The banks are coming home

The branchless society is a step closer now that the Co-op has set up on the internet. Stephen Pritchard reports

ONLY a decade ago, building societies were spending fortunes opening branches to win business from the clearing banks whose marbled halls dominated the high streets. Now the banks are closing branches wherever they can.The best sites reopen as trendy bars and restaurants.

Now building societies are following suit. The logic is irresistible: the branch of the future is a home computer, or even a television set, not a building.

Earlier this month the Co-operative Bank became the third bank to launch an internet banking service, which can do almost anything a branch can do, and more than a cash dispenser. Anyone with a Co-op personal account and an internet link can use a computer to carry out most day-to-day banking business - paying bills, transferring funds and direct debits.

Nationwide and Royal Bank of Scotland launched internet banking services last year. The Co-op's move is more evidence that banks see the internet as by far the best alternative to the branch.

Datamonitor, a research group, predicts that 9 million Europeans will use internet banking within three years.

The Co-op believes its internet banking service is the most comprehensive on offer. The bank says around two-thirds of transactions can be done over the internet, with the rest relying on branches or phone banking.

The Co-op's product is significant, too, because of its technology. The bank developed the site in Java, a software technology that allows it to produce pages that will run on any computer with a recent internet browser, regardless of the make of PC or operating system. At the moment, Nationwide and RBS only support computers running Microsoft Windows.

The Co-op site also works with Apple Macintosh machines, and the bank has prototypes for a Hewlett-Packard hand-held computer. Java also makes it easy for the bank to update its systems to work with new technologies as they emerge, including digital television.

The pages of the Co-op's easy-to-use site have a designer rather than a banking feel. "We hope it is intuitive and the design is friendly," says Keith Girling, head of channel development. "We felt that a lot of internet banking services are boring, and look like banking services."

Mervyn Pedelty, chief executive of Co-operative Bank, says: "In future, as all banks share the same channels, customers will see banking as a commodity, even more than they do today. Banks will need strong brands and quality products. Historically, banks have been woefully inadequate in customer services."

Mr Pedelty's view is that banking will become an icon on a computer monitor, and deciding where to bank will be as easy as clicking a mouse. "It could mean the end of traditional banking. High-street banking is declining pretty fast these days."

For now, potential is limited by the public's confidence in the internet and the number of people who have computers at home. "We believe one in four of our customers are at ease with the technology," says Mr Pedelty. "Others may join the group, but it depends on the success of the internet as a whole."

He points to the take-up of telephone banking to support this view. "Since the early 1990s telephone banking has grown enormously; that shows how quickly consumer habits can change. Potentially, the net can have a far greater impact."

Security is one reason customers may hold back. The risk of fraud via electronic banking is very small, but the internet still has a public image for lawlessness. The Co-op, like its rivals, has invested heavily in electronic security measures and, as an added reassurance, it asks customers to register for on-line banking by phone.

The threat to bank branches is another reason not everyone is comfortable with the idea of internet banking. Banks are being criticised for closing branches in rural and inner-city areas.

But the Co-op's relatively small branch network means electronic banking gives the bank a chance to expand into new markets. It is working on a touch-screen computer to let people use internet banking in its unstaffed kiosks.

"The revolution is not about any one technology," says Mr Pedelty. "It is about diversity, but more importantly, customer choice." Co-op has a link with satellite television and a deal with Vodafone that lets customers check balances from a mobile.

Electronic banking has the potential for more than convenience. Banks can give real-time information about accounts, and it should be possible to shorten the three-day delay when money moves between banks. Internet banking saves money, too, once set-up costs are covered. A bank that can persuade a large number of customers not to use branches will see profits rise.

The danger is that people without the financial or technical resources to use the internet will be left behind. This already happens in the United States, where bank charges come in two tiers: one for people who use branches, and a lower one for those that do not. Technophobes and the less well-off lose out.

The Co-op's solution is to provide the computers itself. It is setting up "cybercafes" with internet-linked computers in six of its largest branches, and has plans to put touch-screen terminals in public places such as supermarkets. In a few years, as cost fall, it might even pay banks to subsidise or even give away a basic computer to customers willing to make the switch.

Co-operative Bank web site: http:///co-operativebank.co.uk.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies