Scandinavians have taken to eBanking faster than people elsewhere, making Nordea one of the most successful eBanks in the world. However, this fairy tale may be coming to an end: Nordea will suffer from slowing market growth this year. This will make it one of the first eBanks to face the challenge of increasing revenue per customer.
Scandinavian banking group Nordea has announced that it now has 2.7 million eBanking customers.
Nordea, like the other Scandinavian banks, is often applauded for the standard of its online provision. Indeed, customers certainly seem to enjoy using its online services. During 2001, they logged on 76 million times in total, and used the services to make 88 million payments – up 38% and 40% on last year respectively.
The bank now has more than one million eBanking customers in two of its home markets, Sweden and Finland, and more than 2.7 million online customers in total. This surpasses the target set for 2001, representing a growth of 28.5%. Nordea was also voted the world’s best electronic banking service last year, and its website is one of the top ten web properties in Norway. Its electronic banking operations have enabled it to eliminate more than 10 million manual transactions.
But the boom times are not going to last. Nordea expects customer growth will fall to 18.5% in 2002. The fall reflects the small size of the Scandinavian markets, and the already high level of saturation compared with elsewhere in Europe. Datamonitor expects the overall number of eBanking customers in the Nordic countries to grow by just 13% this year.
This leaves Nordea with the option of looking outside Scandinavia for future growth opportunities. However, entering new markets is never easy, and so this strategy may not prove too attractive. Although Nordea’s brand is strong in Scandinavia, it is relatively unknown outside the region.
Instead, Nordea needs to increase the level of online functionality it offers, so it can extract maximum value from existing customers. It has prioritised its Solo Market, for example, as one way to do this. At the market customers can buy and sell, paying from their Nordea accounts for goods and services bought. The success or failure of this strategy will be of great interest to other Internet banking providers, as they face similar market conditions and hence similar decisions in the future.