Italy’s largest insurer, Generali, will launch its online bank Banca Generali.
Italy’s Generali Group is to provide a web-based financial services portal and online banking facilities. Relying on its existing 12 million insurance customer base, Generali hopes to grow the bank’s customer base from 30,000 to a million by 2003.
After this week’s tragic events reached the insurance sector, dragging Generali’s shares down 7.8% on Wednesday, it’s understandable the company wants to diversifying its product offering. But it’s not clear that Generali will hit its ambitious targets.
The plans come just after the collapse of European Internet bank First-e, which told its customers they had little more than three weeks to choose new accounts elsewhere. The eBanking sector has failed to impress, particularly in light of the enthusiasm for online banks only a few years ago. Lloyds TSB and Allied Irish Banks (AIB) amongst others have abandoned plans to launch online banks. So what makes Generali think that it will succeed where others have failed?
The Italian firm will benefit from its customer base, assuming that it can convince enough people that their money and insurance should be handled by a single provider. First-e had no such customer base to build upon and could not attract those customers fearful of Internet-only ventures.
If Generali can integrate its financial and insurance products into an easily navigated one-stop-shop for its customers, this will act as another incentive to doubtful but potential customers. It will also give Generali a competitive advantage over online banks who cannot offer such provision. However, the technical challenges involved in building such an offering will be significant: Citibank was recently forced to delay the launch of its one-stop-shop Internet service.
The future is likely to be tough for the Banco Generali, as the question remains whether enough people really want to bank with an online-only provider. Generali will need to be patient with its new offspring – getting the fledgling eBank in the air may cost more than its parent expects.
