Rupert Jones
Banks and building societies in the United Kingdom are pouring money into ever-more sophisticated services, but are they focusing on tomorrow at the expense of today’s mundane issues, such as customer complaints and lunchtime queues?
There have been a spate of personal computer (PC) and Internet banking initiatives. This week, Royal Bank of Scotland launched another and many more are in the pipeline. Yet most bank customers don’t have the hardware or inclination to use them.
Institutions say their aim is to improve customer service and increase the ways people can access accounts. But while the Consumers’ Association believes such initiatives “put the customer more in the driving seat”, others worry that service could end up sidelined.
Barclays Bank has something like 10-million customers, but only 42E500 people – 0,4% – have so far signed up for the PC banking service it launched a year ago.
The National Association of Bank Customers (NABC) says the banks should stick to their knitting rather than spending money on “unnecessary frills”. Staffing of branches, the time it takes for cheques to clear and branch closures are not being properly addressed, claims NABC chief executive Stuart Cliffe.
Complaints about banks in the United Kingdom rose by almost 10% last year, and far too many basic mistakes are still being made, says the banking ombudsman’s last report.
And what with the introduction in the UK next year of Individual Savings Accounts and preparing for economic and monetary union and the millennium bug, it’s not as if the banks haven’t got plenty on their plates.
There have been many predictions about the stunning growth in the numbers of people using the Internet to do banking and shopping, but electronic commerce has yet to really take off. “It is there but it’s not actually happening that fast,” says Jonathan Steel at the Bathwick Group, a business technology research company.
He feels this is partly because “technology is a struggle”. While more people are becoming more computer literate, millions still find it difficult to get to grips with new technology. Nevertheless, while there are currently only 2,6-million PCs with modems in British homes, this is expected to increase to 5,6-million by 2003. That year, 12,4-million homes – half the households in the UK – are likely to have access to the Internet. “The growth potential is enormous for this type of banking,” says Steel. But to succeed, banks are going to have to make their services both cheap and compelling.
Royal Bank of Scotland has recently launched a PC banking and money management package for small firms. The result of a link-up with Microsoft’s Money 98 software package, the service is aimed at helping business people invoice, pay staff and sort out bills. Its Internet banking service brought out in July 1997 now has 15E000 customers.
NatWest will roll out a PC banking service nationally towards the end of the year. It is currently on trial with 1E500 personal customers and 500 small businesses.
Barclays’ PC banking service is now a year old, and it will introduce an Internet-based service soon. Many other institutions are also busy developing their own “on-line banking solutions”. Lloyds has invited customers to sign up for a three-month Internet banking pilot from the start of June. The plan is to go national in the autumn. The Co- operative Bank launched its Internet service last month, and is working on a version allowing people to use electronic personal organisers to access their accounts.
The Nationwide is even taking on the likes of Compuserve and America Online and setting itself up as an Internet service provider (ISP). The service, available by summer, will enable members to get all the standard Internet facilities including its own Internet banking service.
Barclays sees PC banking very much as an additional service on top of its core ones, and reckons it could actually counter-balance some of the various customer gripes.