Personal Finance: Burghers hold back the wave of technology

Spare a thought for the brave burghers of Llanwrtyd Wells, in mid Wales, whose ferocious determination to prevent the closure of their local branch of Barclays Bank led to a minor victory this week.

The town, with a population of just 700, is the smallest in Britain and the bank was intent on saving costs by closing its branch there. But protests by 30 inhabitants have succeeded in ensuring that Barclays will continue to devote two part-time staff to servicing the branch three days a week. One small victory, perhaps. But it takes place against a context of massive rationalisation within the retail banking sector. Thousands of bank and building society branches and tens of thousands of jobs have been axed.

Of course, this is in part caused by the big banks' and societies' drive to boost profits. Yet it is also based on a growing wish among bank customers for different types of service that more closely represent their needs.

First Direct, the telephone bank owned by Midland, is part of this trend. Since its inception in the late 1980s, First Direct has built up a base of almost 750,000 customers who are more than happy - indeed, they demand - to do business over the phone.

This has come in tandem with a move by most banks to remove most of their back-office functions from the branches to remote service centres.

The move to branchless banking has spread. Lloyds Bank and Citibank use Psion organisers, which can be connected to the phone to download financial information.

Nationwide is using the Internet, a move followed by many other organisations.

Co-operative Bank has led the way in staffless branches, through which it is possible to carry out most major transactions via machines in the wall and video cameras.

Barclays offers a mobile phone alternative, in which prospective customers can access details of their account while on the move.

The Co-op this week offered the same mobile link, but also gave users a choice of phones. With the Co-op, you get a free phone for which you pay pounds 23.50 a month in line rental and a pounds 35 connection fee. This gives 20 minutes of free airtime, with peak rate calls costing 40p and peak rate local calls costing 12p.

Co-operative Bank claims that first-year fixed costs would be about pounds 332, on which you must add the price of calls you make. The bank admits that only a few thousand people are likely to take advantage of such an offer in the coming year.

But it insists the future of modern banking lies in the diversity of means of access of financial services to customers, of which mobile phones are just one option.