Internet banking makes steady progress in Europe

The number of people in the European Union (EU)
accessing banking services via the internet is increasing steadily,
having risen from 15 percent of the region’s population in 2003 to
29 percent in 2007, reveals a study by Thomas Meyer, an analyst at
German Deutche Bank’s research unit. However, there are still
significant variations in adoption rates between countries and
population groups which Meyer believes will gradually narrow over
time.

In his study Meyer focused on the key
influences behind the adoption of internet banking. The first of
these is that northern Europeans have displayed the greatest
enthusiasm for internet banking with levels of adoption generally
falling the further south countries are located.

For example, he pointed to adoption rates of 66
percent in Finland and 72 percent in Iceland, which is not an EU
member but is a member of the European Economic area. By contrast
the adoption rate in Bulgaria is a mere 2 percent and even in
Italy, only 12 percent.

Meyer found that education levels play a
pivotal role in internet banking adoption, at least in the early
stages. He noted that in Germany, for instance, 43 percent of
internet bankers are highly educated while in the population as a
whole only 35 percent fall into this education category. Income
levels also play a role.

Meyer stressed that as internet banking spreads
across the population, the education bias can be expected to
gradually disappear. This is evident in Iceland, for instance,
where the internet banking adoption rate by highly educated people
is 90 percent and that by medium educated people not far behind at
76 percent. Put another way, in Iceland an internet banking user is
only 20 percent more likely to be highly educated rather than have
a medium level of education. In Bulgaria this gap is 300 percent.
However, noted Meyer: “At some point in development [of internet
banking] adoption rates among the laggards will catch up with those
of the early users.”

Other important user-gaps are also evident.
Among these are that across Europe the growth rate in internet
banking adoption in the age group between 55 to 64 years has been
twice as high as in the age group of 25 to 34 years. There is also
a gender gap noted Meyer with women lagging behind men in the use
of internet banking by seven percentage points on average.

He added that the age gap should begin closing
from about 2010 while the gender gap began showing signs of closing
in 2006, though the pace is still too slow to be seen in the
data.

Meyer believes factors such as the
disappearance of education and age biases will drive a gradual
increase in internet banking adoption and that an average of
between 50 percent and 60 percent of consumers in the EU-15 (the
EU’s 15 member countries before its expansion in 2004) could become
online bankers by 2020.