                                                                                                                                                                                                                                                  • Figure 17: Average response rate to association of positive and negative words/terms with online banking, RoI & NI, 2009
                                                                                                                                                                                                                                                                • ABC1s, 25-34 and full-time workers most positive about online banking
                                                                                                                                                                                                                                                                  • Branch users less convinced about safety of online banking
                                                                                                                                                                                                                                                                  • The Consumer – Finance-related Activities Conducted Online

                                                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                                                        • Figure 18: Banking/personal finance activities conducted online, RoI & NI, 2009
                                                                                                                                                                                                                                                                      • The core activities: Checking balances, transferring money and paying bills
                                                                                                                                                                                                                                                                        • Majority engaging in ‘core activities’ online
                                                                                                                                                                                                                                                                            • Figure 19: Core banking/personal finance activities conducted online, NI & RoI, 2009
                                                                                                                                                                                                                                                                          • Core activities no longer the preserve of early adopters
                                                                                                                                                                                                                                                                              • Figure 20: Selected finance activities conducted online, selected demographic groups, NI & RoI, 2009
                                                                                                                                                                                                                                                                            • One third compare financial products and services
                                                                                                                                                                                                                                                                              • Older consumers have caught up with 25-34s as ‘online comparers’
                                                                                                                                                                                                                                                                                • Women and C2DEs seeing the merits of an online comparison
                                                                                                                                                                                                                                                                                  • Purchasing online determined by simplicity of product
                                                                                                                                                                                                                                                                                    • Figure 21: Applications for selected financial products online, NI & RoI, 2009
                                                                                                                                                                                                                                                                                  • Variation across demographics in applying online for products
                                                                                                                                                                                                                                                                                    • Men more likely than women to apply online
                                                                                                                                                                                                                                                                                      • ABC1s dominate online applications
                                                                                                                                                                                                                                                                                          • Figure 22: Application for selected financial products, by socio-economic background, NI, 2009
                                                                                                                                                                                                                                                                                        • Consumers aged 16-24 least likely to apply online
                                                                                                                                                                                                                                                                                            • Figure 23: Application for selected financial products, by age, RoI, 2009
                                                                                                                                                                                                                                                                                          • Insurance products as ‘gateway’ to broadening online purchases
                                                                                                                                                                                                                                                                                            • Those ‘holding out’ dwindling in number
                                                                                                                                                                                                                                                                                                • Figure 24: Consumers with above-average tendency not to use the internet for banking/personal finance needs, NI & RoI, 2009
                                                                                                                                                                                                                                                                                              • Day-to-day banking online, advice and queries in branch
                                                                                                                                                                                                                                                                                              • Consumer Typologies

                                                                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                                                                  • NI
                                                                                                                                                                                                                                                                                                    • Figure 25: NI consumer typologies, 2009
                                                                                                                                                                                                                                                                                                  • Potential Converts
                                                                                                                                                                                                                                                                                                    • Traditionalists
                                                                                                                                                                                                                                                                                                      • Online Embracers
                                                                                                                                                                                                                                                                                                        • RoI
                                                                                                                                                                                                                                                                                                          • Figure 26: RoI consumer typologies, 2009
                                                                                                                                                                                                                                                                                                        • In-Betweeners
                                                                                                                                                                                                                                                                                                          • Online-philes
                                                                                                                                                                                                                                                                                                            • Branch Attached
                                                                                                                                                                                                                                                                                                            • Appendix

                                                                                                                                                                                                                                                                                                              • Internal market environment
                                                                                                                                                                                                                                                                                                                • Financial fraud
                                                                                                                                                                                                                                                                                                                  • Figure 27: Plastic card fraud losses on UK-issued cards, NI, 2004-08
                                                                                                                                                                                                                                                                                                                  • Figure 28: Forms and extent of plastic card fraud losses, UK, 2008
                                                                                                                                                                                                                                                                                                                • Impact of technology on quality of life
                                                                                                                                                                                                                                                                                                                  • Figure 29: Impact of technologies on quality of life, RoI, 2009
                                                                                                                                                                                                                                                                                                                • Use of online banking services by businesses
                                                                                                                                                                                                                                                                                                                  • Figure 30: Standard online services or applications currently used by SMEs and Corporate Businesses, RoI, H1 2009
                                                                                                                                                                                                                                                                                                                • Consumer desire for an understanding bank
                                                                                                                                                                                                                                                                                                                  • Figure 31: Agreement with: “It’s important that my bank understands my individual needs,” by socio-economic background, NI & RoI, 2009
                                                                                                                                                                                                                                                                                                                • Preferred means of receiving information on banking needs
                                                                                                                                                                                                                                                                                                                  • Figure 32: Preferred means of receiving/gathering information about banking needs (new or existing), RoI, June 2008
                                                                                                                                                                                                                                                                                                                  • Figure 33: Preferred means of receiving/gathering information about banking needs (new or existing), by age, RoI, June 2008
                                                                                                                                                                                                                                                                                                                  • Figure 34: Preferred means of receiving/gathering information about banking needs (new or existing), by socio-economic background, RoI, June 2008
                                                                                                                                                                                                                                                                                                                • Current account ownership
                                                                                                                                                                                                                                                                                                                  • Figure 35: Current account ownership, NI & RoI, 2007-09
                                                                                                                                                                                                                                                                                                                • Broader market environment
                                                                                                                                                                                                                                                                                                                  • Consumer confidence
                                                                                                                                                                                                                                                                                                                    • Figure 36: Consumer sentiment index, RoI, 2004-09
                                                                                                                                                                                                                                                                                                                    • Figure 37: Consumer confidence index (seasonally adjusted), UK (incl. NI), 2008-09
                                                                                                                                                                                                                                                                                                                    • Figure 38: Consumers’ view of household income in six months’ time, UK (incl. NI), 2008-09
                                                                                                                                                                                                                                                                                                                  • Population
                                                                                                                                                                                                                                                                                                                    • Figure 39: NI & RoI populations, by age group, 2007
                                                                                                                                                                                                                                                                                                                    • Figure 40: Population projections, by age group, NI, 2006-26
                                                                                                                                                                                                                                                                                                                    • Figure 41: Population projections, by age group, RoI, 2006-26
                                                                                                                                                                                                                                                                                                                  • Branch vs. online channel
                                                                                                                                                                                                                                                                                                                    • Methods used to access banking needs
                                                                                                                                                                                                                                                                                                                      • Figure 42: Percentage point change in methods used to access banking services, NI & RoI, 2006-09
                                                                                                                                                                                                                                                                                                                      • Figure 43: Use of branch vs. internet to access banking services, by socio-economic background, NI & RoI, 2008
                                                                                                                                                                                                                                                                                                                    • Online banking
                                                                                                                                                                                                                                                                                                                      • Internet access
                                                                                                                                                                                                                                                                                                                        • Figure 44: Percentage of consumers who have accessed the internet in the last 12 months, NI & RoI, 2003-09
                                                                                                                                                                                                                                                                                                                        • Figure 45: Number of subscribers to internet connection, actual/estimated/forecast, RoI, 2004-13
                                                                                                                                                                                                                                                                                                                        • Figure 46: RoI internet providers segmentation, volume %, 2008
                                                                                                                                                                                                                                                                                                                      • Online banking fraud
                                                                                                                                                                                                                                                                                                                        • Figure 47: Number of phishing websites targetting UK banks and building societies, 2005-08
                                                                                                                                                                                                                                                                                                                        • Figure 48: Number of mule recruitment advertisements, UK, 2005-08
                                                                                                                                                                                                                                                                                                                      • Online banking services: Use and volume
                                                                                                                                                                                                                                                                                                                        • Online banking registrations
                                                                                                                                                                                                                                                                                                                          • Figure 49: Number of new registrations for online banking services, 000s, RoI, 2007-09
                                                                                                                                                                                                                                                                                                                          • Figure 50: Percentage growth (year-on-year) in number of consumers registered for online banking services, RoI, 2007-09
                                                                                                                                                                                                                                                                                                                        • Accessing of accounts online
                                                                                                                                                                                                                                                                                                                          • Figure 51: Number of occasions accounts accessed online, RoI, 2007-09
                                                                                                                                                                                                                                                                                                                        • Online payments/money transfers
                                                                                                                                                                                                                                                                                                                          • Figure 52: Number of online payments/money transfers, RoI, 2007-09
                                                                                                                                                                                                                                                                                                                          • Figure 53: Online payments/money transfers, by type, RoI, Q1 2009
                                                                                                                                                                                                                                                                                                                        • Mobile banking
                                                                                                                                                                                                                                                                                                                          • Number of connections
                                                                                                                                                                                                                                                                                                                            • Figure 54: Number of mobile phone connections, NI & RoI, 2004-09
                                                                                                                                                                                                                                                                                                                          • Competitive context
                                                                                                                                                                                                                                                                                                                            • Cheque usage
                                                                                                                                                                                                                                                                                                                              • Figure 55: Average number of cheque transactions per capita, EU15, 2007
                                                                                                                                                                                                                                                                                                                              • Figure 56: Cheque usage trends, selected markets, 2002-07
                                                                                                                                                                                                                                                                                                                            • Changes in payment methods
                                                                                                                                                                                                                                                                                                                              • Figure 57: Annual change in various payment methods, number of transactions, RoI, 2007-08
                                                                                                                                                                                                                                                                                                                              • Figure 58: Number of cheques and other paper debits, RoI, 2003-08
                                                                                                                                                                                                                                                                                                                              • Figure 59: Annual change in various payment methods, number of transactions, UK, 2008
                                                                                                                                                                                                                                                                                                                              • Figure 60: Annual change in various payment methods, total value of transactions, UK, 2008
                                                                                                                                                                                                                                                                                                                              • Figure 61: Number and value of cash and debit card payments, UK, 2008
                                                                                                                                                                                                                                                                                                                            • Losses through cheque fraud
                                                                                                                                                                                                                                                                                                                              • Figure 62: Cheque fraud losess, UK, 2002-08
                                                                                                                                                                                                                                                                                                                            • ATM withdrawals
                                                                                                                                                                                                                                                                                                                              • Figure 63: Annual number of ATM withdrawals per capita, EU15, 2008
                                                                                                                                                                                                                                                                                                                            • Payment type segmentation
                                                                                                                                                                                                                                                                                                                              • Figure 64: Number of payment transactions, UK, 2008
                                                                                                                                                                                                                                                                                                                            • Consumers’ perception of online banking
                                                                                                                                                                                                                                                                                                                              • Variation across demographics
                                                                                                                                                                                                                                                                                                                                • Figure 65: Average response rates to association of POSITIVE words/terms with online banking, selected demographic groups, RoI, 2009
                                                                                                                                                                                                                                                                                                                                • Figure 66: Average response rates to association of POSITIVE words/terms with online banking, selected demographic groups, NI, 2009
                                                                                                                                                                                                                                                                                                                                • Figure 67: Financial activities respondents conduct online, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 68: Words respondents associate with NI and RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 69: Percentage of consumers who prefer to visit a branch (rather than banking online) that associate selected words/terms with online banking, NI & RoI, 2009
                                                                                                                                                                                                                                                                                                                                • Figure 70: Financial activities respondents conduct online, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 71: Financial activities respondents conduct online, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 72: Words respondents associate with online banking, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 73: Words respondents associate with online banking, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 74: Words respondents associate with online banking, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 75: Financial activities respondents conduct online, RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 76: Financial activities respondents conduct online, RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 77: Words respondents associate with online banking, RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 78: Words respondents associate with online banking, RoI, September 2009
                                                                                                                                                                                                                                                                                                                              • Consumer typologies
                                                                                                                                                                                                                                                                                                                                • Figure 79: Typologies, by agreement with financial activities conducted online, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 80: Typologies, by words associated with online banking, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 81: Typologies, by demographic breakdown, NI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 82: Typologies, by agreement with financial activities conducted online, RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 83: Typologies, by words associated with online banking, RoI, September 2009
                                                                                                                                                                                                                                                                                                                                • Figure 84: Typologies, by demographic breakdown, RoI, September 2009

                                                                                                                                                                                                                                                                                                                            Companies Covered

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                                                                                                                                                                                                                                                                                                                            Online Banking - Ireland - November 2009

                                                                                                                                                                                                                                                                                                                            £1,095.00 (Excl.Tax)