First-e, a subsidiary of Dublin-based online financial services incubator enba, was the Internet channel of French bank, Banque d'Escompte. With 200,000 customers, mainly in the UK and Germany, the bank aimed to take the lead in pan-European Internet-based financial services.
Although 245 of the 280 Dublin-based staff are to be made redundant, 35 employees are to remain at the bank's technology development arm, Factor-e, to sell software products to other banks and brokerage houses.
Alain Wormser, former chairman and managing director of First-e, said the cost of establishing the infrastructure to handle real-time transactions had been very heavy.
"It was very costly to put in place the technology and security for a real-time service. Having only 200,000 customers was not really enough to offset those costs. It would have been different if we had a million customers," he said.
According to Wormser, attempts to sell the technology behind the platform would be co-ordinated through enba.
Analyst Jonathan Charley, vice-president of financial services at Cap Gemini Ernst & Young, said First-e had struggled with regulatory problems, trying to operate on a French banking licence out of Ireland, and that this had affected consumer confidence.
"This meant the bank was forced to spend a great deal of money to attract customers," he said. In addition to that, the site was quite complex to navigate.
But the main problem was that customers were looking for a multi-channel approach. "Customers were reluctant to deal with a pure-play [Internet bank] because they didn't want to deal with a bank through just one channel - they want a multi-channel approach," said Charley.
First-e said UK customers would be encouraged to transfer to the online current account service SelfTrade, which has a service agreement with online bank Cahoot. German customers will be transferred to SelfTrade's German parent online bank DAB.