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E-Banking

It is no secret that, for some years now, the traditional UK high street banks have been extending the choice of channel through which customers can manage their money. Customer channels range from the ubiquitous automated teller machine (ATM), through postal and telephone banking, to the increasing use of personal computer and the Internet for electronic banking purposes (e-banking). This extended choice of channel has been achieved largely on the back of advances in computer technology, which have allowed banks to offer customers more automated methods of conducting their financial transactions.

From the customer's perspective, it is interesting to note that attitudes to bank service delivery and the use of technology are changing. According to a recent Mintel1 market report on current accounts, while 64 per cent of customers still prefer to manage their current accounts through a high street branch, they are nevertheless opting to use more than one channel. For example 51 per cent of those surveyed claimed that they would use ATMs to manage their accounts. Fifteen per cent of 15-19 year olds and 13 per cent of 25-44 year olds stated a preference for using the personal computer for banking purposes - although less than 10 per cent of people currently use the Internet in this way. Telephone banking has also grown in popularity, with 30 per cent stating a preference for managing their accounts over the telephone.1

For their part, high street banks appear to have exploited technology largely for commercial reasons. On the one hand, the expansion of ATM facilities has been instrumental in helping banks to rationalise branch networks. On the other hand, the cost of servicing an average payment transaction via the Internet is around oneeighth of that in a branch (once initial setup costs have been taken into account).1 At the same time, high street banks have come under increasing pressure from new entrants to the financial services sector such as Prudential...