Appendix D 13.2.3: Market

D 13.2.3.Market



End Users






Internet community at large

Financial community



.com registrars

Network infrastructure


Registrant market definitions

The SO is designed to serve the Financial community at large. The Internet has dramatically changed the definition of the financial world. New entrants, new delivery channel, new services have all contributed to outdate the old definition. There is a need for a new definition.


This definition must be large enough to take into account the new convergence of the financial industry especially the many overlapping areas of insurance and banking.

This definition must be strict enough to clearly distinguish the financial community from the commercial world.


Our survey proves this distinction to be important to most of our potential registrants. Finance potential registrants emphasized the importance of trust and security in this intangible industry.

Moreover the financial world is nowadays highly segmented. Our new definition of the registrant market will allow new financial intermediaries to be recognized as members of the global finance community.

Old definitions

To describe our registrant market with today’s segmentation we have used the international standard codes for financial institutions (see appendix). This market can be divided into 5 main categories:


Credit agencies other than banks,

Security commodity brokers dealers and exchange services

Insurance  and other financial service

Public regulation


This definition does not include the new financial intermediaries that appeared on the Internet or will appear in the foreseeable future.

New definition

The new definition of the finance communities will encompass the old definition and will offer new intermediaries such as price comparators, new financial products and sites that exclusively deals with the financial issues, e-brokers, e-insurance…

Registrar market definition

Potential registrars are the already ICANN certified registrars (operational or about to be operational) and will be expanded by the arrival of country code registrars (members of CORE). According to the TLD policies only certain registrars presenting sufficient credentials, will be accredited to be .fin registrars. They will have to comply with a set of procedures that will be annually audited by the sponsoring organization.


Last Updated - Thursday September 21, 2000 05:04:26 AM

Breakdown of registered InterNIC Domains














The market for the regular TLD is growing exponentially. Between September 5th and 21st 2000, 1 million new domain names have been registered. The biggest part of the domain name market is the .com that accounts for nearly 80% of the market.

Registrant market size

Financial institutions worldwide are evaluated to be at least 1 million. Statistics from Dun and Bradstreet show that 700 000 of them are located in North America, Japan and Europe :

§         460 000 in the United States

§         170 000 in Europe

§         40 000 in Japan

§         30 000 in Canada



Financial community may be split into 5 main activities: banking, securities and brokers, insurance, combined real estate in the private sector and regulation in public sector. The number of transactions related to these activities has surged for the past twenty years.

Registrar market size

They are currently 128 ICANN registrars all over the world. The creation of new TLD and the filing of currently operating country code registrars will drive this number to an estimated market size of 250 by the end of 2003 (see table XX below)




Fr, Ger, Swi, Ita, Spa, UK 


Total main countries

Estimated total world demand 2000

Estimated total world demand 2003

number of potential registrants







number of potential registrars








Registrant demand

Financial activities and the net[1] : the number of Internet users of online financial sites should grow by 100% in the next five years.

Financial sites include online banking, mortgage, insurance and investment sites.

Financial activity is one of the “natural” uses of the Internet.

Along with e-mail, investment is one of the “natural” uses of the Internet.

The Internet provides, potentially, what is most important for financial dealings: the ability to deliver rapid and efficient execution of trades, direct link between investors and the market (financial disintermediation), perfect information for all the dealers (online financial news services are now the leading news source for active financial investors looking for share prices and investment advice).

Last but not least, the expansion of online financial activities lowers the cost of individual transaction by enhancing market competition.

After a slow start, the number of customers of online financial sites is showing spectacular growth: projected figures by 2004

Except for one activity, share trading, and one part of the word, Scandinavia, Internet-based financial retailing has been slow to catch on for many reasons, but now they are expected to develop faster

-         Concerns about the security of online transaction are gradually being eased.

-         Technology liberates the Internet from the confines of the PC.

-         Traditional financial institutions especially banks have resisted the move online because they had invested heavily in their own systems and were reluctant to throw them for web-based replacement. But they will have to offer Internet services shortly because they face pressure from their customers who expect an online service.

After a slow start the market is now soaring. Online banking users in the world are estimated to be 50 million persons and financial services users close to 30 million. Both markets should grow by more than 100% in the next five year. We have to distinguish two different markets: +


ü      The United States:

§         Only 3% of American households are using online banking services but they will be between 30% and 40% by 2004 that would represent almost 100 million bank accounts (IDC Research).

§         Around 15 million (10%) of US home Internet users are using online investment services nowadays. The growth by 2004 is expected to be at least 100%.


ü      Europe: The number of visitors to online financial sites in Europe has soared since the start of 2000. Between one third and one half of home Internet users in France, Germany and the United Kingdom now use online financial services.

§         The number of online banking customers in Europe should grow by 30% in the next five years, reaching more than 20 million at the end of 2004. Germany and UK make up for almost half of this figure: Internet banking customers in Germany are forecasted to reach almost 5 million by 2004 and 5.5 million in the UK.

§         There will be around 17 million online share trading accounts (IDC Research) in Europe in 2003 from 4 million now. JP Morgan expects 40% of European consumers use some online financial services by then. The largest growth in online trading will also occur in Germany where the number of clients for online brokerage transactions should grow from 1 million now to 4 million by 2004. Swedish Internet users are heavy online traders just before the UK. France, Italy, and Switzerland are the other major online trading places in Europe.

Market study

Willingness to pay

According to our survey, most registrants are very likely to become .fin registrants even if they already have .com or country TLD registrants.

Size of the market of second and third level names

The market size of second level name is close to the size of financial institutions that is 1 million by now and 1.25 million by 2004.

Many financial institutions with more than one financial activity are expected to buy at least two third level names. They represent around 40% of the financial institutions in the world. We can assert that half of these institutions are likely to become registrants for each of their activity, so a cautious estimate for the size of the market of third level names is 1.4 times the size of the financial institutions market that is to say 1.4 million by now and 1.7 million by 2004.

Why would financial institutions become .fin registrants instead of becoming or staying .com registrants?
ü      The growth of the online financial market will lead traditional financial institutions to develop online services.

Financial institutions will be compelled to buy :fin domain since the spectacular expected growth of the online financial market will create a strong competition between them..

They will have to offer Internet services shortly because they will face pressure from their customers who expect state-of-the-art secured online services. If not, they will be at a competitive disadvantage with online traditional financial services and with pure Internet players.

ü      .fin will ease the research and the knowledge of financial services on the web.

The survey below shows that most of Internet users can name a website related to books or auctions but very few of them can name a website for insurance or financial services. Since  .fin is a restricted domain name, it is likely to help users to find and memorize the websites for financial products and services.



ü      A new restricted TLD such as .finance will probably not compete with .com market.

.fin TLD is a restricted domain that clearly singles out  from other existing domains especially not restricted domains. We have looked at past experience of restricted TLD introduction to study if there had been competition between existing TLD domains and new ones. The evolution of the market of .fr provides such an example.

On the chart below the evolution of the market is compared to the evolution of French market of .com. The growth of the two markets is similar. It appears that the existence of .com market did not prevent the expansion of the .fr market.


ü      Price elasticity close to zero

The price elasticity is the variation of the demand for .fin domain names caused by a variation of the price. It should be very close to zero.

Registrant demand drives registrar demand

Survey on registrar panel

According to our survey, registrars are likely to join any new program for new TLD. The more interesting population for our offer will be the .com, .net, .org registrars.

Willingness to pay

Their willingness to pay is a trade off between the cost of implementing the new registry policy and the price the end user can pay. Since the price elasticity of demand is close to zero the end user selling price of .fin is not a problem.

Adhesion to SO regulation

The ability of currently certified ICANN registrants to handle change of ownership upon domain names with manual checking enable them to do the manual checking requested by .fin registration. The simplicity of the registration rules will not impact their current way of doing business. We can expect a large adhesion to .fin registration process.

5 reasons for being a .fin registrar

·        “I must be in or I will be out of the market”

·        “It provides an idea of quality and seriousness to my business”

·        “I can charge a good price on .fin where as .com offer poor margin”

·        “Having financial institutions as customers can allow me to offer other high value products to them”

·        “I can largely used my current infrastructure and know-how to address this new market”

[1] Figures sources: Datamonitor, JP-Morgan The Economist, IDC Research