A loan's as good as a wink

Mission impossible-style machines that recognise you from your eye retina before a hole-in- the-wall doles out your money could soon become a feature of high-tech bank branches.

By the end of the century the local branch of your bank may look more like an amusement arcade than a centre of financial rectitude. The branches that survive, and the new ones that open, will be automated, with hole- in-the-wall machines handling mortgage, personal loan and credit card applications, as well as paying out and taking in cash.

NCR, the company that makes many of the cashpoint machines that have transformed high streets, says that later this year the first trials of loan-dispensing machines will begin. You will be able to apply for a loan, get a decision, and then have a cheque issued or your bank account credited - all in seconds without speaking to anyone.

After a trial in Sweden, 95 per cent of users said they liked the impersonal touch. This was equally true for rejected applicants - refusals are less embarrassing without eye contact. The US has been using loan-dispensing machines for five years.

Barclays says it expects loan-dispensing machines to become widely used, but not for another two years, by which time smart cards will be common. The cards - like credit cards but with a computer chip on the back - will contain not only personal financial information, but also physical details, enabling machines to confirm your finger prints or eye retina, virtually eliminating fraud.

Loan dispensing machines can already print photos taken by the machine on the issued cheque, but this is expensive and is still vulnerable to fraud as it is difficult to guarantee that the appli- cant has not forged identification.

At the Nationwide in Swindon you will find chairs, cups of coffee and automated machines that accept cash deposits and allow you to move money between accounts. The Interact multimedia kiosks give you printed quotes for remortgages, insurance policies or savings accounts and, through a videoconference link, you can obtain instant pension or mortgage advice from a specialist adviser.

Rate (Remote Access to an Expert) is one of the latest developments in banking, using video-conferencing to link up with specialist bank employees. This already happens with the BarclayZone kiosks, sited in three branches, where a stockbroker advises on share trading.Olivetti, which supplies Barclays' kiosks, says one bank wants to install video-conferencing facilities for customers.

Most bank branches are heading for semi-automation, with staff on hand to help people use the machines. But in some places branches are inappropriate. Kiosks have been installed on university campuses, and the most heavily used cash machines are at rail and Tube stations.

Cash machines are not new at workplaces - Lloyds has had them at Ministry of Defence sites for 10 years. Kiosks that pay out money and take grocery orders are already provided by NEC.

With retailing and retail banking converging, the future bank branch may be part of a supermarket or petrol station. Most new US branches are inside supermarkets, and British banks are interested in doing the same. But as many retailers offer their own financial products, banks here may not be given the opportunity.

Branches may vanish altogether. Some technology firms predict that one- third of branches will disappear in five years.

Home banking - by phone, PC or television - should be cheaper than operating a branch network, and the big banks are under increasing pressure from new competitors. Virgin, Marks & Spencer, Tesco, Ford and Volkswagen, are among those companies fighting for the banks' business. By offering low-cost services they are hastening the death of the bank branch.

In the short-term there are still enough customers to ensure the survival of the branches. But just because retired people in Eastbourne want to use a branch, this does not mean that the same service will remain available in the City of London. And, in time, those who prefer to use a traditional branch may even have to pay more for the privilege.