Online investments a growing trend in SA

With banking and insurance companies having already successfully shown that consumers are willing to engage and transact with them online, the investment industry is set to follow suit in the next step in the evolution of the financial services sector.

According to Rod Lowe, Director at investonline.co.za, faster internet speeds, growing access to the internet and higher levels of trust in the security of online transacting have all increased the appetite for online financial services offerings.

“Banks and insurers have already successfully crossed the divide, with an increasing number of customers preferring to transact online thanks to the ease of use and often cheaper costs that online offers. We expect to see the same appetite from consumers looking for investment products such as unit trusts, money market funds and retirement annuities. We also believe the number of consumers who will look for investment advice using online platforms and tools is set to grow over the next few years.”

He says that with 45 million mobile phone subscriptions in South African, according to a 2008 survey by the International Telecommunication Union, he expects mobile devices to become the primary channel for people to access banking and related financial services products.

Financial data group I-Net Bridge recently launched a mobile stock market platform, I-Mobile, enabling both corporate and private users to view data on Johannesburg Securities Exchange (JSE) indicators, tradeable instruments and their own portfolios on their cellphones.

“These kind of innovative developments in technology show how important the internet is becoming to investors and those interested in financial services products. It is vital that any financial services company takes seriously the opportunities that the internet provides,” says Lowe.

A report by Berg Insight has forecast the number of worldwide users of mobile banking and related services will soar from 55-million users in 2009 to 894-million users in 2015. The report also suggests that this explosion in users will be driven largely by growth in emerging markets.

According to Lowe, emerging markets hold much untapped potential for the internet. “A lack of infrastructure has held back many emerging markets from truly exploiting the full potential of the internet thus far but this is beginning to change. More people than ever before are gaining access through new devices such as smart phones and this will no doubt have a huge effect on the way the internet develops in South Africa.”

He says that while internet penetration is continuing to grow in South Africa, in global terms there is still a long way to go. “Currently, only about 13% of South Africans use the Internet against figures of above 70% in the US and above 55% in Europe, so there is still much more growth to be realised.”

Lowe says that while internet penetration is unlikely to reach the same levels as seen in developed markets due to lower levels of infrastructure and higher levels of poverty, there is a real appetite by many South Africans for improved and easier access to products online.

He also says that with a number of undersea cables bringing further bandwidth to South Africa in the next few years, the cost and speed of the internet will improve markedly. “This will transform the online world in South Africa as it will improve access to everyone. With these developments set to take place in the near future, it is vital that companies make sure that they are properly represented by their online presence.”