Internet Use Grows in Finance Profession
Nearly all treasury and finance professionals in a recent survey conducted by the Association for Financial Professionals (AFP) reported widespread use of the Internet for finance functions. The use of the Web is growing -- especially for cash management, investment and foreign exchange -- despite the tech slowdown and the notable failures of many dot-coms and application service providers over the last year.
The survey revealed that while expectations for rapid adoption have become more realistic, healthy growth in Internet usage in finance functions is expected in the next year.
Key findings include:
- Cash management, the day-to-day handling of a company's cash flows and banking relationships, is by far the finance function most likely to be handled via the Internet. Eighty-six percent of the respondents use the Internet for cash management. Around a half of the respondents also use the Internet for investment and foreign exchange services while significantly fewer respondents use the Internet for other areas queried in the survey (bank loans, letters of credit, insurance, bonds/commercial paper, and derivatives hedging).
- Most Internet usage with respect to finance functions is devoted to obtaining information and communicating with service providers. However, 62 percent of the respondents also use the Internet to transact cash management business.
- Recent growth in the use of the Internet has been centered among three finance functions. Sixty-two percent reported an increase in cash management, 34 percent reported an increase for foreign exchange services, and 35 percent reported an increase in connection with investments. Practitioners find the Internet to be a valuable tool for their treasury functions, as virtually none of the respondents said they had reduced their usage over the past year.
- Most respondents expect that their company's usage of the Internet in connection with cash management will increase over the next year. Nearly half of respondents also expect to increase their usage of the Internet for their investment and foreign exchange activities.
- Respondents cited that barriers to Internet usage continue to be security (84 percent), authentication of counterparties (79 percent), enforceability of contracts (57 percent), inability to integrate data with internal systems (54 percent), and credit quality of counterparties (52 percent).
"We find that there is an expanding role for the Internet in financial services, and that it continues to be increasingly important for the day-to-day responsibilities of financial professionals, even during a period where there have been some notable setbacks for the technology industry as a whole," said Jim Kaitz, AFP's president and CEO.
This is the fourth year AFP has been tracking Internet usage for financial functions. The survey was conducted in July 2002 via e-mail to 2,000 practitioner members of the association and yielded 272 responses, for a response rate of 14 percent. The typical respondent works at a company with annual revenues between $500 million and $999.9 million.
The Association for Financial Professionals in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards.