The new report, "Online customer management and cross-selling in Europe and the US", warns as Internet penetration rates reach their natural limits for growth, financial services firms need to entice consumers who are already online to start using the Internet to manage their financial affairs.

The research suggests that females who already access the Internet could offer a relatively easy and lucrative growth opportunity for financial institutions. With the percentage of females accessing the Internet on the rise, financial services providers should try and gain a better understanding of how and why females use the Internet and why less use online financial services, says Datamonitor. At the start of 2001, just 40 per cent of women in the UK were online. This has since risen to 53 per cent.

In Spain, France, Italy, the UK, and the US, the Internet is predominantly used for leisure purposes, such as sending e-mails and Web browsing. Just one per cent in the US, France and Spain use the Internet predominantly for 'life administration' purposes such as online banking or arranging car insurance. This rises to only two per cent in the UK.

Datamonitor suggests that financial insitutions should devise their branding and marketing strategy around the principle that the Internet is primarily viewed as a source of fun/leisure, for example Prudential with Egg and the Co-operative Bank with Smile.

The study also shows online financial services continue to be dominated by the younger age groups. According to Datamonitor, financial institutions should come up with ideas that link e-financial Web offerings to leisure activities that the young are already using the Internet for, and advertise on sites that young people frequent. "This could be a good way to plant the seeds for account aggregation development," notes the reseach company.

The report points out that financial services providers need to work hard on allaying consumer's fears about managing their finances online. Efforts should be made to show how consumers personally benefit from the any time, any where ethos of online financial services, while reassuring them that they will be able to contact a human if needed.

Cross-selling is also set to become a key focus point for financial institutions in the future for increasing revenue per customer, predicts Datamonitor. The report cites the example of banks entering the motor industry generating revenues from car sales, the finance package offered with the car, and from offering motor insurance. Consumers value the idea of a 'one stop shop' and are open to the concept of buying a variety of products from the one supplier. Financial service providers should trade-off this knowledge and highlight to customers the overall benefits associated with grouping their purchases, thus increasing revenues per customer, suggests Datamonitor.