Why are so many on-line banking ventures—start-ups and incumbents alike—foundering? A business that can conduct such a high proportion of its transactions electronically would seem well suited to move on-line rapidly. Yet, perversely, the rate at which customers around the world are adopting Internet banking varies enormously, from a few percent to double digits, both among countries and among banks within the same country.
In an attempt to find out why rates are so variable, McKinsey studied 65 leading banks in ten European countries.1 The findings show that in bringing customers on-line, "push" factors (the efforts that banks make to attract customers to on-line operations) are almost as important as "pull" factors (demand from Internet-savvy customers for electronic services). The study also indicates which elements of those push and pull factors really matter, both for converting existing customers and for attracting new ones; which banks have the best position for success on-line; and what the others can do to catch up. Finally, the study makes it clear that banks will have to pursue on-line customers, however difficult the environment may seem.
Despite the presence of more than 2,500 Western European banking sites on the World Wide Web—some banks...