Increased access to broadband Internet service is expected to become more commonplace across Eastern Europe in the coming years, which will likely lead to significant growth in both online access to bank accounts and increased e-commerce sales. As of 2010 only 40% of households in Eastern Europe possessed an internet-enabled computer but that figure is expected to rise to 53% in 2015, according to the latest figures from Euromonitor International.
One of the greatest benefits that this increased usage will have on the region will be a rise in the amount that is purchased online by consumers versus the amount spent in brick and mortar stores. Consumers have become increasingly open to internet retailing due to the ease of shopping online and as well as more affordable prices, especially in light of the financial crisis when consumers became more price sensitive.
In fact, Eastern Europe is expected to post the greatest increase in internet retailing over the next five years versus all other regions, according to Euromonitor data. By 2015, the Czech Republic is expected to have the highest share of internet retailing within the region when the proportion of total retail is expected to stand at 7%, the same proportion as the US. Russia, in particular, is expected to post the highest internet retailing growth over 2010-2015 and add the most in terms of absolute sales value. In 2007, 35 million people had internet access in Russia but by the middle of 2010 there were more than 43 million internet users registered, according to the Public Opinion Foundation in Russia . The number of internet users is also expected to continue to grow to the point that 95% of Russians are expected to have constant Internet access by 2015.
Growth in the Value of Internet Retailing
Consumer electronics is currently the most popular category for internet retailing for Eastern Europe in terms of sales volume and that is expected to remain unchanged through 2015. The most frequently sold products are computer hardware and software and mobile phones. Home care is expected to post the fastest-growth rate over 2010-2015 for Eastern Europe at a 30% CAGR and consumer healthcare is projected to be second with a 22% CAGR. The fastest-growing category for internet retailing varies across countries. In Hungary, it is predicted to be beauty and personal care in 2015 whereas it will be clothing and footwear in Romania and home care in Russia.
One of the other effects increased internet availability will have on the region is the expansion of online banking. In Russia, officials realized the strong potential for electronic payments and opened a government-supported website in the spring of 2010 so that people could pay for various state and community fees by electronic payments. In Poland, which is expected to have the highest proportion of households with internet-enabled computers in 2015 across Eastern Europe , consumers are beginning to transition to internet payments as the preferred mode of payment. The number of active users of electronic banking in Poland grew from 8.4 million at the end of 2009 to 10 million by the end of 2011, according to the Polish Bank Association .
Banks across the region have been looking toward online banking more as the pressure of the global downturn has forced financial institutions to consider alternative payments methods with a lower cost structure. In light of the recession, consumers also began to pay more attention to the cost for such services. In both Poland and Romania, banks have been competing for new consumers and increasing the use of more electronic banking by offering innovative services and ever-expanding websites. Easy-to-use systems and low-cost internet operations are a priority for younger generations when selecting a bank account. A larger number of users of internet banking will also mean higher value and volume of electronic direct/ACH transactions in the coming years. The expansion of internet capabilities and availability is becoming a way to further integrate consumers into the financial mainstream.