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LONDON, JANUARY 2005 - According to a survey by Xbridge, the business finance solutions provider, the percentage of businesses sourcing commercial finance online is growing nearly four times faster than the percentage of consumers sourcing financial products via the online channel.
The internet's popularity as a purchasing channel for CD's, books, and DVDs is already well established (with forecasts of over £4billion to be spent online for gifts this Christmas). And online personal finance transactions are catching up as more people become accustomed to internet banking and online shopping.
This increased use of the internet for personal finance is bolstering the interest from businesses in finding finance online. This is translating into significant opportunity for commercial lenders with a superior online service. Xbridge predict that over the next five years the online commercial finance sector will grow by an average 22% each year, easily outstripping the 6% per annum growth for online personal finance.
| Product | Average annual growth in online channel |
| Consumer Finance (Cards & Loans) | 6% |
| Business Finance | 22% |
Business versus Consumer
The Xbridge researchı revealed that while just over 15% of small business owners surveyed said they were happy to arrange their business finance online today, that number is expected to increase to 38% in 2009 - an average increase of over 22% per year. In contrast, 34% of small business owners are currently happy to arrange a personal loan using the same channel, but that percentage grows only 6% a year over the next five years.
Almost two thirds (65%) of small business owners are happy to research their home insurance online, however less than half (48%) of those who research online go on to arrange their cover online. In contrast, fewer small businesses are researching commercial insurance on the internet (20%), however the preponderance of those (95%) are likely to go on to source cover online.
Furthermore, the number of small businesses intending to source their commercial insurance online is expected to increase to 44% over the next five years, representing an annual increase of 17%.
Brad Liebmann, managing director of Xbridge, comments: "The levels of growth demonstrated by these results confirm that the online financial services market for small businesses is growing rapidly. As the sale of consumer goods and personal finance over the internet shows early signs of maturing, the market for online business finance is still in its infancy and looks set to grow year on year as it moves along the adoption curve."
The Adoption Curve:
Brad Liebmann concludes: "In the past, the single biggest reason people went online was price. Now, the number one reason is convenience. Business customers are starting to realise how much time they can save using the internet. Longer term, the lenders and insurers that interact with their business customers using the most intelligent web-based user experience will be the ones who will dominate the online channel."