Electronic commerce: Banks go from high street to high bandwidth Coaxing customers on to the Internet takes a combination of easy accessibility and tight security, says Mark Vernon

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The Independent Culture
Banks are cosying up to their customers, and the Internet is proving to be the ideal way of doing it. Last week the Co-operative Bank unveiled its new online service as it joined the handful of UK institutions already offering PC or Web-based banking. It will not be long before access to accounts, transactions and purchasing are offered as standard by all the high street names. Which is timely, because as this industry undergoes its very own cultural revolution, everyone will find their banking experience, offered or received, changing beyond recognition.

Only three banks currently offer full Web-banking services, defined as operating over the Internet rather than via a direct dial connection: Nationwide, the Royal Bank of Scotland and now the Co-operative Bank. This compares to more than 10 in Germany, to say nothing of the number in the United States. But it is clear that these are just the leaders in the trend to move online. A number of other firms, including the Bank of Scotland, Barclays and NatWest offer home banking services, in part as a confidence-gaining prelude before transferring to the Internet.

However they reach you, a common feature of all the sites is how different they are from what might traditionally be expected. Long gone are the days of columned facades opening up into marble-floored halls at the end of which stood a black- suited teller. Intimidation is out and intimacy is in. For example, the Nationwide site (http://www.nationwide.co.uk) includes comprehensive coverage of the Nationwide Football League. Similarly, Barclays PC banking includes links to additional services such as Argos, Interflora and Eurostar, on (http://www.barclays.co.uk) via Microsoft's Money 97 software.

Even banks that have yet to launch similar kinds of operations are all working on their interactivity with imaginative schemes. Lloyds, for example, has a page for connecting home workers to one another (http:// www.homeworker.co.uk).

Meanwhile, the Co-operative Bank has done its bit to the changing face of the industry. "For users inhibited by the 'techy' environment of the Web," the press release reads, "the Co-operative Bank interface is designed to provide a refreshing change." And it is true that gone is the flat, menu-based look of traditional online banking forms in favour of a console- like interface, looking not unlike a Nintendo Game Boy, with the idea that details are presented in a familiar, easily accessible framework.

Entranet, the company that designed the Co-operative Bank's site, is already known for its well-developed philosophy. "Electronic commerce should achieve two things: lowering cost and accelerating trade," explains Nick Spooner, who works for Entranet and was trained by Steve Jobs of Apple fame. "The customer should feel in control, but the machine should do most of the work." If they are to achieve this, sites need to be bullet- proof, he says, not so much from the threat of hackers as the uncertainties of the user.

Too many sites, he argues, shy away from this less tangible issue, though it shows itself up in obvious ways, as when pages do not have a consistent look and feel to them. This is not good enough, especially when it comes to financial sites. "Consistency is comfort. The slightest amount of discomfort leads to prejudice [about the Internet], and that leads to distrust."

"Co-operative comfort" is the hook upon which the new site is hung, and it is something to which all banks should become attached. "Retail has been doing this for years," Spooner says. "If it is easy to use, it is easy to buy." For banks, this disquieting message is coming from more than one direction. Witness the rise of the supermarket bank; cheque in at the check-out.

Indeed, all electronic commerce on the Internet should be like this. It is only in this way that it will be possible to break what might be called the "cycle of complaint" - ie, even if people trust security measures, they find problems with a system's use and so on, out of a general fear of the new medium.

But the Co-operative Bank is taking no chances with the nightmare that steals the headlines. It happened to the Royal Bank of Scotland, which last year, weeks after a triumphant launch as the UK's first fully-fledged Internet banking service, saw a breach in its fire walls courtesy of the self-styled Chaos Club from Hamburg. Although there was no real threat to customers, the PR damage was done.

The Co-operative Bank's systems have been rigorously tested. In a move explicitly designed to reassure customers, all users must register a Security Pass Code and Secure Personal Information (SPI) with the bank via a telephone call prior to using the service for the first time. The SPI will consist of five pieces of memorable information known only to the account holder. Internet users will be asked to confirm any one of the five SPI items plus their unique Security Pass Code each time they use the online service. Failure to do so will abort the Internet access and the customer will be asked to contact the bank by telephone.

Mervyn Pedelty, chief executive, comments: "This system is best-of-breed and we are confident of its security. However, we appreciate that there have been security problems surrounding the Internet in the past and that is why we have built in the extra safeguard of speaking to customers before they use the service."

You might call it "safer banking", reminiscent of other forms of intimacy in the late Nineties.