The bank inside your PC

The Danes are pioneering a new branch of electronic banking based on the home computer. The system is proving to be customer-friendly, but will the rest of the world join the queue? George Cole reports
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The Vikings invaded many lands, but now the Danes are exploring the electronic frontier. Denmark has one of the highest penetrations of home PCs in the world (34 per cent), with only the United States ahead of it (37 per cent). Little wonder that Denmark is also one of the leaders in home PC banking.

The Sparekassernes Data Centre (SDC), a consortium of 86 Danish savings banks, and Olivetti Systems and Services (OSS) have developed a new home banking system, E-Bank. The two groups have also formed Financial Internet Technologies (FIT), which hopes to sell E-Bank to other financial institutions.

The E-Bank system builds on the PC Bank system which has been used by more than 40,000 Danes for the past two years. The system allows almost anyone with a home PC and modem to link up their bank's computer network to carry out account inquiries, make payments, transfer money, and more.

The first PC Bank program was a DOS-based system with a rather unfriendly text-based screen. But the latest version uses the Windows graphical screen. Next month, an enhanced system will offer users 20 products and services, including tax, savings, pensions, interest rate comparisons and loan applications. Users looking to buy a new car will be able to access a database of more than 1,200 models, select the car they want, and then carry out their own credit rating check to see whether they are likely to qualify for a loan. They can then e-mail their request to the bank.

The E-Bank user interface consists of a graphic of the Copenhagen town square. Click on the picture of the Danish parliament building and you can get tax information. Click on the bank graphic and you enter the branch, where can use a spreadsheet to make up your own budget. Click on a band standing in the square and you hear the Danish national anthem.

The Lan & Spar Bank was founded in 1880 as a savings bank for public servants. Carsten Colfach, the bank's IT director, says that for the first 180 years, "It was a rather dusty and slow-growing bank." But in 1993, the bank adopted a new strategy designed to promote its products and services. It also introduced new services, including telephone and PC banking.

By September 1994, 1,400 of Lan & Spar's customers were logged on to the PC Bank system; today there are 9,500 users, or 10 per cent of the bank's customers. The number of PC Bank transactions reached almost 23,000 by the end of 1994. By June 1996, this figure was around 113,000.

The largest group of users is aged 30-40 (37 per cent), followed by those in the 40-50 age range (26 per cent) and those aged 20-30 (20 per cent). Mr Colfach says customers like using the system: "They want to be in control, they want accessibility, and they don't want to pay fees." He adds that the only unhappy customers are the 4 per cent with Apple Macintosh computers.

Lan & Spar's new strategy has certainly paid off: in 1989, the bank was ranked number 42 and had just 20,000 customers. Today it is number 11 and has more than 92,000 customers.

Piero Verdiani, vice-president of OSS's professional services, says there are many compelling reasons for banks to offer PC-based banking, including cost. The SDC estimates that the average customer makes five transactions per week or 260 a year. A PC bank system can save around 80p per transaction or about pounds 200 a year. A bank with 100,000 customers could make potential savings of pounds 20m a year. "PCs have been inside bank branches for years, now it's the turn of the virtual bank, which puts the branch inside your PC," says Mr Verdiani.

The E-Bank system has just been rolled out in Denmark. It uses the Internet as a low-cost communications link from customer to bank. Banks can also advertise their services on the Net. E-Bank offers many layers of security to prevent hacking, including passwords, PIN codes, encryption and digital signatures. The Danes have certainly taken to PC banking; now Olivetti and SDC must convince the rest of the world to follow their lead.