Report: Online Banking Strategies in Europe 2006 TOC

CHAPTER 1 INTRODUCTION
- Who is the target reader?
- Scope of the report
  - Defining an Internet bank
- Structure of report
CHAPTER 2 INTRODUCTION TO ONLINE BANKING
- Introduction
- The number of customers banking online has continued to increase over the years
  - Germany has the highest number of customers banking online
  - A number of factors are behind the growth of online banking
- However, online banking penetration varies between countries
  - In terms of Internet banking penetration rate, the Nordics remains far ahead
  - A number of factors are behind the varying penetration of online banking
- Despite the increased popularity of the online channel, expansion is hindered by a number of issues
  - Internet usage is directly affected by fraud issues
  - A number of other factors are negatively impacting on the development of online banking services
- However, there is now more willingness by banks to integrate the online channel within their multi-channel strategy
  - Depending on their priorities, banks can choose to provide a basic online service or to invest in their online channel as a key differentiator
  - Indeed, the importance of the Internet in the distribution channel mix is contantly being reviewed
    - The online channel offers a number of differentiators
    - However, the Internet is not a fully-fledged sales channel
    - Each distribution channel has its own strengths and weaknesses
  - IT investment spend further reveals that the development of the online channel is a priority for financial services providers
    - However, the branch also remains a key element
    - The willingness of European banks in developing their channel strategy is reflected in their IT spend
    - Going forward, Datamonitor expects IT spend for the online channel to grow at a sustained pace
- Datamonitor identifies three types of online banking model followed by banks
  - The majority of European banks follow a strategy where the Internet is seen as complementary to the other channels
    - The standalone online bank has fallen from grace
  - Branch-focused banks with an online presence have a larger number of customers banking online than that of standalone Internet banks
  - Key strategic priorities and challenges vary according to the business model chosen
CHAPTER 3 BEST PRACTICE STRATEGIES IN ONLINE BANKING IN EUROPE
- Introduction
- Egg: personalized customer experience and innovation is at the heart of its success
  - Egg offers a range of products with specific focus on credit cards
  - Cross-selling and significant marketing investment are Egg's main strategies to increase its customer base
    - Egg is aiming at maintaining critical mass via cross-selling its personal loan to its credit card customers
    - Advertising remains a major acquisition tool for Egg
  - The launch of Egg Money has further strengthened the innovative values of Egg and further raised brand awareness
    - Egg Money, launched in September 2005, is a hybrid product combining a credit card, a debit card and overdraft facilities
  - Collaboration with its customers and regular customer satisfaction surveys ensure that Egg enhances customer experience
- Fineco: a niche player aiming at becoming the bank of choice for digital customers
  - Online banking services are viewed as complementary services by banks in Italy
  - Fineco is the leading online player in Italy
  - Fineco's aim is to be the bank of choice for the 'digital customer'
  - Fineco has a number of competitive strengths
  - Going forward
- Alliance & Leicester: an online bank with a high street presence
  - The lender is enjoying significant success in terms of Internet sales and servicing
  - A number of critical success factors are behind Alliance & Leicester 's online success
- OP Bank Group: focusing on encouraging customers to use online self-service functionalities
  - Finland has one of the highest online banking penetrations in Europe
  - OP Bank Group is the leading online banking player in Finland
  - The Internet is fully integrated within OP Bank Group's multi-channel strategy
  - Providing excellent and advanced banking services has contributed in establishing OP Bank Group as the leading online player in the Finnish banking industry
    - OP Bank Group is a pioneer in online innovation
  - OP Bank Group has switched to an integrated infrastructure to enhance customer experience
  - Going forward, sales will be the focus for OP Bank Group
- Best practice in encouraging usage of online banking and maximizing cross-selling and sales opportunities
  - Players need to look at how to increase returns from the online channel
  - Initiatives in maximizing cross-selling to online customers
  - Initiatives in encouraging dormant registered online customers to use eBanking
  - Initiatives in acquiring new customers
CHAPTER 4 THE FUTURE OF ONLINE BANKING
- Introduction
- Online banking penetration will continue to increase over the years
  - Online banking penetration will remain the highest for the Nordics but growth will slow considerably
  - A few key trends will shape the future of online banking over the next five years
    - Trend no.1: the Internet will remain a channel of choice for servicing rather than sales
    - Trend no.2: sales of commoditized products will increase although growth will be relatively slow over the next couple of years
    - Trend no.3: the online platform will not play a significant role in the distribution of less commoditized financial products
- There are a number of measures that financial providers can take to promote and encourage customers to bank online
  - Financial providers should continue to work toward a seamless consumer experience
  - Financial providers should make use of Internet blogs to attract customers
  - Promotional incentives remain the quickest way to acquire online customers
  - Financial providers should add testimonials or success stories to boost confidence about online banking
CHAPTER 5 APPENDIX
- Supplementary data
  - Chapter 2: Introduction to online banking
- Definitions
  - Account aggregation
  - Bank providing Internet services
  - Internet bank
- Current readings
- Relevant links
- Datamonitor's custom research capabilities
- Retail Banking team contact details
- List of Tables
  - Table 1: Online banking IT spend by country, 2005-2009
  - Table 2: Branch IT spend by country, 2005-2009
  - Table 3: Examples of standalone online banks and recent closures for a sample of European countries, September 2006
  - Table 4: Number of customers banking online with standalone Internet banks and major banks for a sample of providers, 2005 (Table 1 of 2)
  - Table 5: Number of customers banking online with standalone Internet banks and major banks for a sample of providers, 2005 (Table 2 of 3)
  - Table 6: Number of customers banking online with standalone Internet banks and major banks for a sample of providers, 2005 (Table 3 of 3)
  - Table 7: Advertising expenditure for leading standalone online banks in the UK, 2003-2005
  - Table 8: Fineco's key statistics, 2004 and 2005
  - Table 9: OP Bank Group's service network, 30 June 2006
  - Table 10: OP Bank Group is a pioneer in online innovation
  - Table 11: Percentage of motor insurance consumers who changed their insurer at last renewal, split by how arranged insurance, 2005
  - Table 12: Number of online banking customers, 2002 and 2005
  - Table 13: Internet banking penetration among retail customers, 2005
  - Table 14: Number of active home Internet users for a sample of European countries, February 2005 and December 2005
- List of Figures
  - Figure 1: Germany has the highest number of online banking customers in 2005, 2002 and 2005
  - Figure 2: The Nordic region has the highest Internet banking penetration, 2005
  - Figure 3: Among the sample of countries displayed, Sweden has the highest population penetration of active Internet users, February 2005 and December 2005
  - Figure 4: Bankinter in Spain has introduced co-ordinates from the customer's code card each time they sign an operation to decrease the risk of customers falling victims to 'Trojans'
  - Figure 5: Alliance & Leicester two-factor authentication process: We know it's you...You know it's us....
  - Figure 6: Percentage of UK consumers who have arranged financial products via the Internet, by product sector, 2004
  - Figure 7: Egg and First Direct are examples of standalone online players offering account aggregation to encourage usage from customers, September 2006
  - Figure 8: Rating of retail banking channel options with respect to various banking transactions and services
  - Figure 9: Alliance & Leicester uses its online channel to generate leads for its call center and branches, August 2006
  - Figure 10: Alliance & Leicester is able to reduce application process time by providing useful information online, August 2006
  - Figure 11: European retail banks' distribution channel project priorities
  - Figure 12: The Nordics are the only countries where IT spend for the online channel exceeds IT spend for the branch network, 2005
  - Figure 13: Examples of European banks split by online banking model, 2006
  - Figure 14: European online banking business models and strategic priorities
  - Figure 15: Egg invests significantly in raising brand and product awareness, Q3 2004 - Q3 2005
  - Figure 16: Egg is the biggest advertising spender among standalone Internet banks in the UK, 2003-2005
  - Figure 17: Fineco executed nearly 10 million retail orders in 2005, 2001-2005
  - Figure 18: Alliance & Leicester appeared twice in Moneyfact's current 'Best Buys' table for discounted variable mortgage products targeted at first-time buyers, September 2006
  - Figure 19: Alliance & Leicester uses demonstrations to introduce customers to Internet banking, September 2006
  - Figure 20: High penetration of online banking has led to a significant fall in the number of branches and personnel in Finland, 1970-2004
  - Figure 21: 41 per cent of eBanking users in Finland use OP Bank Group eBanking services, 2005
  - Figure 22: More than 90 per cent of OP Bank Group's basic retail banking transactions are conducted via the electronic channels
  - Figure 23: OP Bank Group has been focusing on encouraging its retail customers to self-serve via the Internet
  - Figure 24: "My economy" service for retail banking customers helps them create their own budgets and analyze their money flows
  - Figure 25: Easy access to daily banking operations via portable devices
  - Figure 26: Advanced interactive tools for stock trading and analyzing the markets, 1 of 2
  - Figure 27: Advanced interactive tools for stock trading and analyzing the markets, 2 of 2
  - Figure 28: Catering for the visually handicapped via a separate 'easy to use' service
  - Figure 29: OP Bank Group has a single integrated customer portal
  - Figure 30: OP Bank Group has reached the third stage of the development of its online banking channel
  - Figure 31: HSBC promotes products inside the online customer's secured site
  - Figure 32: Cahoot is encouraging uptake of other products by displaying all products as if the customer already had them
  - Figure 33: Barclays Bank is using a substantial amount of the screen to promote products
  - Figure 34: In the UK, Lloyds TSB probably has one of the most advanced online marketing strategies to logged in customers
  - Figure 35: Barclays has introduced 'instant access' in the UK
  - Figure 36: Lloyds TSB uses customer information to encourage use of accounts
  - Figure 37: Major high street banks in the UK are wooing students via promotional incentives, September 2006
  - Figure 38: Crédit Lyonnais in France is encouraging existing customers to introduce their friends, September 2006
  - Figure 40: The Nordics will continue to dominate in terms of eBanking penetration in 2010
  - Figure 40: e.LCL, the eBanking website of French bank Crédit Lyonnais, provides a number of articles for its online customers, September 2006
  - Figure 41: Alliance & Leicester uses pop-ups in the mortgage section of its website to offer the services of an online agent, September 2006
  - Figure 42: Datamonitor's core consulting capabilities

Online Banking Strategies in Europe 2006

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