UK banks must move out of "dark ages"

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UK banks must move out of "dark ages"

Nick Huber


UK banks risk losing customers to internet and foreign banking rivals unless they develop online cheque clearing and reconciliation systems, software groups and analysts have warned.

Despite the recent boom of e-banking, UK banks and clearing houses lag far behind Europe and the US for real-time internet-based cheque clearance and bank reconciliation services, analysts claim.

Although UK banks offer electronic reconciliation, this is based on batch processing with transactions processed overnight.

Alexander Drobvik, vice-president for e-business at analyst Gartner, said the banking industry's traditional conservatism and 20-year-old largely proprietary networks were barriers to investment in real-time reconciliation services.

UK banks will face increasing competition to introduce online reconciliation services as newer companies provide Web-based payment and clearing services, he added.

He also predicted that a small sub-set of companies and banks could band together to forge new technology standards for the exchange of Internet transactions. The services could include online clearing for corporate clients and inter-market clearing services for the UK's financial markets.

"With new players getting into retail Net banking, it will change this cosy little world [of UK banks]," he said.

Dennis Keeling, chief executive of suppliers group Business and Accountancy Software Developers Association, also attacked the banking industry's e-commerce credentials. He claimed UK banks were e-commerce "dinosaurs" fearing that the onset of rapid electronic reconciliation would make it too easy for customers to switch banks.

"I'm constantly getting overseas banks saying they want to set up online banking services here, but you can't get online cheque clearing," he said. "We're still in the dark ages."


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