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.