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Omega 32 (2004) 1 – 7
www.elsevier.com/locate/dsw

“Attack or convert?”: early evidence from European

on-line banking
Jacques Bughin∗;1
ECARES, Free University of Brussels, McKinsey & Company, Avenue Louise 480 b.22, Brussels 1050, Belgium
Received 15 March 2001; accepted 8 August 2003

Abstract
Why are so many on-line banking ventures—start-ups and incumbents alike—foundering? An industry which can theoreti-
cally conduct such a high proportion of its transactions electronically would seem well suited to a rapid move on-line. Yet, the
rate at which customers around the world are adopting Internet banking remains relatively low; and furthermore the capability
to convert or acquire customers on-line varies enormously among banks.
This paper attempts to analyze and compare possible drivers of customer acquisition and conversion for European on-line
banking at the light of various theories of bank innovations. The econometric model is consistent with “pull” market features
playing a signi9cant role, but only for customer conversion. In contrast, bank-speci9c factors are largely the driver for on-line
customer acquisition strategy, especially organizational link to on-line activities and bank size.
All in all, this paper con9rms that, consistent with the strategic management literature, an “attacker” versus “conversion”
strategy obeys signi9cantly di:erent paths, but also that some banks are notably better in executing their strategy than others,
on-line.
? 2003 Elsevier Ltd. All rights reserved.

Keywords: e-commerce; On-line banking

1. Introduction academic research has been mostly theoretical, 9rst in ref-

The economic analysis of the internet is gaining momen-
tum following the recognition that this new medium might
have signi9cant impact of the traditional economy. 2 Early
∗ Tel.: +32-2-645-43-01; fax: +32-2-646-45-48.
E-mail address: jacques bughin@mckinsey.com (J. Bughin).
1 Dr Jacques Bughin is a Partner Principal at McKinsey& Com-
pany. He is also a Fellow of the ECARES, Free University of
Brussels as well as at Department of Applied Economics, KUL,
Leuven. This paper is part of a series initiated by @McKinsey’s
Digital Economy Lab. The author thanks Marc Singer, Bozidar
Djelic, Michael Zeisser, Driek Desmet, Byron Auguste and Jurgen
Wunram for their support to this research. This paper has also ben-
e9ted from the comment of one Editor of this Review as well, as
one referee.
2 A University of Texas study recently sponsored by Cisco [14]
erence to network congestion [1], then, in terms of compe-
tition analysis [2].
Recently, the focus has shifted towards elaborate empiri-
cal analyses of the various business models. 3 Bradlow and
Schmittlein [3] analyze search engine performance. Bughin
and Hagel [4] investigate the operational performance of
on-line communities; Bajari and Hortacsu [5] assess the po-
tential of a winner’s curve in on-line auctions, while Moe
and Fader [6] develop a model of visits to buying conversion
at transaction sites. Bailey [7] tests the internet market ef-
9ciency for transactions sites of books, software and CD’s.
Brynjolfsson and Smith [8] update Bailey’s work, while
Clemons et al. [9] investigate price dispersion and price dis-
crimination for on-line travel agent o:erings. Ozer [10] uses

had argued that the internet had already generated more than 500 3 See among others the special Winter 2000 issue of Marketing

billion US dollars of revenue already by end of 1999. Science.

0305-0483/$ - see front matter ? 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2003.08.002
2 J. Bughin / Omega 32 (2004) 1 – 7
fuzzy clustering as a way to identify customer segmentation
of on-line music services.
This paper concentrates on yet another industry that is
well suited to on-line at 9rst sight. The scope is on on-line
6nancial services, for which academic research has para-
doxically been relatively scarce to date at the exception of a
few studies, e.g. [11] or [12]. This is rather surprising given
that the internet has been felt early to a:ect the market struc-
ture and dynamics of the 9nancial services sector. On one
hand, the low costs of internet communications and transac-
tions have made possible to reach customers electronically
in very cost-e:ective ways [11]. On the other hand, new
customer value propositions may in theory be enhanced dra-
matically via new services (e.g., e-mail, 9nancial news) and
via higher convenience (e.g., “24 h=7 days” a week, and
“always on” features under broadband access or wireless
access, see [13]).
Recognizing those advantages, banks have early and ag-
gressively moved o:erings to the internet, e.g. before the in-
ternet bubble, a 100% growth rate in new on-line bank ven-
tures was witnessed in Western Europe alone, according to
eMarketer [15]. Yet, perversely, the rate at which customers
around the world are adopting Internet banking varies enor-
mously. A recent CyberAtlas’ debrief in 2001 illustrated the
point for the US with the headline that: “On-line banking
continues to disappoint [banks]..(...) with only 5 to 10%
of their customers base using such services”. The same story
holds true for Western European banks despite the experi-
ence of strong electronic banking such as pan-European au-
tomated teller machines networks. In fact, in Europe, bank
customer on-line penetration has so far reached about 14
million household usage by end-year 2002.
In an attempt to 9nd out why this rate is low, but also
why it varies largely among banks, this paper leverages a
sample of 115 banks in 10 European countries during the
period 1997–2001 included, in order to correlate factors of
customer conversion and customer acquisition to on-line
banking. The rationale to use Western Europe is that one
can exploit the cross-country di:erences in terms of internet
literacy. The sample also uses large banks because of data
availability, but also because the concentration of assets in
banking makes our sample a large part, more than 50%, of
the total retail banking assets in Europe.
The 9ndings must of course be weighted against the sam-
ple size. Nevertheless, they show that in bringing customers
on-line, “push” factors (the e:orts 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). In addition, common themes emerge:
smaller banks are more active, not in converting existing
customers, but rather in acquiring new customers from larger
banks. As for ‘push’ factors, the familiarity of customers
with other kinds of electronic banking, such as ATMs,
does help banks to move people on-line more quickly, both
for conversion and acquisition. Finally, clear di:erences
are also visible for some factors inSuencing conversion or
acquisition: for example, banks which have chosen to fol-
low a strategy to acquire new customers on-line tend to have
spun-o: on-line operations, especially via e-brokerage of-
ferings, and as noted above, are in general smaller in size.
Interestingly as well, the estimated elasticity of customer
conversion and acquisition to on-line booking, is large, sug-
gesting that only a small variance in drivers can generate a
wide distribution of on-line banking penetration success.
If those results can be con9rmed more largely when mar-
ket develops, or for a larger sample of banks, or still for
various geographies (e.g. US), they illustrate that on-line
banking can take di:erent strategic paths, based on whether
banks follow a conversion or acquisition objective. It also
shows that some banks are visibly better in pursuing their
on-line strategy that some others.
The paper reads as follows. After descriptive statistics,
the logistic model results are shown and analyzed. Section
3 concludes.
2. Data and hypotheses
On-line banking is often reported as one of the most fre-
quently used applications on the internet, especially with
respect to e-brokerage. Despite this importance, and in con-
trast with other “killer” B2C products categories such as
books, music CD’s or software, no quantitative analysis of
on-line banking has been systematically conducted. 4 This
paper 9lls the gap by testing a few hypotheses regarding
on-line 9nance, leveraging a unique and representative sam-
ple of banks in Europe. In particular, the scope of our pa-
per is about retail banking as opposed to corporate banking.
Furthermore, retail banking is typically a local market with
non-resident customers being virtually negligible, at the pos-
sible exception of small countries such as Luxembourg. This
feature means that we can reasonably assign country vari-
ables to each bank based on their home country of origin.
For a minority of banks with multi-national retail banking
presence (say Fortis), we are able to separate the various lo-
cations (in this case, the Netherlands and Belgium), but we
retain only the data linked to the major country as the refer-
ence (in this case, Belgium). We also de9ne on-line banking
as any form of transactional banking including e-brokerage.
A bank customer is considered adopting transactional bank-
ing if it does at least one transaction per quarter.
2.1. Hypotheses
Four major hypotheses are being tested in this paper.
First, on-line banking penetration should be linked to con-
sumer readiness with on-line channels as it is well known
that e-commerce usage increases with tenure on-line (e.g.,
[18,19]). We thus expect that internet penetration of a bank
4 Beyond what was already mentioned in this article, see the
anecdotal evidence in [16] and [17].
 J. Bughin / Omega 32 (2004) 1 – 7
homeland is correlated positively both with a bank acquisi-
tion and conversion strategy (see also [20]).
Second, from a strategy perspective, banks pursuing a low
cost strategy should also be the ones which have pushed the
on-line channel quicker than others, not only for customer
conversion, but also for customer acquisition [21,17]. This
9ts with the traditional model of spatial competition where
low cost providers may reinforce their competitive advan-
tage under new innovations [22].
Third, the dynamics of customer conversion and customer
acquisition should be largely di:erent. Given traditionally
low churn rates in European banking, 5 on-line customer
acquisition is a strategy which must be deployed quite ag-
gressively to have any chance of success. In this respect,
E-brokerage has usually higher transaction frequencies than
traditional banking at the branch or at the automated teller
and is informally viewed as one killer application to grab
customer assets quickly, - witness pioneers on-line such as
E-trade [23]. Additionally, one would expect that the organi-
zational structure for customer acquisition is more Sexible,
possibly separate from the established brand, to replicate a
“pure attacker” mentality [24].
Fourth, and 9nally, size should also matter for on-line
strategy. Consistent with the Schumpeterian view that size
is tied with innovation, there is quite an evidence that size is
positively correlated with speed of technology adoption in
banking, see e.g. [25]. We hope to replicate these US 9nd-
ings for Europe in this paper. Furthermore, and in contrast to
the Schumpeterian theory, Courchane et al. [12] develop a
real option model whereby each bank holds an option to in-
vest in the technology to provision internet banking. In such
case, the value of waiting is relatively bigger for large banks
than smaller ones when they use the internet to get new cus-
tomers as, relatively speaking, most of their revenues will
largely come from an already established customer base. We
expect thus smaller banks to be faster in their acquisition
strategy in contrast to larger banks being faster to convert
their base as a ‘put option’ to secure their revenue line.
2.2. Data
A sample of 115 western European banks (i = 1; : : : ; 115)
has been compiled. The data have been compiled from early
1997 to end of year 2001 on a quarterly basis (t = 1; : : : ; 20).
The sample covers ten European countries (j = 1; : : : ; 10),
namely Belgium, Switzerland, the Netherlands, UK,
Germany, France, Portugal, Italy, Sweden and Denmark.
Banks included in the sample are available from the au-
thors upon request and include well-known brands such as
Fortis, BNP-Paribas, Deutsche Bank, ABN-Amro, Credit
Suisse First Boston or Halifax. The sample was inherently
designed with the aim to include for incumbent banks the
5 For instance, the churn is less than 5 percent in Belgium, the
country in which the author of this article currently lives.
3
high-end of the banking sector within each country. The
period of analysis is also noteworthy as it covers the most
comprehensive period available for statistical analysis, from
1997 to 2001. In other words, the sample includes the early
stage of internet banking conversion as well as the recent
period of the stock market “downturn” observed after March
2000.
We leverage three sources for sampling constructs:
a McKinsey “E-performance” con9dential database de-
scribed and already used in [4]. Secondly, we use
Jupiter/MediaMetrix, a lead company that tracks visitors
on-line. Finally, we leverage multiple investment banking
reports by Merrill Lynch, Goldman Sachs, Chase/Morgan,
and Societe Generale, which also report quarterly data on
on-line banking penetration. As discussed in [4], all the data
included in the E-performance have been collected through
log 9les and checked for consistency. The sample includes
75 banks from that source. Concerning Jupiter/MediaMetrix,
the data cannot directly measure transactions per se, but
on-line sessions under secure environment. However, those
types of sessions typically occur when an on-line banking
user makes a transaction. The data includes an addition of
25 banks, outside of the overlap with E-performance. The
9nal extra data, (or 15 banks) come from the investment
banks reports,—possibly the less accurate source of the
three used in this paper.
Omitting t, the index of time, the sample includes statis-
tics of client base (Cli; j ), on-line conversion (CONVi; j ) and
acquisition (ACQi; j ). It also provides information on inter-
net banking organizational structure (ORGi; j =1, if structure
is standalone, e.g., If.com from Halifax) and on product of-
fering (BROKER i; j = 1 if o:ering is e-brokerage rather than
e-banking, e.g., Cortal from BNP-Paribas). As in [12], the
information was collected via the web on each bank.
The data set has been extended with various other indi-
cators, harmonized in their de9nition. It includes country
internet penetration data from a lead internet research com-
pany, IDC (INTERNETj ), and with traditional bank statis-
tics from the rating agency IBCA, including (a): indicators
of size, i.e. balance sheet assets (ASSETSi; j ) and full-time
employees (EMPLij ); (b): indicators of pro9tability, i.e. re-
turn on average assets (ROAAi; j ) and return on average
equity (ROAEi; j ); (c): indicators of cost-e:ectiveness, i.e.
cost-income ratio(C=Ii; j ), and cost-assets ratio(COAi; j ); (d)
indicators of market positioning, i.e., market share in assets
(MSAi; j ); and 9nally, (e): indicators of non-brick banking,
i.e., ATM coverage per customer (ATMi; j ).
A summary of the full data are described in Table 1. For
simplicity, we use the second quarter of the year 2000 as an
illustration.
A few important facts emerge already upon inspecting
this table. First, we con9rm that, by design, the sample in-
cludes rather larger banks. Second, on-line customer con-
version and acquisition among the European banks were
still relatively low in Western Europe mid of 2000, averag-
ing just above 7% for the former and less than 3% for the
4 J. Bughin / Omega 32 (2004) 1 – 7

Table 1 may also choose not to go for a customer “acquisition”

Sample features strategy. The 9rst fact implies to use simultaneous regres-
Statistics Label Mean Std. Dev.
sion techniques, while the second fact implies to include a
Heckman [28] correction for the probability that a bank
Employeesa EMPL 16,2 25,3 chooses acquisition over no acquisition strategy.
ATM’s ATM 846 834
Customersa CL 1842 1145 3.1. Empirical model
Assetsb ASSETS 96 88
Return Assetsc ROAA 94 44
The two equations to be estimated via least squares are of
Return Equityd ROAE 14.7 5.2
Cost-incomed C/I 60.3 14.1 the form (again with t = 1; : : : ; 20, omitted for simplicity):


Market shared MSA 12.6 10.2 (CONVi; j )
Log = a + b · Xi; j
E-conversiond CONV 7.2 6.3 (1 − CONVi; j )
E-acquisitiond ACQ 2.7 1.9
Structured ORG 45 — + c · (INTERNETj ) + ui; j ; (1)
Brokeraged BROKER 12.8 —

Internet usaged INTERNET 34.1 17.9 (ACQi; j )
Log = d + e · Yi; j
(1 − ACQi; j )
Notes: employers are in full-time equivalent; ATM’s are the pri-
vately owned ATM’s only; average assets equity stands for the av- + f · (INTERNETj ) + vi; j ; (2)
erage between year beginning and year end levels of assets/equity.
Market share is market share in terms of assets. ML: Merryl Lynch; where X; Y are vectors of bank-speci9c regressors;
JPM: JP Morgan. a; b ; c; d; e ; f are all coeXcients to be estimated, and u; v
a In thousands.
are disturbance terms assumed i.i.d.
b Billion Euro.
c Basis points.
The pair vectors (X; Y ) were originally the same, in-
d Percentage.
cluding EMPLi; j , ORGi; j , BROKER i; j , Clij , ASSETSi; j ,
ROAEi; j , ROAAi; j , COAi; j , MSAi; j and ATMi; j , as de-
scribed above. When estimating the model, only variables
which were signi9cant at traditional level (¡ 10%) were
latter. With respect to internet penetration, this represents retained, and so on, for the 9nal regression results. Note
21% for conversion and about 8% for acquisition, in line that correlation between the Clij and EMPLi; j , ASSETSi; j
with anecdotal 9ndings that about one European internet on one hand, and ROAEi; j , ROAAi; j was found high. In
user among 9ve has experienced on-line banking in Europe order to avoid multi co-linearity, only Clij and ROAEi; j
[26]. Third, data exhibit strong standard deviation, with, for have been retained in the regression analysis.
some variables such as CONV, a variation coeXcient which
is close to the mean. Interestingly in the rough data, there 3.2. Econometric adjustments
is as much variance among as within countries in terms of
on-line conversion/acquisition—for instance, while the con- Two econometric adjustments must be performed to guar-
version rate was only 3% of its customer base for the CCF, antee robust and unbiased estimates. First, a bank may have
the fact that BNP-Paribas with Cortal has been already able both adopted an on-line customer conversion and acquisi-
to convert 14% of its customer base, well above a fair share tion strategy. To handle this, Eqs. (1) and (2) are estimated
of 21% of French consumer internet penetration, 6 pinpoints in a simultaneous model via SUR (seemingly unrelated re-
to bank-speci9c strategies in pushing for on-line. gression). Second, only a sub-sample of banks has actually
adopted a customer acquisition strategy during the period
analyzed, i.e., 45% of banks in the full sample. Thus the
3. An empirical model for e-conversion and e-acquisition
results of Eq. (2) must be interpreted as variance in cus-
tomer acquisition intensity among banks with have started to
The empirical analysis aimed in this paper is to under-
acquire customer on-line. However, since the customer ac-
stand the inter-bank variance of on-line conversion and ac-
quisition aggressiveness of a bank is contingent upon its
quisition in 1999. We do it via a logistic regression form as
initial decision to launch a on-line acquisition strategy, a
representative of the micro-aggregation of consumer adop-
correction must be made to avoid selection bias in the esti-
tion curve [27]. The empirical form is described here below,
mates. We use Heckman [28,29] seminal work to adapt the
together with the adequate econometric techniques which
model above. In a 9rst stage, a probit equation is developed
must account for the fact that (i) banks may adopt both an
of the form:
“attacker” and “conversion” strategy, as well as (ii) some
P(ACQi; j ) = g + h · Yi; j + zi; j ; (3)
6
According to IDC, the internet penetration in France was only where P(·) is the probability of a bank choosing to launch an
22% by mid 2000. acquisition strategy and g; h are coeXcients to be estimated.
 J. Bughin / Omega 32 (2004) 1 – 7 5

Table 2 4. Regression results

Partial correlationa

Statistics Label CONV ACQ The multivariate regression has been performed with
bank- and time-e:ects. The results are summarized in
ATM’s ATM 0.14 0.13 Table 3. The table exhibits estimates in terms of their
Customers CL 0.31 −0:34 marginal e:ects as well as in terms of elasticity at the sam-
Cost-Assets COA −0:24 −0:16
ple mean of CONV and ACQ, respectively, using equations
Return Equity ROAE — —
(1) and (2). We 9rst discuss country factors, then discuss
Structure ORG — −0:15
Market share MSA — −0:17 bank-speci9c factors.
Brokerage BROKER — 0.14 Before this, however, note already the signi9cance of 
Internet usage INTERNET 0.58 — (as included in Eq. (2 )). This suggests that accounting for
the prior choice of acquisition signi9cantly reduces the bias
a Only statistically signi9cant coeXcient reported (¡ 10%); av-
that would have otherwise occurred in the model estimation.
erage correlation across time, t = 1; : : : ; 20.
The positive sign means that such a model would have been
biased towards stronger “push” in the acquisition equation.

The methodology employed by Heckman [28,29] is then to 4.1. Convert: on-line conversion
use the information from the probability to be launching
an acquisition strategy and use it as an additional regressor Table 3 demonstrates that on-line conversion is 9rst of all
Lambda in Eq. (2): 7 linked to pull factors, as represented by a country level of

 internet penetration. In fact, two-third (64%) of the variance
(ACQi; j )
Log = d + e · Yi; j + f · (INTERNETj ) explained for CONV is linked to the INTERNET regressor
(1 − ACQi; j )
variance. Furthermore, the INTERNET elasticity on CONV
+ r  · (i; j )) + wi; j (2 ) is the highest in absolute value (1.28) of all the regressors
and is furthermore signi9cantly above one. Otherwise stated,
where Lambda is a new variable ‘’ computed as at the mean of our sample, further on-line penetration will
be amenable to a more than proportionate take-o: of the
 = (M )=1 − (M ) (4) on-line banking conversion to the bene9ts of the banks will-
 ing to bene9t from the lower cost e:ectiveness of the on-line
and M is −Y · h = from Eq. (3) using vector notation
channel versus traditional bank channel.
and suppressing subscripts, while  and  are the density
Concerning bank-speci9c factors a:ecting CONV, this
and distribution function for a standard normal variable,
paper con9rms Furst et al. [25] as well as Bughin [20] that
respectively. 8
larger banks tend to have been quite successful in convert-
As a 9rst indication to econometric results, Table 2
ing their own customer on-line. Also, banks with low cost
illustrates the partial correlation, on one hand, between
structure as well as having invested privately in a strong
CONVi; j and Xij , INTERNETj , and on the other hand,
ATM coverage as an additional electronic channel to cus-
between ACQi; j and Yi; j , INTERNETj .
tomers have also been more successful than others in con-
While those results do not represent the multivariate
verting customers to on-line. The largest elasticity e:ect is
model (1)–(2 ) and (4), they already point towards the hy-
however visible for the cost e:ectiveness variable, being 4
potheses that the drivers for Eqs. (1) and (2) may be quali-
times the one for ATM coverage. This reemphasizes the be-
tatively di:erent. Particularly, and concerning bank-speci9c
lief that banks with low cost operations have also been the
variables, organizational structure variables are correlated
9rst to push for the claimed cost saving bene9t of people
only with ACQ. Furthermore, INTERNET exhibits a large
using on-line. 9
positive correlation for CONV, yet the correlation is not
signi9cant for ACQ. Finally, size (as measured by absolute
4.2. Attack: customer acquisition
numbers, e.g. customers, or in relative numbers, e.g. market
share) is negatively related to acquisition, yet the reverse is
The results above for customer conversion are however
roughly true for conversion.
in sharp contrast with customer acquisition, ACQ.
First, INTERNET does not appear to inSuence acquisition
strategy signi9cantly. In other worlds, we are thus not re-
7 You will notice that the same independent variables are used
jecting the early hypothesis that customer acquisition might
in stage (1) probity and stage (2) logistic regressions, except IN-
be more of an aggressive “push” strategy.
TERNET in the 9rst stage. This is due to the fact that one variable
must not be included in both stages for identi9cation (see [29] or
[30]). 9 Estimates claimed that unit cost of on-line banking transaction
8 Lambda is also called the inverse of the Mills ratio in the can be as low as a few percentage of a branch transaction (see
economic literature. references in [23])
6 J. Bughin / Omega 32 (2004) 1 – 7

Table 3
Logistic regression resultsa

Statistics Label CONV ACQ

Marginal Elasticity Marginal Elasticity

e:ects e:ects

ATM’s ATM 0.039 0.240 0.071 0.143

Customers CL 3.55 0.19 −5:10 −1:12
Cost-assets COA −2:80 −0:95 — —
Structure ORG — — 0.051 1.42
Marketshare MSA — — — —
Brokerage BROKER — — 0.022 0.66
Internet INTERNET 0.21 1.28 — —
Lambda  nab nab 0.17 0.09
Proportion likelihood explained byc
-ATM/CL/COA 36% 33%
-ORG/BROKER/ — 67%
-INTERNET 64% —
a SUR estimates after correction for heteroscedasticity. Only statistically signi9cant coeXcients reported ( ¡ 10%). Bank- and time-e:ects

not reproduced.
b Not relevant.
c Based on full model likelihood function, after removal of multi-co-linearity.

Second, a comparative analysis of bank-speci9c factors
proves that the dynamics of CONV and ACQ are also very
much di:erent.
As we recall, bank size (as measured by customer base)
exerts a positive impact on bank “push” strategy to convert
on-line customers. The e:ect is the reverse and larger for
ACQ. The elasticity with respect to size is larger than one
in absolute value, and is about six times larger than for the
elasticity linked to CONV. This is in line with the option
theory that larger banks should be more concerned by the
‘put option’ on securing their own customers to on-line, than
by a ‘call option’ to acquire new costumers .
Furthermore, we see that banks with lower costs and large
electronic channel base tend to have already converted more
customers to the on-line channel the last e:ect is however
only statistically relevant to explain customer acquisition,
ACQ.
Finally, customer acquisition rate is signi9cantly larger
for banks which have chosen an aggressive organization
structure, both standalone, and when linked to e-brokerage
activities. Not only, those organizational e:ects explain the
majority of the cross-sectional variance of ACQ (67%),
but the separate organization structure variable exhibits the
largest elasticity at the sample mean on customer acquisi-
tion. Hence, organizational setting is a key driver of acquisi-
tion strategy success, while not much relevant for customer
conversion.
5. Conclusions and future extensions
This paper has analyzed the factors driving on-line bank-
ing customer conversion and acquisition for a large sample
of Western European banks. While the conversion and ac-
quisition rates remain low, the statistical evidence clearly
points towards major di:erences in the market dynamics
of on-line customer acquisition and own bank customer
conversion. As expected, the latter is mostly linked to
“pull” factors, while the former to aggressive organizational
strategies.
Another common theme has also been found here: while
large European banks may have an incentive to convert their
customers on-line, the acquisition strategy of new customers
have been much less aggressive. This means that the tra-
ditional Schumpeterian link between size and innovation is
pretty much dependent on innovation type (e.g. conversion
vs. acquisition) and is consistent with a real options frame-
work under competitive oligopoly.
This paper has of course important limitations, 9rst of all
linked to the nature of the sample used. Extension to this
paper will of course be to extend analyses to larger sample
and countries, but in general, the paper proves that 9rm dy-
namics are a critical factor beyond the evolution of on-line,
at least with respect to the major incumbent European banks
for this sample.
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