IFAJ 45th
Annual Congress 8-13 September 2001, Savonlinna, Finland
Electronic Banking Services in Agriculture
Director
OKO Bank Group
Banking is increasingly becoming an electronic
service conducted over the Internet. Information technology is developing at an
astonishing rate, with customer behaviour changing in pace with technological
developments. A majority of customer relations can be handled outside of the
traditional bank office. The availability of information to the customer has
been facilitated by easier access to product comparisons on feature and price.
On the Internet, products are also standardised more quickly and new
competitive advantages must be constantly sought.
Finland is one of the top countries in the
world for per capita Internet use. One out of every three households has its
own Internet connection, while the average for the EU is one out of ten.
Finland is also the promised land of mobile telecommunications, in that 70% of
the Finnish population owns a mobile phone. At present, 6% of the total Finnish
workforce are employed in the information sector, and over 3% of all Finnish
household expenditures goes to telecommunications services. There is active
social support for the development of electronic services in Finland. The goal
is that, by the year 2005, 4/5 of all Finnish households will have the
opportunity to use broadband data transfer connections, which provide faster
connections and a wider range of electronic possibilities.
Electronic banking
services today and tomorrow
Nearly 1.5 million of Finland’s 5 million
citizens uses some form of electronic banking service. For example, of
Osuuspankki’s over 2 million customers, one out of every three has signed an
electronic banking service contract.
The most commonly used electronic banking
service is bill payment. At present, nearly 90% of all bills are paid via a
self-service electronic banking facility, such as automated teller machines,
bill payment automats, Internet banking services, direct debiting and debit
card purchases. Monitoring investments and account status can also be
conveniently done over the Internet. All Osuuspankki electronic banking
services can be found on the bank website. In addition to actual banking
services, the website also has useful information on various services
available.
A major advance in electronic banking will be
the application of personal electronic identification (PEI) for widespread
customer use. For example, already this year it will be possible to open an
account with the Osuuspankki electronic banking service, with a
government-issue PEI card. Osuuspankki’s own electronic signature confirmation
will be made available to customers sometime later this year. The legal status
of electronic identification is considered to be equal to that of a personal
signature. When an individual can be positively identified in an electronic
environment, it is possible to perform nearly all banking services over the
Internet.
Digi-TV makes it possible to bring electronic
banking services into nearly every household. The number of wireless banking
services will increase considerably in pace with technological developments.
Electronic banking
services and the farmer
Two out of every three Finnish farms maintain a
computer, and a majority of these farms have an Internet connection. Almost 10%
of all farms in Finland have their own website. This is due to the fact that
many farms are engaged in sideline businesses, such as tourism or direct
produce sales.
Of all the farms maintaining a computer, 60%
have an electronic banking connection, either via the Internet or a modem.
Nearly all young farmers have an electronic connection to their banks. The
single most important electronic banking service used is bill payment.
According to a recent survey, farmers would not give up the ability to pay
their bills over the Internet for anything. Farmers feel that the best aspect
of electronic banking services is that all bank transactions are rendered
completely independent of time and place. Usually, banking hours fall on the
busiest times of farm work, and going to the bank takes a great deal of time,
especially when considering the long distances of rural areas. Furthermore,
electronic banking services are far more economical than physically going to the
bank.
Farms also make good use of computers for other
applications than bill payment; computers are also used as a tool in planning
and monitoring the farm’s business operations. The Internet is often a source
for news and weather, or obtaining information on farm-related topics. Farmers
are enthusiastic supporters of e-business. They feel that, for example,
livestock feeds or used farm machinery are tailor-made for online purchase.
Email is also used with great frequency.
The objective of banks is to quickly make all
banking services required by farmers available over the Internet. The
Osuuspankki Group endeavours that, within a few years, the farmer will be able
to handle all major banking transactions electronically if he so desires. The
Osuuspankki Group is also working in co-operation with agriculture authorities
to bring the application and granting process for production and investment
subsidies to the Internet, including them in Osuuspankki’s range of electronic
banking services.
Osuuspankki Group
service model
In the new electronic operating environment,
banks must be able to offer their services via a wide variety of channels,
because the service needs of different customer groups vary from one another.
The future strategy of Osuuspankki is to provide as wide-ranging a service
offering as possible, from which the customer can choose the most suitable
alternative based on his own preferences. This operational strategy is called
the ‘multi-channel model’.
In the multi-channel model electronic services
will play an increasingly important role in the future, even if the share of
wireless service is increased. When it becomes more widely available, Digi-TV
will place electronic banking services within the reach of almost all people.
Telephone services will maintain their role, as will offices and service
points, because there will always be situations and customer groups that demand
personal service. However, the current office concept requires change. When
designing the basic services (e.g. bill payment) for new bank offices, one must
make a clearer distinction between services requiring more time and
information, such as loan consultations and investment services. Thus, varying
customer needs can be served efficiently and waiting times reduced. In agriculture,
for example, transfer of ownership and major production facility investments
can be considered service situations, which require personal consultation with
bank experts.
By co-operating with various Internet portals,
Osuuspankki strives to provide its customers with value adding services. Among
these is Farmit.net, which is Finland’s leading commercial agriculture service
channel. The proliferation of e-business will also require the development of
electronic banking services.
In accordance with its chosen strategy, the
Osuuspankki Group desires to be a pioneer in developing electronic banking
services to meet its customers needs. This goal requires co-operation with all
key elements of the agriculture industry.
Director
OKO
Bank Group
M.Sc. (Agr.For.)
Mr. Tammilehto oversees financing and other
banking services of the Osuuspankki Group for agriculture and forestry clients.
He has actively participated in the development of the Finnish agricultural
financing system and, in conjunction with his work, he has monitored
agricultural financing in other European countries. He is member of the
presidium of the Confederation Internationale de Credit Agricole (CICA). Prior
to his appointment to the OKO Board of Directors, he served in a variety of
capacities in the Central Union of Agricultural Producers (MTK) over a 15-year
period.