UK: The High Street Banks Will Win Handsomely As Europe Outpaces US In E-Banking Race

Last Updated: 16 May 2000

Internet banking is upon us, but perhaps surprisingly, established High Street banks across Europe are better placed to exploit this new channel than new entrants and stand-alone e-banks, according to a research report from KPMG, the business advisory firm. The report identifies how the internet will drive change in European retail financial services and pinpoints the key success factors that will mark out the winners. "Europe's future leading retail financial institutions will not be built in a garage in Helsinki," argues Philip Middleton, Head of Financial Services Strategy at KPMG.

Awakening Giants : How Europe's big banks will win in the e-commerce revolution, reveals that financial institutions, have invested up to Euro 15 billion in e-banking technology and building awareness through advertising. Although new e-banks have the speed, agility and ability to adjust to new demands, free from legacy IT issues, the incumbent major European banks have three crucial competitive advantages that will help them win. Put simply - traffic, trust and multi-channel access.

Established banks already have large customer bases which generate a large amount of daily banking traffic. New Internet banks are having to attract and retain customer bases from scratch - a costly and time-consuming process.

At the same time the established banks have strong and trusted brands. "Customer-trust is clearly vital to banks of any size, and customers trust banking brands rather than technology," comments Chris Gentle, Head of Research within the Financial Services Consulting Practice of KPMG. "This is likely to make a critical difference because while newcomers may have the technology, if not the brand strength, established banks have both."

The third advantage lies in the multi-channel access that customers currently have to established banks. A multi-channel proposition is critical in building an on-line customer base. Wells Fargo in the US estimates that up to 90% of its on-line banking customers sign-up at a branch. Branch networks, ATMs, and phone, internet and interactive TV banking will all play a part in a successful multi-channel strategy.

Middleton comments, "Established banks have trusted brands, they also have the resources to develop their e-banking operations. Success will be determined by how well they remodel their entire businesses around e-banking. We expect e-commerce to revolutionise both internal processes and the evolution of consumer channel usage. New entrants have shaken up the game, but they have not made significant inroads in terms of market share. But they have radically altered the playing field and are changing banking from a supplier to a customer orientation."

"It remains to be seen if the new players will stay the course. Over the foreseeable future we believe that it is unlikely that consumers will embrace new players, due to fears about security and lack of expertise, and hence it will be difficult for them to become significant in the mass market."

The report points out that European financial institutions have drawn heavily from the early experiences of American banks in formulating their internet strategies and that the number of online bank accounts opened in Europe will exceed those in the US by the end of this year, 7.25m versus 6.8m.

The US market demonstrates that Internet banking will not sweep all before it in the consumer market; poor functionality and the lack of a 'killer application' have resulted in relatively low adoption rates and high 'churn'. Take-up of e-banking within Europe has been varied with Nordic countries having a far higher penetration than countries in Southern Europe.

"I would expect to see over the next two or three years a rapid increase in PC-based banking across Europe, before it levels out. However I do not expect the Nordic model to be adopted in the rest of Europe," argues Philip Middleton. "Where I would expect to see far greater growth is in the area of mobile technology - so called m-banking. Within Europe, ownership of mobile phones is exceptionally high, and I would expect to see this figure continue to soar with the arrival of WAP technology. The m-commerce market will erupt as we move towards a 'Martini' vision of the future - any time, any place, any where. Combined with Digital Interactive Television this provides a major opportunity to develop low cost e-banking channels. By 2003 more homes in Europe will have digital television than PCs."

While all European banks are putting e-commerce at the heart of their future strategies, two different paths are emerging. One is to set up new and separate 'baby banks', such as IF and Cahoot in the UK, and Banque Direct in France, alongside the traditional brand. The other is making 'e' integral to the entire bank. " In the final analysis the winners will be those who can harness the new technologies effectively to offer customers low cost, personalised and responsive service backed by strong brand values. We believe there is a significant window of opportunity for today's banks to restructure their business to achieve this," concludes Middleton.

For more information please contact: Chris Gentle, Head of Research, KPMG Financial Services or Charles Dalton-Holmes, Marketing Manager, KPMG Financial Services.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.


To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.