Internet Investor: Don't bank on the Net, yet

By and large I have steered clear of getting into the technicalities of computers, modems, software and the paraphernalia which is involved in surfing the net for several reasons, not least because this is not a column about computers and I am by no means an expert on such matters.

Like most people I switch the kit on and expect it all to work as it should. Thus to be confronted by the following message was dispiriting: "Netscape's network connection was refused by the server. The server may not be accepting connections or may be busy. Try connecting again later."

This is software-speak for: "The number you have called does not know that you are waiting, nor does it care. Try again some time and have a nice day!"

So what? Well, I find it a matter of some concern to be confronted by such a message while investigating the options available for banking on the internet. It makes a mockery of the advantages one would rehearse for being able to bank via one's own computer in one's own time. It would be like turning up to the bank to pay money in or cash a cheque to see a notice on the door saying: "We're closed but we'll be open some time later. Come back then."

In fact, it happened to me last Sunday night, when one might reasonably assume that the website in question would not be overly busy. In fairness, I should also report when I tried again the following morning I had no difficulty in getting on to the site. But that is not the point.

For web banking to take off it has got to be available to the customer and the potential customer when he, she, you or I want it. Not when it suits the bank to offer it.

If the reason I could not get on to the site was because it was too busy then the bank in question needs to expand its facilities. If the reason was because of some kind of computer failure then they need to improve the back-up systems. The institution in question? It was Royal Bank of Scotland's website.

Admittedly, electronic direct banking is in its infancy, at least in the UK. The first bank to offer online services was American. Wells Fargo Bank launched its online services in 1989 and internet banking in May 1995. It now has around 200,000 online accounts.

For financial institutions facing increasing competition from the likes of supermarket banking it is a logical step to become a "Martini" business - anytime, anyplace, anywhere.

It was only in June last year that the Royal Bank of Scotland's internet banking service went live, becoming the second big UK financial institution to offer banking on the web, beaten by two months by the Nationwide Building Society, which launched its online service in May 1997.

So far, these two remain the only web-based accounts on offer from large British financial institutions. However, the other banks are not far behind. Several offer PC banking via their own "intranet" operations, while TSB runs an online service through the service provider Compuserve which Lloyds is building on to establish internet banking.

By January 1998, after six months in operation, Royal Bank of Scotland's service "direct banking by PC" had 10,000 customers. The bank had originally planned for the service to be free for each customer's first six months, after which a charge of pounds 1.50 per month was to be made. However, the charge has now been withdrawn and the service is fee-free.

Nationwide Building Society's recently redesigned Online Banking site was always designed to be fee-free and allows you to run a FlexAccount and access CashBuilder card and InvestDirect accounts online. I will be returning to the subject of just how these accounts operate and what you can and cannot do banking online in the future.

Nationwide Building Society: www.nationwide.co.uk

Royal Bank of Scotland: www.rbs.co.uk