Britain to lead Europe in phone banking

On-line future: Boom time is coming for the banks with no branches as dial-a-grocer services gather pace

Telephone banking is set to explode in Britain by 2001 when more than 30 per cent of the British population will conduct their banking affairs by telephone, a higher proportion than any other country in Europe, according to research published today.

In a separate move highlighting this expansion, Britain's phone-banking pioneer First Direct is about open a second call centre, to deal with its increased workload.

The new operation in Glasgow will operate alongside its existing centre in Leeds, which was founded seven years ago.

According to the research by Datamonitor, a management consultancy firm, just 10 per cent of Britons currently bank by telephone.

The research will come as welcome news to the nation's banks, which are pouring millions of pounds into developing telephone banking, and at the same time closing branches and slashing staff numbers. According to Bifu, the banking union, 120,000 jobs have been lost in bank branches in the last six years and thousands more are expected to go.

Competition is already fierce, and will get more intense. Four building societies are due to convert to bank status this year, and all four of them will use phone banking to compete with the existing high street banks.

The supermarket chains are also getting in on the act. Sainsbury's recently announced a phone-based banking service in partnership with Bank of Scotland.

Telephone banking was pioneered in Britain by First Direct, which was launched by Midland Bank in 1989. First Direct is still expanding and will announce shortly that is opening its first call centre outside Leeds.

The experience of First Direct shows it can take years to make any money out of phone banking because of the high investment needed in technology.

First Direct did not make any profits for Midland until December 1995 and since then has wavered back and forth between the red and black depending on the resources being ploughed into advertising.

First Direct dealt with 10 million telephone calls last year and aims to field 12.5 million by the end of this year. On average, a spokesman said, First Direct recruits 12,000 customers a month and has over 600,000 in total.

The example set by First Direct jolted other banks into offering telephone banking. But most of these services differ to First Direct as they are run in addition to traditional branch banking rather than as an alternative.

For instance, NatWest, which caused uproar from unions by announcing plans to cut 10,000 jobs in branches in the next four to five years, has around 540,000 customers using its telephone banking services.

Kartik Natarajan, analyst at Datamonitor, which based its research on interviews with 200 banks across Europe, expects Britain to have Europe's highest penetration of telephone banking customers in 2001 at 32 per cent or 13 million customers.

"Competitive pressures across European retail banking markets will force banks to set up telephone banking operations in order to meet customer demands, although in some countries banks will have to work hard in order to persuade their customers to transfer to such services," he said.

Britain was currently behind only Finland and Sweden in its penetration of telephone banking and would grow to the highest proportion because of changing work patterns in Britain, the efforts of the banks and sophistication of the telephone network, Mr Natarajan said.

Lloyds TSB, which estimates that 560,000 of its customers are banking via the telephone, is already preparing for the next era in banking with plans next month to start a television banking trial at 250 homes in Hull.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
ebookA unique anthology of reporting and analysis of a crucial period of history
Rhys Williams
commonwealth games
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
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.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform