BNP Paribas is to tap rising demand for banking services by mobile phone users with the launch of a full-service dedicated mobile bank across four European countries.
Hello Bank starts with zero customers but aims to have 1.4m by 2017 in Germany, Belgium, France and Italy. The bank launched on Thursday in the first two countries, with France to follow next month and Italy in October – reports the FT.
Banks in France are looking for new customers in the face of stagnant or declining revenue growth in the domestic retail business because of the contraction in the economy and falling demand for loans.
Chris Harvey, global head of financial services at Deloitte, the consultancy, said: “Banks are increasingly looking for new growth avenues. The digital and mobile sector is one promising area that also has the potential to reduce radically the cost base.”
Of the 1.4m customers BNP is targeting, up to one-third are likely to be existing BNP clients deciding to transfer their branch based accounts but François Villeroy de Galhau, BNP’s chief operating officer, said the aim was to attract new customers and to respond to the “explosion” of smartphone usage since 2010.
“In France no one used their mobile for banking services in 2010 – now there are 700,000 people who do and that is growing at 50 per cent a year,” he said.
Hello bank is “the first full-range bank specifically designed for mobiles with a rapid and permanent connection”, said Mr Villeroy, offering products available in branches. Most other mobile banking services were either payments-based or transfers of technology from the internet to mobiles and tablets, he said.
Some €80m will be invested this year – mainly the cost of acquiring new clients – and Hello bank is expected to break even within four years.
Its accounts and payments will be free – in France, there is usually a charge for debit cards – and its savings rates would be “attractive” said BNP. It will have a back-up staff of 900 for mobile customers, who will have to use the branch network to deposit cash and cheques.
BNP said that Hello bank would entail lower costs than a branch-based network because it needed less paper and fewer employees. But in turn, revenue per customer would be lower.
Banks are looking to cut costs to boost profitability. BNP, which is at the start of a €2bn three-year cost-cutting programme, said this week it expected a “significant” drop in staffing levels in France. Baudouin Prot, chairman, told shareholders at the group’s annual meeting on Wednesday that: “Our employee levels will go down in France this year
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