The Prague Post
October 10th, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation
Prague Real Estate

Home » Archives » Banking & Finance

Northernincursion

Offering no-fee online banking, Poland's mBank hopes to lure customers from local competition

By Victor Velek
Staff Writer, The Prague Post
December 12th, 2007 issue

COURTESY PHOTO
Sławomir Lachowski created the concept of mBank's online integrated system.
enlarge
Last month, the local banking industry welcomed, with a shrug, a newcomer from the north. MBank, a Polish retail bank controlled through its Polish mother company, BRE Bank by Germany’s Commerzbank, expanded into the Czech Republic.
The bank, with services tailored to capitalize on the dissatisfaction many Czechs feel against high banking fees, is based on cheap and convenient electronic banking. Basic services are free of charge and, whenever possible, the bank’s services and communications are carried out over the Internet.
Despite a model that has allowed it to thrive in Poland — it has drawn more than 1.6 million customers since its launch in late 2000 — many industry observers feel mBank does not offer much of a threat to the current banking market.
Many of these limits can be attributed to the financial conservatism of Czech consumers, which should limit how far and quickly mBank can expand, said Marek Hatlapatka, an analyst with brokerage Cyrrus.
“I don’t think mBank could significantly change the market,” he said, though the bank’s model could draw certain types of clients: “Young people and other frequent Internet users is a niche where mBank can be successful.”
Neither do local banks seem to fear mBank as serious competition. Raiffeisenbank’s branch eBanka, which introduced cheap Internet banking several years ago, is confident mBank won’t win over its clients, said spokesman Tomáš Kofroň.
Despite the cold reception, mBank remains confident that it can lure Czech customers with its integrated systems.
“[We have] a single password and login that opens up an integrated menu covering banking, investments and insurance services,” said Sławomir Lachowski, the BRE Bank CEO and creator of the mBank concept.
“The client can easily, and without excessive fees, transfer money between personal accounts, saving deposits and investment funds, monitor his or her debt, repay loans and do e-shopping,” he added.
In the Czech Republic, mBank’s target is to have 160,000 clients by 2010. By the end of 2008, it aims to have 12 branches in large cities and a network of information desks in shopping malls. Today, the bank has one branch and one information desk in Prague.
MBank is wooing customers mainly with no-fee Internet banking. The opening and administration of its personal account, mKonto, is free of charge, as well as all wire transfers, electronic statements and its Visa debit card. The first three withdrawals per month from any ATM in the country and all withdrawals made abroad are also free.
Fee frustration
Although mBank’s success in the Czech market remains to be seen, its emphasis on cheap digital banking might meet with a positive response. Many Czechs are frustrated by high fees for banking services, and surveys suggest the discontent is well-founded.
For example, according to a survey by the Slovak Bank Association (SBA), Czechs pay the highest banking fees in Central Europe. This year, an average Czech bank account holder will spend 82 euros ($121/2,151 Kč) on various banking charges. In Slovakia, for example, people pay only 45 euros for the same service, the SBA report said.
However, domestic banks’ revenues from charges for transactions and services are not significantly higher that those made by banks in Western Europe, Hatlapatka said. Service fees make up about 30 percent or 35 percent of the total revenues of local banks, compared with the 25 percent or 30 percent share in Western Europe, he said.
“In Western Europe, a large part of fees is charged for investment services,” he said. Czechs, in contrast, are conservative and invest little, with local banks compensating for this deficit by charging higher fees for personal banking.
Surpassing expectations
MBank is also not the first bank to offer some form of no-fee bank accounts. For a long time, eBanka has offered a no-fee personal account for clients using additional banking products or those deposits of at least 25,000 Kč, said Kofroň, the eBanka spokesman.
Besides, mBank doesn’t offer services available with eBanka accounts and features less sophisticated e-banking protection, Kofroň added.
“Our clients expect high-standard services and a wide offer of services,” he said. “Perhaps mBank’s products will be attractive for other banks’ clients.”
So far, mBank is content with its presence on the market, said mBank spokesman Jan Sedláček, who declined to comment on the bank’s number of clients.
“We are surprised by the great interest in our services,” he said. “It’s even better than we expected.”

Victor Velek can be reached at vvelek@praguepost.com


Other articles in Banking & Finance (12/12/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.