(June 5) – A J.P. Morgan analyst says the rise of Internet banking is going to force massive cost cuts at mainstream banks if they are to stay competitive.
According to the Financial Times, Morgan analyst Huw van Steenis suspects that online banking will triple over the next three years to capture 15% of the European banking business, including one-third of new savings and 19% of mutual fund sales. He suggests that these online upstarts could carve 7 billion euros worth of profit from Europe’s largest banks as it steals away high net worth clients. “We are witnessing the invasion of the customer snatchers,” said van Steenis, head of Morgan’s e-finance group. “Putting the existing business online is not enough.”
The FT says van Steenis sees online banks focusing on valuable client segments, possibly leaving old-style banks with the low margin current account business supported by heavy overheads.