your net:// Banking on future

The new face of banking is coming - even if customers are not ready, reports CHRIS BARTON.

"Would you like a complimentary latte and muffin, sir?"

The bank teller brings the tray to the coffee table by the sofa. I select the blueberry muffin and a large dollop of butter. Between mouthfuls, I tell him I want an automatic way to maximise the interest on my savings and minimise the interest on my borrowings. Don't we all?

The teller brings up my account on the screen at the cafe's table and shows me the new "intelligent banking" system - one that automatically calculates interest on both savings and loans and moves money around to "make customers' cash work harder." I'm sold. Later that night I dial in to watch my intelligent bank account work ...

And then I wake up. Futuristic cyber-banking nonsense? Possibly. But Halifax, Britain's biggest mortgage bank, is due next month to launch just such a service - its revolutionary "Intelligent Finance."

Also in September, Dutch company ING Direct - part of European financial conglomerate ING Group - will open its first US banking cafe in Philadelphia to introduce its online services to Americans.

The new face of banking, but not as we know it, is coming - even if customers are not quite ready. When ING launched its first online banking website in Canada in 1997, customers took to visiting the company's Toronto office - demanding to see the website's call centre to ensure the online bank was real.

Offering coffee seemed to calm them, and the idea of cyber banking cafes was born.

Nothing quite so creative is happening in New Zealand. But after a slow start, online banking is picking up. The first internet-based service was ASB Bank's Fastnet, begun in mid-1996. In October 1997 Bank Direct followed, an offshoot of ASB and the country's first and only "virtual" bank without branches. Between them they have about 60,000 customers - hardly rampant growth, though customer numbers are now doubling every six months.

The other major banks have moved more slowly. But in the past year, all responded to customer demand and now offer some form of online banking. Westpac was the last, launching its internet services in March.

Already it has 37,500 users, although that's a tiny 3.5 per cent of its total 1.3 million customers. National and BNZ, which went online late last year, have 40,000 and 31,000 online customers, respectively. All up, about 200,000 New Zealanders use the internet for banking.

To many, online banking is just an extension of telephone banking - the convenience of round-the-clock, seven-day-a-week access with the advantage that you can see your balance and bank statements on screen. Services include transferring money between designated accounts, viewing bank statements, and making credit card, bill and automatic payments. Most have the facility to download statement information into money management software such as Microsoft Money or Intuit's Quicken.

As with traditional banking services, it's hard to see much difference between what each of the banks offer. ASB Bank and Bank Direct boast that unlike the others, their services are real time - meaning when you make a transaction, it happens immediately, whereas with other banks the transaction occurs later, usually within 24 hours.

Other differences include the ability to set up automatic payments online and the amount of bank statement history available. Westpac, for example, goes back two years.

National Bank is the only bank to charge extra - $1 per month - for its online services. Other banks don't charge extra online, although normal transaction fees apply.

Some, such as ASB Bank, are focusing on added-value services - such as online trading of shares on the Australian and New Zealand Stock Exchanges with low transaction fees - to complement customers' online lifestyle. From the banks' point of the view, the aim is to shower the customer with extras - loans, insurance and information services - all from the convenience of a single source.

Most of the banks don't seem to be in a hurry to offer lower-cost transaction fees and interest rates to customers that opt to do most of their banking online. Bank Direct is the only one considering offering special rates to internet-only customers.

Part of the problem is that banks have considerable investment in magnetic strip card technology for ATM machines and credit cards - a technology that doesn't readily translate to the net.

What the net is really looking for is a means to transfer electronic cash - like an Eftpos card. But getting that technology to work globally and in a secure way over the net is fraught with problems. There's talk of having magnetic swipe-card readers attached to your PC - but it all sounds too hard. What looks more promising is mobile phones.

Several of the New Zealand banks are already in trials to do electronic banking via the net with a mobile. With an in-built smart card so it can function as both a debit card from your account and an electronic purse loaded via the net with e-cash, the mobile could be the answer to an e-banker's prayers.

Am I still dreaming? Maybe. But it may be closer than you think. In Europe, there are already phones that can be loaded with e-cash and then waved at a vending machine to buy a can of coke.


Safety concerns


Is it safe? That's a big concern for internet users accessing their accounts via a medium known to be highly insecure. All the banks combat the net's inherent security holes by connecting clients to special secure servers and by using encryption (scrambling technology) to further protect transmissions through cyberspace. Since they are in the business of securing your money, it is reasonable to assume they have made big efforts to keep your account safe.

Every bank has a section on its website devoted to allaying security concerns. Banks have terms and conditions about how online banking services may be used. This covers keeping your password and log-in details secret, but it's worth reading the fine print carefully.

Links


Halifax's Intelligent Finance

ASB

BankDirect

BNZ

National Bank

ANZ

Westpac