European online banking set to boom

European online banking set to boom

The number of Europeans banking online will rise to seventy-five million by 2005 according to forecasts from research house Datamonitor. The company projects a $5 billion e-bank technology spending spree as financial institutions equip to cater for the growing numbers of Web bankers.

The report, 'eBanking Technology in Europe 2001', forecasts a trebling of the number of customers using PC-based Internet banking services, from 23 million at the end of 2000 to over 75 million in 2005.

Datamonitor's research indicates that, despite the current market uncertainties, banks are being successful in migrating their customers onto the Internet.

Siân Jones, e-financial services analyst at Datamonitor, comments: "The availability of more and more value-added services, such as account aggregation and online advice, will continue driving strong consumer uptake of e-banking services. The challenge for banks now will be to hang on to these customers through using advanced personalisation and one-to-one marketing technologies to build up loyalty."

The research company predicts the size of the e-banking technology market will almost double over the next four years, growing from $2.7 billion in 2001 to nearly $5 billion by 2005.

Germany, the UK and the combined Nordic markets of Denmark, Finland, Norway and Sweden will continue to account for the greatest number of Internet banking customers. Italy will be the fastest-growing market, exhibiting a compound annual growth rate of 70.9% from 2000-2005, as leading banks seek to roll out aggressive e-banking strategies to attack this relatively underdeveloped market, says the report.

Datamonitor also takes a bullish view of the future uptake of mobile phone banking. While initial uptake of WAP-based services has been limited, the advent of 2.5 and 3G networks will allow for richer banking services to be delivered via the wireless channel. As a result, Datamonitor forecasts almost 35 million customers banking on WAP by 2005.

Jones states: "Although there has been some initial customer disappointment in WAP services, we firmly believe that, when higher bandwidth networks and suitable handsets become widely available, mobile banking will become a killer m-commerce application."

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