Will Internet banking ever take off in Asia? Although much of the region is wired, obstacles remain. Customers are concerned about security; the banking products available so far tend to be unexciting; and in the wake of Asia's recent economic crisis, many smaller banks have been preoccupied with the more urgent issue of survival. But some evidence suggests that on-line banking will succeed if the basic features, especially bill payment, are handled correctly.
Meanwhile, human tellers and automated teller machines continue to be the banking channels of choice, and only a tiny minority has recourse to Internet banking. Among middle- and high-income people questioned in a McKinsey survey, only 2.6 percent reported banking over the Internet last year.1 In India, Indonesia, and Thailand, the figure was as low as 1 percent; in Singapore and South Korea, it ranged from 5 to 6 percent.
Overall, Internet banking accounted for fewer than 0.1 percent of these customers' banking transactions—a figure unchanged from 1999. (By contrast, telephone transactions have doubled since then, to 0.6 percent.) The Internet is used more often for opening new accounts, but again the numbers are small: fewer than 0.3 percent of respondents used it for that...