Egg has been searching for a way into Europe for a year now. With two million existing UK customers, European expansion may be the best chance for the bank to maintain its strong growth rates into the long term. However, it won’t be easy. The French financial services market is very different from the UK’s, even in the online sphere.
UK online bank Egg is considering a takeover of its French counterpart Zebank.
UK online bank Egg, which is 80% owned by insurer Prudential, has grown quickly since its launch in 1998. It now has almost two million customers, more than half of whom use its credit card. Zebank, which is jointly owned by Groupe Arnault and Dexia, has also grown its customer numbers, albeit on a smaller scale. After finally managing to launch in February 2001 with a target of 60,000 customers, it has now attracted 100,000 customers.
The most interesting thing about Egg’s bid is that the company is trying to operate on a pan-European scale as other online banks scale back their international plans. Last year SEB abandoned its attempts at developing a UK online presence, while part of the story behind First-e’s high-profile failure was its international organization.
So why should Egg do any better? One factor in its favor will be Zebank’s established customer base and domestically recognised brand – although there are fears that a high proportion of Zebank accounts may be inactive. Egg will also be able to transfer its credit card expertise to a French card market that although sizable remains relatively uncompetitive.
But at the same time, it is well recognized that success in one European market does not guarantee success in another. The differences between the demand for and the supply of Internet banking services are unique to each of the European markets.
Following Egg’s announcement last November that it would break even by the end of 2001 and that customer numbers were approaching two million, European expansion seems like a necessary step if Egg is to further its growth. However, only time will tell whether the Egg hatches successfully.