So far, only a handful of banks have true Internet banking. The Nationwide and the Royal Bank of Scotland have Internet sites where anyone with a standard Web browser, such as Netscape Navigator, can access their current account details by putting in a password.
Last year, there was talk of the larger banks and converted building societies, and certainly the high street clearers, launching electronic banking. The banks won't say why this has not happened, but it is reasonable to assume the reasons are as much commercial as technical. At least four banks - NatWest, Alliance and Leicester/Girobank, Lloyds and First Direct - are running on-line banking trials. Some or all of them should launch a full commercial service this year, but in the meantime Nationwide and RBS are ahead of the game.However, they are not the only organisations to offer electronic or PC banking.
The first true electronic banking system in the UK was Hobs, the Home and Office Banking System from Bank of Scotland. Hobs launched in the pre-Internet Eighties. Unlike Web-based banking, Hobs subscribers use a computer modem to connect directly to the bank's computers. Hobs still operates, and the direct-dial route is being followed by other banks. Last year, Barclays launched PC banking. The software is prettier, but the principle remains the same: Barclays customers dial a Barclays computer. It has nothing to do with the Internet.
The advantages, according to Barclays computer banking specialist, Graeme Hosking, are security and speed. There are certainly plenty of Internet users who experience delays from time to time. It is not for nothing that Internet aficionados refer not to the World Wide Web but the World Wide Wait.
Security, though, is no longer the issue it was. The US government has eased restrictions on exporting encryption software, which protects sensitive information, including PIN numbers and credit card details, from prying eyes. The real risks, security specialists point out, are slim. Professional criminals are more likely to try to crack banks' internal systems, and listen in to millions of transactions. Casual thieves are more likely just to steal your credit card.
Newcomers to the computer banking business, such as Lloyds, which plans an electronic launch this year, see the Internet as the way forward. This stance is supported by research published last week by Datamonitor. The analysts predict that by 2001, 9.1 million Europeans will use on-line banking. The Internet will be the route of choice. It is flexible as it lets customers use any computer, while PC banking normally works on just one PC. Banks also point out that Internet technologies are cheaper to install and cheaper to expand than bespoke systems. Datamonitor predicts that 60 per cent of electronic banking customers in the UK will use the Net in 2001. Last year, it was just 2 per cent.
For that to happen, there are other issues the banks need to address. One is the software customers use to access their accounts. Even banks that claim to use standard Internet software only do so up to a point. To guarantee being able to use on-line banking, customers currently need Microsoft's Windows 95 operating system, or its big brother Windows NT. This is fine for owners of fairly new PCs but it does little for people still running the older Windows 3.1, an Apple Macintosh, or any other "minority" system.
Predicting anything in the computer business is dangerous, but there is no guarantee that Windows will remain dominant, especially for Internet access. Already there are other devices, from TV set-top boxes, to kiosks, to hand-held computers, that can browse the Web. They use their own operating systems. Banks need to look at these now to make sure they, and their customers, are not left behind.
q Contacts: RBS, www.rbs.co.uk; Bank of Scotland, www.bankofscotland.co.uk; Nationwide, www.nationwide.co.uk; Barclays, www.barclays.co.uk; Lloyds, www.lloydsbank.co.uk; TSB, www.tsb.co.uk
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