E-Banking in Estonia: Reasons and Benefits of the Rapid Growth

Abstract

The new information technology is becoming an important factor in the future development of financial services industry, and especially banking industry. Banks are faced with a number of important questions, for examples how to take full advantage of new technology opportunities, how e-developments change the ways customers interact with the financial services provider, etc. In paper author analyzes the main criteria for successful internet-bank strategy and brings out benefits of e-banking from the point of view of banks, their clients and the economy in general. Author argues that Estonia has achieved significant success in the implementation of electronic banking; it is on the top of the emerging markets in this area and even outpaces the achievements of some developed countries. This progress is not coincidence; it has external and also subjective reasons. In paper, author tries to analyze the main reasons and factors responsible for the rapid growth of electronic banking in Estonia. In order to achieve this goal banks use a wide variety of measures, such as price concessions, sales of bank-service packages as well as offering additional non-banking services. Also some possible future trends for e-banking development in Estonia are discussed. The last e-banking development was mobile phone banking (m-banking), which allows paying for goods and services by mobile phone and was implemented in 2002.

Keywords: E-banking, Estonian banking sector, development of banking services

JEL Classification: G20, G21