The conclusion was just one of the findings of a worldwide survey of the financial services industry published this week by IT services group Cap Gemini Ernst & Young. In its 10th year, the report looked at the use of technology by 120 financial services companies in 13 countries.
Findings in the report that relate to the UK indicate that e-commerce initiatives have failed to reduce costs to the extent predicted last year, mainly because the use of e-channels by both customers and business partners has been lower than expected. As a result, anticipated savings stand at less than a third of early estimates.
Half of the respondents said the expected savings had not materialised because of "a failure to migrate clients" to online channels.
Jonathan Charley, financial services analyst with Cap Gemini Ernst & Young, said many companies had believed the hype about how quickly customers and business partners would use electronic channels.
"Respondents were disappointed with both the low number of people going online, and about their general lack of activity," he said.
One of the main reasons for the low uptake of these channels is that negative user experience has driven both customers and business partners away.
"If you expect an e-mail to be answered immediately and you end up waiting eight hours, you are going to go back to the phone or to your local branch," said Charley.
Having electronic links with intermediaries, such as financial advisers and retailers, is a key way to make savings because a significant proportion of insurers' costs relate to dealing manually with a middle-man, particularly when processing new business and claims.
The failure to drive business partners online means there are still too many links in the sales and claims-processing chain. This is forcing costs up and having a negative effect on customer service levels.
Much of the problem lies in the fact that insurers have created electronic channels based on their own requirements rather than their partners' needs. "The first thing to do is step out of your own organisation and look back at it from the perspective of the intermediary. There needs to be a fundamental shift in attitude," said Charley.
The need to increase electronic links with business partners is seen as being so important that it has cornered the lion's share of e-commerce budgets, with about 40% being used for this in 2001, rising to a predicted 55% in 2002.