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Introduction
Banking has come a long way from the days when consumers had to stop by a bank branch or an ATM machine to complete their payments and check their balances. Today, consumers use both online and mobile banking, and are seeking greater accessibility and control over their personal finances – a service which is provided by the immediacy of online banking. Online banking has become the norm in developed economies. In 2017, France has been quick to adopt digital banking and has taken the lead over some other developed markets, including the USA, where just 69.3 percent of internet users bank digitally (eMarketer, 2017). Indeed, almost 80 percent of the French’s internet users (33.8m people) have visited an online banking site at least once a month, and it is estimated that nearly 70 percent of France’s adult population and 84.3 percent of its adult internet users will bank online in 2021 (eMarketer, 2017). Compared to other European countries, French customers are also more likely to manage their financial investments online than are banking customers from other European countries such as the UK (68 percent of internet banking penetration) or Germany (59 percent of internet banking penetration) (Statistica, 2016).
Even though French customers seem to be adopting more online banking along with traditional banking (“clicks and mortar” banking model), customers are still skeptical toward using internet-only banks (IOBs). IOB adoption rate in France was estimated to be 10 percent of the French banking sector in 2016 (Simon-Kucher & Partners-Research Now, 2017). Thus, IOB’s penetration rate in France increased from 7.1 percent in 2014 to 8.3 percent in 2015 (+1.4 percent per year). In addition, Macron’s new law simplifying customer mobility in relation to bank accounts was expected to generate more growth in 2017 (OpinionWay Study for Fortuneo, 2017). It is expected that one in five French banking customers intend to change their bank during the next 12 months, and 24 percent of them claim to be ready to opt for an IOB (OpinionWay Study for Fortuneo, 2017). IOBs are like e-retailers with reduced overhead expenses, offering a lot of advantages such as convenience and cost savings (higher interest rates on deposit accounts, lower loan rates and reduced fees).
Being branchless, IOBs are only accessible via...