Netting the customers

A journey round the pitfalls and pleasures of online banking, by Robin Amlot

The first bankers in Britain were Italian goldsmiths from Lombardy, commemorated in the name of Lombard Street in the city of London. We also owe them the name, bank, which is a corruption of the Italian banco, meaning bench, at which goldsmiths worked.

The first bankers in Britain were Italian goldsmiths from Lombardy, commemorated in the name of Lombard Street in the city of London. We also owe them the name, bank, which is a corruption of the Italian banco, meaning bench, at which goldsmiths worked.

In the days when banks really did look after our gold and silver, the need for imposing edifices to inspire confidence was obvious. As promissory notes replaced precious metals we still needed the re-assurance of solid bricks and mortar and bars and, these days, bullet-proof glass.

Now, most salaries or wages are paid directly into bank accounts. We pay most of our household bills by direct debit or standing order. We buy with debit or credit cards. When we need cash we may use a hole in the wall ATM. Whether we actually bank on the Internet, most of us have already graduated to the world of virtual money and virtual banking.

The banking business has changed but it has left many banking institutions struggling. If most, if indeed not all, the services we require as customers may be accessed over the telephone or via the Internet, what need of an expensive high street property portfolio of overblown cod-Georgian monuments to another age of banking probity?

The first bank to embrace banking on the Web was, as you might expect, American. The San Francisco-based Wells Fargo bank launched its first online service in 1990. Customers could check balances on their PC screens and transfer funds between accounts. In 1994 the bank set up a website and in May 1995, Wells Fargo was the first to offer banking via the Internet.

In the UK in the early 1990s several banks experimented with their own intranet services. The oldest-established of these is still going strong - Bank of Scotland's Home and Office Banking System (HOBS). The first web-based banking service in the UK was Nationwide Building Society's Online Banking website, in May 1997. The first bank offering current account services over the Internet was Royal Bank of Scotland, hard on Nationwide's heels in June 1997.

It is disingenuous of Smile, which launched in October 1999, to claim to be the first full service Internet bank. What Smile actually represents is the first purely Internet-based banking offshoot of an existing banking institution, the Co-operative Bank.

US bank Citibank has 750,000 customers online around the world. Barclays has the most active Internet accounts among UK institutions, with 400,000 customers online. Lloyds TSB has 100,000 customers online and ambitions to reach one million by the end of next year. Lloyds plans to launch a new Internet subsidiary, provisionally branded e-bank.

PC banking via a bank's intranet requires customers to use extra software, either custom-provided by the bank or personal accounting programs such as Microsoft Money or Quicken. Online Internet banking does not require you to have extra software although many people do use programs like these to manage their money and most of the online banks will allow you to download your account data into the program or spreadsheet of your choice.

When you apply for an online bank account you will receive a PIN (personal identification number). This will not be the same as the PIN you already have for use with ATMs. You must also agree to the bank's terms and conditions. These are governed by the Unfair Contract Terms Act of 1977. This means most of the liability for any fraud is placed on the bank.

All banking services available to UK customers are supposed to work with PCs running Windows 95/98/NT. But fewer function satisfactorily with Apple Macs running Mac OS8 or later. You will need to be using Internet Explorer 4.0 or Netscape Communicator/Navigator 4.0 or later versions. Among the banking services which proclaim their Mac compatibility are Lloyds TSB, the Co-operative Bank (but not Smile) and Citibank.

The services available vary widely, several allow the option of viewing six months' statements but Lloyds TSB, for example, offers you only the current statement. Some banks allow you to schedule future payments out of your account and all have different rules on standing orders and direct debits. You may view them but can you establish, amend or cancel them? That depends on the particular institution.

Cost savings in using online services are beginning to be passed on, evident in the market-leading 9.9 per cent APR charged by the Egg Card and the juicy interest rates paid on current account balances by Citibank (2.5 per cent gross) and Smile (4 per cent gross).

The downside to the attractions of Internet banking include how much you like watching paint dry. Some of the sites are very slow to load. Few lessons have been learned from the US experience of online banking, which is much less popular than online stockbroking. A US survey showed half of the people who had tried to bank online had closed their accounts and almost two thirds would not bother to try again.

Already stories of pages failing to load, system freezes, and of unanswered or interrupted helplines are familiar. Egg's credit card has been a victim of its own success and Citibank and Lloyds TSB have experienced problems as customers tried to sign on.

Most of the services make no charge above what customers pay for the Internet connection. But you are likely to tend up spending time chatting to the bank's help desk. Some are on free phone numbers and some make you pay for a national rate call rather than the local rate for your Internet connection. Yet others, including the Smile technical help line, are premium rate numbers and you will be charged 50p per minute.

More Net banking services are on the way. Halifax is on the Internet but planning its discrete brand, developed under the working title of greenfield.co. Tesco has plans for a full-service online bank. Abbey National is working on two Internet banking services, one of which has the working title Aquarius and will not feature Abbey National branding.

Even no-frills airline easyJet, which has a chain of Internet cafes, easyEverything, says it plans an Internet bank next year. The entry cost into the banking market is now minimal, a website replacing a chain of high street locations.

And foreign institutions also have designs on our accounts. Sweden's Svenska Handelsbanken will be on the Internet looking for UK customers early next year, as will Australia's AMP, using its UK-base Pearl brand, in the second quarter.

Indeed, the best available interest rate for savers is offered by first-e, the pan-European online offshoot of the French institution Banque d'Escompte, which is paying 6.51 per cent gross. UK taxpayers face the minor annoyance of having to pay tax due on the interest after the end of the financial year.

But the Internet is not the only way banking will come into your home. HSBC has unveiled its TV banking service via digital satellite television. Abbey National and Barclays will have similar services within a couple of months.

Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
beauty
PROMOTED VIDEO
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
transfers
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    BC2

    £50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Programme Support, Coms, Bristol, £300-350p/d

    £300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

    (Junior) IT Systems Administrator / Infrastructure Analyst

    £28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

    Finance Officer

    Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice