eBanks are having a tough time everywhere, but the Spanish situation is worse than much of the rest of Europe. People in Spain don’t want to use eBanking services, and so growth will be low relative to elsewhere in Europe. While the latest rationalization moves are welcome, there may still be too many providers competing for too few customers.
The major Internet banks in Spain are trying to cut costs and rationalize their operations.
Spanish Internet banks are cutting back their operations further and further. BBVA’s Internet subsidiary, Uno-e, has cut employees by 23% and has merged its product development platform with that of BBVA. In 2002, it aims to restrict overall losses to E25 million. Meanwhile, SCH’s Patagon has also frozen recruitment, and has slashed marketing costs by 20%.
eBanking troubles are hardly unique to Spain – there have been casualties across Europe. Firstviewbank.com, Vontobel’s YOU, First-e and ABN Amro’s MoneyPlanet are all examples of what can and does go wrong at Internet banks. Even so, the Spanish Internet banking market is small relative to other markets in Europe.
Datamonitor research finds that the number of Spanish Internet banking customers will increase from 3.9 million to 6.8 million between 2002 and 2005. This compares with countries such as Germany and the UK, where Internet banking customers will number 15.4 million and 13.4 million respectively by 2005.
Part of the reason could be that only 3% of Spanish consumers say that the Internet is their preferred way in which to deal with their financial affairs (although this low level of preference is not unique to Spain).
At the moment, Uno-e holds 10% of Spanish online deposits, Patagon 29%, and ING Direct 57%, while Bancopopular-e.com has just 1%. This may well represent too many providers competing for too few online customers.