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Thursday, 28 September, 2000, 02:38 GMT 03:38 UK
E-banks: Europe in the lead
Screenshot Barclays banking web site
Barclays' online banking service is the UK's largest
European banks lead their US rivals in internet banking, according to analysts from CapGemini Ernst & Young.

In Europe 4% of all bank transactions are currently done online, and this is expected to rise to 25% by 2003.

US banks have persuaded customers to do just 3% of their transactions online and are forecast to push this to just 12% during the next three years.

But as banks rush to produce an internet offering, just 4% see web security as their greatest concern.

Compromising quality

Instead they are focused on their competitors, with 40% believing they are the biggest threat.

Jonathan Charley of Cap Gemini Ernst & Young said this "intense pressure" to go online creates the "danger that many are compromising the quality" of that e-commerce offer.

The result is a bizarre situation, where all banks are desperate to get on the web, but neglect to persuade their customers to follow them.

Many banks do not even bother to offer their customers an incentive to bank on the web - in the US about half do not encourage their clients to migrate to internet banking, in the UK the proportion is 43%, and in continental Europe a third.

Online customer care is neglected as well. The Cap Gemini researchers said at least half of all financial institutions, and in the United States nearly two-thirds, did not respond to customer e-mail within eight hours.

As clients worry about their finances and their accounts, internet banking was failing consumers, according to the report.

Which strategy?

Financial institutions, meanwhile, are still not quite sure which strategy to pursue.

Three years ago, many banks hoped online banking would allow them to cut costs dramatically.

This hope has been dashed, as they realise it will take much longer to realise these cost savings.

The bricks-and-mortar bank branch, for example, is unlikely to become irrelevant any time soon, the Cap Gemini report suggests.

But while US firms believe the internet will allow them mainly to retain customers and sell them new products, European firms are much more aggressive.

They hope to gain new customers in their established markets, and open up new ones by branching out into other countries for example.

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See also:

18 Apr 00 | Business
Bank giants create online broker
08 May 00 | Business
Halifax, BT in internet banking deal
23 May 00 | Business
Barclays 325m web plans
26 May 00 | Business
Online banks scramble for customers
01 Aug 00 | Business
Safety fears for web banking
21 Aug 00 | Business
Online banking gets poll boost
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