The company now lags behind Barclays and Lloyds TSB, highlighting the problems and continuing bad publicity affecting the pure Internet banks. As high street banks go online, net banks will find it increasingly difficult to compete in an already saturated market. To compound Egg's problems, security issues will further crush already fragile consumer confidence.
It has been a troublesome three months in the life of Egg. To further compound the recent problems facing the bank, Barclays and Lloyds TSB have for the first time this year attracted more users to their Internet banking operations than Egg, according to research conducted by MMXI Europe.
Barclays was the leading UK business and finance site in August, attracting 641,000 visitors. Lloyds TSB has risen to second position in the UK, with some 583,000 visitors. Egg was a narrow third, attracting 582,000 unique users.
The news will come as a further blow to Egg. Last week, five people were charged with conspiracy to defraud the bank, prompting the National Crime Squad to widen its probe into fraud at Internet banks as fears about online security increase. Although Egg has suffered a considerable amount of bad publicity recently, it is not alone amongst UK Internet banks. With security a key consideration for customers, any security problems will affect the number of customers attracted to the websites.
The traditional UK retail banks are all launching Internet banking operations so net banks are going to find it more difficult to compete for customers in an already saturated market. UK high street banks are increasingly looking to the Internet as a channel for customer acquisition after seeing the success of net banks like Egg. However, continuing technical problems only serve to make life more difficult to attract customers to and further dent increasingly fragile customer confidence.