1 1 Working Party on Financial Statistics 6-7 October 2003 Measuring E-commerce in the Financial Sector (DSTI/ICCP/IIS(2003)17) Sheridan Roberts DSTI/EAS Hartmut Buchow Eurostat

2 2 Background In 1999, OECD’s Working Party on Indicators for the Information Society (WPIIS) established an Expert Group on Defining and Measuring Electronic Commerce to –"compile definitions of electronic commerce which are policy relevant and statistically feasible". Work by the Expert Group resulted in definitions in 2000 for –electronic commerce transactions –Internet commerce transactions –electronic commerce business processes –Internet commerce business processes. The April 2000 WPIIS meeting agreed with the two transactions- based definitions but deferred decision on the electronic commerce business process definitions.

3 3 Background: electronic commerce transactions definitions The broad definition: –“An electronic transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private organisations, conducted over computer-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate delivery of the good or service may be conducted on or off-line.” The narrow definition restricts the transactions to those conducted over the Internet.

4 4 Background: model questionnaire In 2001, a model questionnaire on the use of ICT/E- commerce in the business sector was agreed by WPIIS. However, it was not sector-specific and experiences in using it (and the similar Eurostat questionnaire) suggested that there are difficulties in applying the questionnaires to the financial sector.

5 5 Establishment of an Expert Group on Measuring Electronic Financial Transactions Because of those difficulties, WPIIS established an Expert Group in 2002 to look at the financial sector –it was established jointly with Eurostat. It met in March 2003 and presented its work to the May 2003 meeting of WPIIS.

6 6 Findings of the Expert Group The Expert Group considered the following aspects of financial sector measurement – though did not attempt to answer all the questions implied: –country experiences in measuring (mainly Internet-based) electronic transactions in the financial sector –how to define and measure income from providing financial services electronically (mainly through the Internet) –the most appropriate volume measures (emphasis on the Internet) –reviewing the general measurement of ICT usage/adoption by the financial sector –categorisation of financial sector businesses based on the nature of their business –categorisation of the e-business functions of financial sector businesses.

7 7 Main findings of the Expert Group: defining income associated with e-commerce activity Focus on the Internet Value measured through the income from Internet based transactions –where income based measures should be those interest margins, fees, commissions, premiums etc which are attributable to Internet transactions.

8 8 Main findings of the Expert Group: measuring the activity and value of Internet services The Expert Group assumed that many firms would be unable to separate the value of Internet services sold from other business. They therefore defined three possible types of measures ‑ in ascending order of difficulty: –activity measured through the number of Internet customers –activity measured through the number of transactions/interactions via the Internet –value measured through income from Internet based transactions.

9 9 Other findings of the Expert Group Many of the 'categorical' questions in ICT use covered by existing OECD/Eurostat questionnaires work acceptably for the financial sector. Other areas covered by the OECD and Eurostat questionnaires of ICT use/E-commerce require more industry advice –IT security, reasons for Internet selling, use of particular networks other than the Internet and confidence-building practices. Relevant electronic business processes are likely to be different for financial institutions –it was suggested that further work in this area would require industry advice. The Group attempted to define categories of financial sector businesses based on the nature of their business.

10 WPIIS reaction to the paper Following discussion at the May 2003 meeting of WPIIS, a view emerged that the existing OECD and Eurostat questionnaires (of ICT use/E-commerce) could be used for the financial sector with some adjustment.

11 Eurostat work Eurostat was a joint member of the Expert Group –with a particular interest in the outcome due to data requirements associated with the e-Europe action plan –and has established a task force on e-finance measurement. Eurostat has developed a draft questionnaire for a 2004 pilot survey of financial institutions –it is based on the business use of ICT/E-commerce questionnaire –the 11 September 2003 version is annexed to the paper –a later (1 October) version differs slightly…in small wording changes intended to clarify the meanings in modules C and D –and slight changes to the product list: loans ► savings & loans; insurance services split to life and non-life; pension funds removed –and changes to scope ►includes NACE 67.12, 67.13, 67.2.

12 Next steps Eurostat and its Task Force on E-finance will take the lead on development of measures of ICT use and e- commerce in the financial sector –results of the 2004 pilot survey are of particular interest. Eurostat and the OECD will continue to work together on user requirements and conceptual issues, with Eurostat expected to take the more prominent role. A workshop of the (now merged) three Expert Groups of the WPIIS is planned for 3 December this year –it will generally cover the area of e-business and is likely to include some consideration of financial sector e-commerce measurement.

13 For discussion – WPFS views are sought on: The Expert Group’s work: –did the Group identify the most important measurement issues relating to e-commerce (and, in particular, Internet commerce) in the financial sector? –is the definition of e-commerce income as “interest margins, fees, commissions, premiums etc which are attributable to e-commerce transactions” reasonable? The draft Eurostat questionnaire: –are the activity and value questions of the Eurostat pilot questionnaire appropriate? –Are the concepts and classifications used correct? –Does the Group have views on the likely availability of the data requested?

14 After the meeting…… Please contact either Hartmut or myself after the meeting if you would like to provide further comments –these would be most welcome. Our contact details are in the paper DSTI/ICCP/IIS(2003)17.