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Europe banks go online
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August 23, 1999: 9:51 a.m. ET
Institutions offering Web-based services nearly doubles this year
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LONDON (CNNfn) - The number of European financial institutions offering online banking services nearly doubled over the last six months, according to a report on deregulation and restructuring in the sector published Monday.
The boom in Net and telephone-based direct banking is concentrated in continental Europe. Banks in the region have been slow to follow the lead made by their British counterparts in axing expensive and unprofitable branch networks to cut costs.
Between November 1998 and the end of June 1999, the number of online banking sites offering transaction capabilities climbed to 1,265 from 703, according to a study in eight European countries by Paris-based BlueSky International Marketing.
The number of U.S. banks offering Net-based banking rose to 386 from 184 over the same period.
BlueSky president Suzan Nolan cites the dramatic growth in Germany as an example of how financial institutions have seized on the low-cost alternative of Web-based accounts to gain market share. "It takes only 10 minutes and 150 marks ($85) to create an online bank," she said.
Bankers said the new breed of online banks is not cannibalizing existing business, but instead offers a way to fend off overseas competitors and generate economies of scale by expanding their own services in other European countries.
The customer base of commdirect, the direct banking arm of Germany's Commerzbank (FCCB), has grown by 50 percent to 240,000 this year, with only 8 percent of these transferring from community-based Commerzbank accounts.
commdirect can be accessed by telephone and Internet, but company spokesman Rheiner Schuering said the proportion using the Web service had increased from 40 to 60 percent since the start of the year.
The bank is looking to roll out its bank and brokerage services in other European states next year, taking advantage of the deregulation of the financial services sector following new legislation from the European Commission, the Brussels-based executive arm of the European Union.
The fragmentation of Web-based banking in continental Europe contrasts sharply with the experience in Britain, where a handful of entrants have grabbed market share from traditional banks. Just 10 institutions dominate the business, with market leader Egg -- a unit of insurance group Prudential (PRU) -- taking 20 percent of total new U.K. deposit savings over the past year. 
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Commerzbank
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