Hong Kong's Internet banking industry has often been criticised for lagging behind the rest of the world. HSBC only started offering online services in August, when even Finland - not known for banking innovations - had its first Internet bank in the early 1990s. The Internet arena is a tempting one for banks as they can drastically cut costs by offering services online. Hong Kong's banks may have taken a particularly conservative approach to offering online services but appear to have finally realised that such savings cannot be ignored forever. A leading academic believes Hong Kong banks now find themselves in an excellent position to capitalise on online banking opportunities offered by the territory's proximity to China. Dr Andy Lowe is a lecturer in marketing at the University of Strathclyde and an expert in Internet banking. He feels Hong Kong's slow pace of development in online banking may prove more of a boon than a hindrance. 'It's sometimes not such a bad thing to be a late starter,' said Dr Lowe. 'Hong Kong is in a very good position to benefit from the mistakes and successes that America and Europe have made in this area. 'The really key role that Hong Kong could have in Internet banking is as a platform for mainland China, because once the mainland enters the World Trade Organisation then there will be some massive retail banking opportunities,' Dr Lowe said. 'Hong Kong banks are in a unique position to develop Internet banking in China like no other place is.' Dr Lowe pointed out that, as most citizens in China do not have bank accounts, banks can bypass traditional services and start offering online services immediately. Dr Lowe also predicts a bright future for online trading in the SAR, following last week's successful MTRC share offer. That was the first time an initial public offering (IPO) had been carried out online in Hong Kong. A key concern in this area, Dr Lowe believes, is server speed. 'The availability of affordable high-band communications is a really vital requirement,' Dr Lowe said. With stock prices fluctuating by the minute, a slow connection becomes, in Dr Lowe's words, 'a very major limitation to personal retail online trading'. The advent of Internet banking could also bring major pressures to Hong Kong banks, as they face much greater competition from a whole range of businesses that can offer banking services online. The worry for banks is that the customer service and marketing strategies offered by new entrants may outstrip anything traditional banks can come up with. Dr Lowe believes banks need to change their mindset to survive these challenges. 'Small and medium-sized banks need to find the right niche to survive,' said Dr Lowe. 'These banks will probably have to group together in some sort of alliance.' Dr Lowe thinks large banks need to focus on providing better customer care. He proposes partnerships between banks and locally based specialist Internet service providers as the best way to achieve this. Established banks, Dr Lowe believes, have the advantage of offering institutional stature to consumers, a key component in maintaining customer trust. Dr Lowe also brushed aside security concerns over online banking, and said: 'One of the myths is that Internet banking is not safe.'