Internet Banking in Europe

While banks all over Europe have been looking at the possibilities created by the Internet, the fastest take-up of the service has been in the Scandinavian countries where it is forecast that up to 50 per cent of consumers will be doing some of their banking online by 2003, compared with 15 per cent in Spain and Italy, and 22 per cent in the UK. Nordic Baltic Holding (NBH), the region's Internet leader has reported that 1.7 million of its 9 million customers have signed up for online banking. Foreningsbanken has 800,000 online customers, SEB has 620,000 and Danske Bank 500,000. The banks envisage major cost savings as a result of the take-up of online banking, because their branch staff will be less tied up with day-to-day transactions. This means that staff can be freed up for other services such as providing advice and selling products, including pensions and life assurance. For customers, too, bill paying and share buying is faster and often more convenient when conducted online. NBH claims that up to 32 per cent of Finnish bill payments are now made online.

The Internet has become a key part of the marketing strategy of many Nordic banks. They have made it cheaper to pay bills online than at a branch, encouraging their customers to switch to the new channel. Not only has this saved them money, it has prevented foreign e-banks from entering the region and signing up their customers. In fact, SEB has sought to expand abroad by setting up Internet banking operations in Germany, Poland, Denmark and the Baltic States, and aims to have 5 million Internet banking customers by 2004.

Technological forces

Both people's lives and companies' fortunes can be affected significantly by technology. Techno­logical advances have given us body scanners, robotics, camcorders, computers and many other products that have contributed to our quality of life. Many technological breakthroughs have changed the rules of the competitive game. For example, the launch of the computer has decimated the market for typewriters and has made calculators virtually obsolete.

Monitoring the technological environment may result in the spotting of opportunities and major investments in new technological areas. For example, ICI invested heavily in the bio­technology sector, and leads the market for equipment used in genetic fingerprinting. Japanese companies are investing heavily in areas such as microelectronics, biotechnology, new materials and telecommunications. The key to successful technological investment is, however, market potential, not technological sophistication for its own sake. The classic example of a high-tech initiative driven by technologists rather than pulled by the market is Concorde. Although technologically sophisticated, management knew before its launch that it never had any chance of being commercially viable.

One particular major technological change that is affecting marketing is the development of infor­mation technology. Information technology, or IT, describes the broad range of innovations within the fields of computing and telecommunications. Almost no aspect of marketing remains unaffected by developments in these areas. For example, many market research studies are being conducted via e-mail; the efficiency of salesforces is being improved through salesforce automation; and the ease with which international marketing can be conducted has been enhanced by technologies such as e-mail and videoconferencing. In Chapter 5 we will see that a whole new industry, called customer relationship management (CRM), has grown up in recent years; this uses database technologies to enable companies to improve their relationships with customers. The Internet is also having a profound effect on how business is conducted, despite the collapse of a wide range of Internet-based businesses in the past two years. For example, we will see in Chapter 3 how more and more businesses are using the Internet as a medium for purchasing supplies. However, the speed with which consumers adopt the Internet is proceeding at an uneven pace throughout Europe, as shown in e-Marketing 2.1.

Another technological area that is set to provide a wide range of marketing opportunities is that of mobile phones. Ownership in most developed markets is fast reaching saturation point, with all but the very young and very old already in possession of a mobile phone. Consequently, in an effort to boost sales, manufacturers are focusing on dimensions like fashion and innovation. New phones are smaller and sleeker in design, and innovations like 3G (third generation) technology will allow users to have access to the Internet and enable them to download music and video on to their phones. Some of the marketing possibilities of using mobile phones being considered are described in e-Marketing 2.2.

2.2 e-Marketing