According to Datamonitor's 'European eBanking Market Update' report, 49 million people will be using e-banking by the end of 2002, a rise of 45 per cent in comparison to the 23 million customers in 2000. And the numbers are expected to surge to 75 million by 2005.

But investment in e-banking technologies has fallen from US$2.1bn in 2001 to an estimated US$1.7bn in 2002.

Christine Skouenborg, financial services technology analyst, Datamonitor, says: "Any recovery in e-banking technology spending will be fuelled mainly by banks' efforts to achieve unified channel architectures and enhanced workflow processes."

She adds that this is because banks no longer view their Internet channels in isolation but are focusing on integrating and optimizing all channels to achieve consistency and allow customer relationship management projects come to fruition.

European banks have been extremely successful in driving customers to the Internet channel. Banks are continuing to migrate customers successfully to the Web, particularly for transaction-based services and sales of commoditised or standard products.

Uptake remains particularly strong in the UK, Germany and the Nordic region. These constitute the largest and most technologically advanced e-banking markets in Europe. As a group, these countries will account for nearly 55 per cent of Europe's e-banking customers by the end of 2002.

The UK has the highest number of online banking customers at 9.8 million, followed by Germany with 8.5 million and the Nordics countries with 8.2 million. But in 2005, Datamonitor predicts Germany will overtake the UK when it grows its online customer base to 15.4 million. The UK will have just over 14 million.

The report found that despite having made significant investments in e-banking technologies in 2000/early 2001, the economic climate has forced banks to reassess their channel priorities. They are cutting back significantly on new development projects, particularly on the application side. This means that solutions such as account aggregation, m-banking and e-advice have dropped significantly down banks' list of priorities.

They are shifting their attention to more mission-critical projects such as multichannel integration and front-to-back process integration as cross-selling multiple financial products across a range of channels becomes increasingly important.