European e-banks merge

Internet banks Uno-e and First-e yesterday announced plans for a 2.4bn euro (£1.5bn) merger in a move to create the world's first global online banking group.

The combined company, which will be known as Unofirst, aims to have 300,000 online customers by the end of the year.

UK bank First-e, which launched in November last year, has 110,000 UK registered users and is piloting in Germany. Spanish bank Uno-e has 19,000 users signed to its pilot scheme in Spain.

According to Fletcher Research, about one third of UK internet users research financial products while online and some 1.5 million bank online. The researcher predicts this number will rise to more than nine million by 2004.

But Fletcher warns that many of the UK's incumbent banks are poorly positioned to keep customers' business once they move online.

The researcher claims that new entrants into the market are exploiting the internet to undercut existing players and to meet customer demands for increased convenience and flexibility. Many of the UK's traditional financial services players will need to develop flexible and scalable back-office systems to compete, said Fletcher.

HSBC said this week that it will team up with IBM to develop Interactive Financial Services (IFS), a platform designed to handle the high volumes of traffic generated through its multi-channel banking. Customers will be able to access the bank though any of its portfolio of customer channels.

The IFS platform will allow transactions undertaken on one channel to show immediately on another. HSBC said it is the first bank outside the US to use this technology.