Welcoming the online revolution

By Richard Dyson
Updated: 05:09 EST, 7 December 2005

 

WASTED lunch breaks queuing at the bank were the final straw for Paula Ritchie. Now she handles all her finances online and no longer sets foot inside her bank. Paula, 27, says: 'Everything to do with the bank involved a queue. If I wanted to make a payment or even just check a balance, I had to queue in a branch. I would spend my lunch hour queuing. If I phoned up, I was put in a calling queue.'

When she saw an advertisement for the launch of phone and online bank Intelligent Finance in 2000, she signed up. She hasn't looked back.

It is a trend that thousands are joining. Britain is now one of the most 'wired' countries in the world. It has the highest percentage of internet users in Europe.

In 2000, a third of Britons had access to the internet, either at work or at home. Today, it is nearer three-quarters and rising fast. And the rate at which households are signing up for high-speed broadband, rather than dial-up, is also faster than anywhere else.

More than fivem households have broadband. By 2010, that figure is expected to treble - that will be almost two-thirds of all households.

Paula, a consultant in a mortgage broker in Bathgate, West Lothian, says: 'I log on about four times a week and I never do anything manually. All my payments are electronic - I've never written a cheque and I never phone the bank.'

She holds the account jointly with her boyfriend, chartered surveyor David Telford, 26, from Newcastle upon Tyne. Paula says: 'David's the opposite to me as he's quite dubious about doing everything online. But I'm winning him round. And my mum banks online now, too.'

The astonishing rate at which internet access has become commonplace has revolutionised many consumer habits. Some of the biggest changes have been in the way we use financial services. Banks, stockbrokers and other finance companies want customers to use the internet because it slashes their administration costs. But many customers, too, are clearly keen to use the net.

Anne Gunther, chief executive of Standard Life Bank and a leading expert on phone and internet banking, says: 'Some people simply want to have more than one way of dealing with their bank. 'But it's also about control. People have a terrific sense of confidence in being able to see their transactions and records when they want. You could say the internet has brought the bank branch into a customer's home - and it's open for business whenever they want.'

Though banking is the most widely used service over the internet, websites offering other financial transactions are catching up fast. Tens of thousands of customers are signing up every month for billing and payment online, according to companies such as British Gas and BT. And, apart from some early glitches, even filling in tax returns on the web has proved popular.

Revenue & Customs says it expects almost am people to file self-assessment returns online for the tax year 2004-05 by the January deadline. Not only has the net given customers a new way of doing things, it has brought about new refinements.

Internet-based share portfolios, for instance, allow investors far greater flexibility in managing and analysing their holdings. The process of trading, too, has become cheaper and safer.

And one unexpected benefit of banking online is highlighted by Paula - it encourages her to save. 'I look at my balance so often that I know what's to spare at the end of the month, and I put that straight into a savings account.'

THE internet is making big inroads in banking and share dealing. Among bank customers who use both phone and online banking, the internet is twice as popular, according to analyst Datamonitor.

More than 15m people bank online - about one in three of those aged 55 to 65 and two in three of those aged 30 to 55. In 1999, bank customers made 16m transactions over the phone, a figure that swelled to 40m by 2004, according to the British Bankers' Association.

But the internet has gained popularity far more quickly. In 1999, there were only 1.3m online transactions. By last year, that number had soared to almost 30m.

Share dealing has also been transformed by the internet. Before 1999, online trades were virtually unknown. Last year, for the first time, more than half of all UK transactions were made online, and by the end of this year, brokers estimate the figure will be nearer two-thirds.