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.

Life and Style
A nearly completed RoboThespian robot inside the Engineered Arts workshop is tested in Penryn, England. The Cornish company, operating from an industrial unit near Falmouth, is the world's only maker of commercially available life sized humanoid robots
techSuper-intelligent robots could decide destroying the human race is the kindest thing to do
News
The current recommendation from Britain's Chief Medical Officer, is that people refrain from drinking on at least two days a week
food + drinkTheory is that hangovers are caused by methanol poisoning
Life and Style
techConcept would see planes coated in layer of micro-sensors and able to sense wear and tear
News
Patrick Stewart in the classiest ice bucket to date
people
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
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

Software Developer (Java /C# Programmer)- London

£30000 - £45000 per annum: Harrington Starr: A global investment management fi...

Senior Network Engineer-(CCIE, CCNP, Cisco, London)

£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...

Senior Network Analyst - (CCIE, Cisco, CISSP)

£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...

Senior Network Engineer-(Design, Implementation, CCIE)

£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition