ABN Amro and KPN have abandoned their online financial services portal.
Dutch bank ABN Amro has decided not to launch an Internet financial services portal with incumbent telco KPN. The venture, called Money Planet, was announced last July and would have cost $140-187 million in total – although apparently only a small fraction of this sum has been spent so far. Money Planet would have offered a rebranded version of ABN’s existing products in retail banking, stockbroking and cards, completing the financial services package by offering insurance from other providers. KPN would have promoted the service heavily to its 19.5 million subscribers.
But it’s becoming increasingly clear that standalone eBanks are not a good investment. Even early entrants such as Egg are finding it hard to turn customer numbers into profits, with losses of GBP155.3 million for 2000. Meanwhile, many other providers have made the same decision as ABN Amro, with Allied Irish Bank recently abandoning high-profile online banking operations.
Banks like ABN Amro have two major advantages in online banking. They have trusted names – if consumers trust them with their life savings, then they’re much more likely to trust their websites. At the same time, they also have the huge advantage of a branch network. Even people who find it easier to do some banking online will often also want to deal with a real cashier or advisor. A good example is UK bank Barclays. Its online service is part of its standard retail offering, using its existing brand and branches – and it is the most popular eBanking service in the UK.
It makes little sense, then, to invest huge sums in marketing a separate service that throws these advantages away. Online banking will become a major part of retail banks’ offerings over the next few years. But it only makes sense as part of a wider, multi-channel strategy. As long as it can ensure there is still a good eBanking infrastructure in place for its retail customers, ABN Amro is wise to abandon Money Planet.
