For a time they were running scared of the Internet, but UK banks
are now beginning to embrace the potential of the Web.
Winners and losers are already emerging amongst the UK's leading
banks and their Internet strategies. According to merchant bank
Salomon Smith Barney, their efforts differ depending on whether
they are retail banks or traditional clearers, and whether the
strategies are defensive or offensive.
Halifax, the Woolwich and Abbey National are said to have been
the most aggressive in their offensive strategies to gain an
increased share of new markets, while Barclays and Bank of Scotland
have taken a lead in defensive tactics to safeguard their current
account and personal loan businesses. Lloyds TSB is regarded as one
of the most ambitious, while the newly acquired NatWest is expected
to unveil its strategy as part of the Royal Bank of Scotland group
in the next two months.
Salomon Smith Barney's survey of who's doing what measures the
converted building societies and traditional clearing banks in
terms of the services offered, notably Web site savings and loans
applications, current accounts and offerings via Wap mobile phone
and digital TV. All are offering current accounts, savings
facilities and have a Web site, but the response in terms of Wap
and digital TV is patchy.
For defensive strategies, First Direct of the traditional
clearers is said to have done best in terms of converting customers
to PC banking, though for First Direct, with its customers being
telephone bankers, that is no great leap. Over 20% of First
Direct's customer base is now online. It expects to have around
400,000 online by the end of 2000, or 40% of its customer base.
Barclays already had over 500,000 online by the end of 1999, but
that represented only 6% of its current account base. By the end of
January, Barclays said, another 100,000 had gone online, and it
hopes to have 1m online by the end of 2000.
Of the retail banks, Alliance and Leicester started offering
Internet banking from January 2000, while Abbey National hopes to
have 500,000 customers online by the end of 2000.
When it comes to breaking into new markets, the more
retail-facing banks - Abbey National (with Cahoot), Halifax, the
Woolwich, together with Lloyds TSB from the traditional clearers,
are launching their own standalone Internet business, to sit
alongside Egg. Lloyds TSB is testing its offering now in Spain, and
expects to offer a service here later in the year. Egg plans to
launch a current account-based product around the middle of
2000.
Since Egg already has 1m sign-ups, and both Lloyds TSB and
Cahoots are aiming for hundreds of thousands of sign-ups, Salomon
predicts that the current market will be much bigger than current
forecasts suggest.
With the Internet revolution still in its early days, and the
promise of the mobile Internet still to come, there is still
everything to play for in the banking sector.
The Salomon survey suggests that if Halifax manages to hit its
targets it could have an 80% share of the "clicks only" market.