Banks fight shy of the Internet

BANKS in Britain and Europe are showing extreme reluctance to embrace the Internet despite evidence from the United States that the world wide web is already dramatically changing the way customers deal with banks.

A report published today by consultants PriceWaterhouseCoopers and the Economics Intelligence Unit concludes that most UK banks are standing Canute-like on the sidelines watching to see which way the development of Internet pans out before committing themselves.

Many of the banks surveyed described themselves as a "fast follower".

However, given the evidence from elsewhere in the world, particularly the US, the report says, "they look more like the king of ancient Britain who stood on the beach and commanded the incoming tide to retreat".

It adds: "The majority of retail banks do not yet have a clear and viable strategy for using the Internet as anything more than an undifferentiated service delivery channel."

The report warns that very few existing brands will be enough on their own to withstand the impact of the Internet. It says their reluctance is partly due to European banking culture, which is steeped in a tradition of face-to-face contact.

The British banks that participated in the study include Barclays, Abbey National, Midland, National Westminster Bank and Virgin Direct.