RealTime IT News

UK Banks Risk Losing Customers to New Online Entrants

E-business solution company Netlife, of Hamburg, Germany, says that UK banks are at risk from new entrants to the financial services market.

The UK lags behind Germany, where 91 per cent of all banking sites offer online transactions.

Netlife made an extensive study, comparing the Web sites of UK banks with those of foreign banks, assessing each against such criteria as assurance on security issues and availability of customer service.

"The banks must convince their customers to view online banking in the same way they view telephone banking," said Philip Brown, managing director of Netlife.

"For most customers, the main issues are security and familiarity. If it is to be worth their while making the switch to online banking, banks must provide assurances that security and customer service are as good as, if not better than, over-the-counter or telephone services."

Retail banks in the UK, says Brown, have not convinced their customers of the benefits of banking online. Their failure opens up opportunities for other financial institutions to gain a market share.

"A particular threat is the aggressive cyber-banking policy being pursued by small banks across Europe," he continued.

"Foreign banks are capitalising on the UK banks' hesitation and moving in on the UK market: Britain's first virtual bank is to be launched this summer by French group Banque Escompte. UK banks need to act quickly to move their customers online and retain their loyalty if they are to remain competitive."

As an example, Brown points to two well-known high street banks which are not open 24-hours a day on the Internet, while a third makes no mention of any security systems in place to protect its customers' details.

By contrast, says Brown, German Postbank provides detailed security advice, an always-available telephone helpdesk, and a responsive email help facility.