Internet Banking in Europe: A Comparative Analysis
Free University of Brussels (VUB) - Faculty of Economic, Social and Political Sciences; European University Institute - Economics Department (ECO)
University of Milan
December 15, 2008
A key strategic issue for banks is the implementation of internet banking. The 'click and mortar' model that complements classical branch banking with online facilities is competing with pure internet banks. The objective of this paper is to compare the performance of these two models across countries, so as to examine the role of differences in the banking system and technological progress. A fuzzy cluster analysis on the performance of banks in Finland, Spain, Italy and the UK shows that internet banks are hard to distinguish from banks that follow a click and mortar strategy; country borders are more important. We therefore explain bank performance by a group of selected bank features, country-specific economic and IT indicators over the period 1995-2004. We find that the strategy of banking groups to incorporate internet banks reflects some competitive edge that these banks have in their business models. Extensive technological innovation boosts internet banking.
Number of Pages in PDF File: 28
Keywords: Banks, Internet, Innovation
JEL Classification: G21, O32working papers series
Date posted: February 17, 2009
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