Egg, majority-owned by Prudential, is the UK’s leading Internet-only bank by a huge margin. Its key challenges now are to turn France’s Zebank into a success, and to cross-sell more premium products, reducing its reliance on credit cards. Neither of these objectives looks impossible – and if Egg achieves them, it will truly have cracked it.
UK online bank Egg has reported a GBP4.1 million pretax profit for Q1.
UK online bank Egg, which is 79% owned by insurer Prudential, has reported a pretax profit of GBP4.1 million – far exceeding analyst predictions of GBP3 million. Egg’s success is even more apparent given that in Q1 last year it made a GBP37 million loss.
Egg now has 2.1 million customers, considerably more than any of its UK online-only rivals, having acquired 157,000 net new customers between January and March. Its closest rival is the Co-op’s Smile, which recently hit the 500,000 customer mark.
What now for Egg? The outcome of its tie up with French bank Zebank will be crucial. It bought Zebank, France’s first Internet bank, in January 2002, and plans to use the French firm’s existing distribution deals with retailers Sephora and La Samaritaine.
International expansion will help Egg overcome the limits of the UK Internet banking market and will mean that it is able to market its services at a new customer base. Egg says that Zebank’s customers are upmarket and metropolitan… managerial level earning higher than average salaries.
The bank also needs to lessen its reliance on its credit card business. Egg has been criticized for relying too heavily on cards and as a result is seeking to increase the proportion of business accounted for mortgages, savings and pensions. Only time will tell whether Egg can make these products as attractive to customers as its card.
Egg is already beating its online banking rivals. If the French expansion and the cross-selling attempts pay off, the bank will have truly cracked it.
Related research: Datamonitor, 2002: eBanking Strategies in Europe 2002