A McKinsey survey of online banking in Europe has found that banks will have to work hard to pursue online users.

The study of 65 banks in 10 European countries found that the rates at which customers are adopting Internet banking varies widely both among countries and among banks within the same country. Bringing customers online depends on both the banks efforts to attract customers to online services (push factors) and the demand from customers to use these services (pull factors).

McKinsey identified 2,500 Western European banking sites which share eight million online users between them. By the middle of 2000, only 8 percent of existing customers had moved online and only 2.9 percent of new customers had been attracted online.

The survey found that 60 percent of existing customers convert due to pull factors. For the 40 percent who convert due to the banks efforts the most important factors are cost-effectiveness (67 percent), coverage of automated telling machines (18 percent) and size of the bank (15 percent).

For new customers the most important factors are organizational design (56 percent), cost-effectiveness (23 percent), size of the bank (17 percent) and availability of automated telling machines (4 percent).

McKinsey also analyzed the on-line penetration of banks and their overall cost-effectiveness, which leads it to believe that the potential for cost savings online could widen the gap between Europe’s strongest and weakest banks.

For details visit: McKinsey & Company