'Click here to do your banking'

Banking on the internet is cheap, but you won't see many of the savings, writes Isabel Berwick

An online banking service is this week's must-have accessory for any fashionable bank. In the past 10 days, four of the big banks - Woolwich, Co-op, First Direct and Halifax - have announced expensive commitments to online banking, with NatWest due to follow next week.

An online banking service is this week's must-have accessory for any fashionable bank. In the past 10 days, four of the big banks - Woolwich, Co-op, First Direct and Halifax - have announced expensive commitments to online banking, with NatWest due to follow next week.

What brought all this on? Just coincidence, suggest those involved. Most of the banks have invested in new technology. But they may have brought their announcements forward because the Co-op trumped them with the launch of Smile, the UK's first dedicated internet bank.

It is hardly surprising that they have been beavering away: getting us to do all our transactions by phone and computer saves the banks lots of money. The Halifax has even gone to the expense of hiring Jim Spowart, the man who set up Standard Life Bank's successful telephone-based operation. His new job is to lead Greenfield, a service aimed at attracting new online and phone customers. In the meantime, the bank has launched an internet service and ISP (internet service provider - the gateway to the net) for its existing customers.

All these electronic banking services are complementary to the normal account at a branch (or call centre, in the case of First Direct). You can pay bills, move money about, and check recent transactions. They give you more control at a small price (it is 65p an hour to be online) and you do the work previously done by bank staff. So you are subsidising people who choose to queue for the cashier, because most of the banks do not offer better rates to those who look after their own finances.

Smile has changed all that. When it goes live later this month, it will pay 4 per cent on all current accounts in credit. That is better than many savings accounts, and makes sense for technophiles who cannot be bothered to move money between accounts. And because it is backed by the ethically sound Co-op, Smile will appeal to young, well-off customers.

If you do not fit the Smile profile, you may be better off hanging back for now. "This is very much aimed at the experienced internet user," a spokesman says. "We are not expecting people to buy a PC and get online."For the 70 per cent of the population for whom the internet is only a buzzword, this world is still very alien. Phone banking has taken off in the past 10 years but it has not replaced bank branches - it has been complementary. The internet will be, too, for years to come.

Some experts even doubt that the net will ever win the electronic banking battle. HSBC is co-funding Open, an interactive shopping and banking channel on digital TV. It is betting that TVs not PCs will be the dominant force in electronic trading. But HSBC is hedging its bets with an online banking service due to launch next year. And all banks are spending on mobile phone technology to allow you to do your banking on the move.

In five years, you may be able to choose from a menu of possible banking options. But it is almost certain that those who visit a branch will be paying for it - through lower savings rates and more expensive mortgages, and perhaps through fees for having staff manage their accounts.

New online banking services

Smile: www.smile.co.uk. Fully integrated net bank from the Co- op. Register now for launch at the end of October.

Woolwich: www.thewoolwich.co.uk. What is claimed to be the fullest range of online services, including managing your mortgage. Not running yet.

Halifax: www.halifaxonline.co.uk. Customers still bank at a branch but can run their accounts online. Includes a free ISP and online share- dealing service.

First Direct: www.firstdirect.net. Customers must install a CD-Rom before using it for the first time, full internet access expected early in 2000.

NatWest: www.natwest.com. Details are scanty but the troubled bank claims its service will offer the widest range of online facilities, in partnership with Yahoo!

How to choose your bank?

The banks are full of marketing speak about `lifestyle banking'. Find out what this really means by matching your lifestyle to the sort of banking that will best suit your needs.

Skint Stick with the bank branch - at least for the moment. You probably spend way too much time shopping away income your do not have, so the high street is your second home. Getting to know your bank manager or personal banker could be your best bet for a decent overdraft arrangement.

Phone loverIf you cannot go anywhere without a mobile phone, you will even be able to bank on the move using your phone screen. First Direct is setting up an integrated phone, computer and mobile banking service. HSBC and Woolwich are doing the same.

Dedicated couch potatoHSBC's new interactive digital TV banking service is a secure closed network using a digital remote control (currently only available with Sky digital). You can also play games and order the supermarket shopping.

E-addictYou may as well do something useful, like banking, during all those hours online. The Co-op's Smile will satisfy all your banking and saving needs and, if you are lucky, you won't ever have to talk to another human being. If you are already a customer of the Prudential's Egg, watch out for its current account package - due early in 2000.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want for the fitness tech, or the style
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own