Internet Banking: A Dual Strategy

During the dot com boom, the Spanish banks felt obliged to go online as they faced the perspective of a more global scenario. The banking sector had traditionally been a sector with significant entry barriers generated through the need to acquire an important number of branches. The arrival of the Internet posed a threat to the sector since banks could now operate on the net without the need to create a wide branch network. This threat was interpreted by the large banks as being an opportunity to increase their market by using the Internet as an instrument for expansion. Specifically, the banking sector then undertook two clearly differentiated strategies: they created new banks which operated exclusively online, and launched Internet versions of their banks as an extra channel through which to offer online services.