Royal Bank spearheads Internet revolution

Royal Bank of Scotland is spearheading a revolution in banking with the launch this spring of the first fully fledged Internet service in Britain. RBS's initiative steals a march on high street rivals, most of which are still experimenting only with a direct-linked home banking service.

With its dramatic cost advantages over traditional forms of branch and telephone banking, many analysts expect Internet banking to be the way of the future.

"Internet banking is going to develop much faster than most people imagine. In cost terms alone it is an irresistible force," said Claus Nehmzow, principal at Booz Allen & Hamilton, a consultancy firm which conducted a recent study on Internet banking.

TSB has offered home banking since last year, and Barclays is working towards the launch of a similar service shortly. Access to both services, however, is restricted and will not be available on the Internet.

RBS does not expect a mad dash to take up the service. Initially the service will be offered only to its 500,000 telephone banking customers.

Provided they have the necessary equipment customers will be able to conduct a variety of banking services through the Internet, such as printing out bank details, displaying balances and statements, viewing standing orders and direct debits and paying bills to over 750 companies.

Customers will also be able to transfer money between accounts held at RBS, and transfer financial data to accounting packages such as Microsoft Money 97 and spreadsheets.

To begin with RBS is proposing to levy a charge of pounds 1.50 a month for its Internet service. This will be on top of existing bank charges.

This surprised Booz Allen, which pointed out that the benefit for banks of offering services on the Internet is that it is cheap.

Mr Nehmzow has calculated that Internet and other virtual banking channels have a significantly lower cost structure than traditional methods, so that banks on the Internet can operate at expense ratios of between15 to 20 per cent, compared with 60 per cent for traditional banking services.

RBS defended its decision to charge for the system. "We put a lot of investment into it and we hope we're providing a system that customers want, that's value-added," said Bill Bougourd, head of electronic services with RBS's retail banking services.

"It is a modest charge," he added. "We're absolutely committed to maintaining a competitive package."

He declined to reveal the amount of investment put into the system but such services are generally estimated to cost between pounds 1m and pounds 2m to set up.

RBS said it had overcome one of the main barriers to providing Internet banking - security for users. Mr Bougourd said this had been of paramount importance to RBS and its security system was "extremely robust". It had been checked by external experts who work for the Ministry of Defence.

All customer data is scrambled to ensure privacy and cannot be added to, deleted, replayed or tampered with. The central computer server is also "fire-walled" from inside and out providing a protective barrier between the internal network and the Internet. Customers will also need a password to use the system and their PCs will need to be registered.

RBS said it was so confident about security that if customers had taken care to keep their security details secret they would not be liable for any transaction on the account which they had not authorised.

At the moment around 11 per cent of adults in the UK use the Internet but this proportion is expected to escalate to such an extent that Mr Nehmzow at Booz Allen estimates 80 per cent of European banks will provide a full banking service over the Internet within three years.

He said that 15 per cent of American customers will be conducting at least some of the banking activities via the Internet by 2000. While Europeans, and Britain particularly, are slower to catch on, Mr Nehmzow said banks on this side of the Atlantic believed that 10 to 20 per cent was not an unrealistic target for this period.

Comment, page 19

Arts and Entertainment
TVShow's twee, safe facade smashed by ice cream melting scandal
News
newsVideo for No campaign was meant to get women voting
Sport
Wayne Rooney talks to the media during a press conference
sport
Arts and Entertainment
tv
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
News
i100
News
Down time: an employee of Google uses the slide to get to the canteen
scienceBosses are inventing surprising ways of making us work harder
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

PMO Analyst - Risk - Banking - London - £350-£400

£350 - £400 per day: Orgtel: PMO Analyst - Risk - Banking - London - £350 - £4...

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?