Posted by Allison on 5 April 2009, 11:11
A few years ago the idea of doing our banking in any other way than going into our local branch would have been unthinkable. That was when there simply was no other way to do it though, and things have certainly changed since then.
The rise and rise of the internet has led to a whole new breed of accounts hitting the web, aimed at taking the work away from the banks and letting you do most of it instead. This new monster called online banking is here, and it looks set to catch on even further in years to come.
In the early days of online banking people were very wary of it, and that was perhaps to be expected. After all we were all used to going into our banks and seeing an actual human being, not sorting our accounts out online without the hassle and time it took to do so.
So what happened? How did it get to be so popular, and is that popularity set to continue?
The banks realised early on that getting accounts online would be a good service to offer to their customers. Banks in several countries started to develop an online presence that included an in depth look at how they could get their customer's accounts available for viewing online if they wanted to do so. Whatever country you were in you could start looking at your own currency amounts online.
The main question for a lot of people initially was how secure the whole thing was. From the banks point of view however, they did all they could to make their sites secure, and they generally guarantee that if anything goes wrong as a result of their site being at fault, they will reimburse the customer fully for any losses.
However history tells us that the majority of faults that lead to a breach in security come from the customer's side of things. Many people still go online without any kind of security protection or software at all, and even such simple steps as making sure you have a decent firewall have led to people's accounts being accessed without them knowing until it is too late.
The banks soon made things a little more interesting as far as accounts were concerned though. They decided to create new accounts that could only be operated online, meaning that going into a branch of your local bank and asking for information about that account would result in nothing more than a blank stare.
By putting the onus onto the customer for handling these kinds of accounts, the banks were able to offer a tempting deal to get more and more people to bank their money with them. Interest rates that were much higher than the usual amounts were suddenly offered, and these if nothing else started to make people sit up and take notice about what offers were available in their own country.
This is a trend which has continued too, so those people who are savvy about saving money have realised that if they want to make the most of it they should be putting it into internet only savings accounts that offer the best rate of interest.
But it isn't only savings accounts that are drawing people in. Current accounts are now also fully online and accessible all day and night long, and this has definitely been a huge benefit to those people who find it awkward or inconvenient getting to the bank at any other time. There is no such thing as opening hours online, so if you forget you've got a bill to pay and it's Christmas Day, you can still go online and set it up to go as soon as the banking services start up again after the holiday.
It is perhaps this kind of convenience which has finally resulted in more people switching to internet banking, but there is the green issue too. Many banks will not send out paper statements any more, hoping to reduce their carbon footprint by doing so and leaving it up to the customer to print them out if they want or need to. Some might say this is a crafty way of making even more money out of us (after all they are getting us to create our own paper statements now) but at least we are getting a bigger slice of interest in compensation.
But while internet banking is certainly more popular than it used to be, there are also plenty of people who don't use it yet. Many older people are mistrusting of it or simply not interested in the faceless aspect of it that appeals to so many younger people who have busy lives. They still prefer to see someone face to face in their local branch, and don't seem to mind queuing longer to have that personal service.
It is easy to speculate in years to come though that internet banking may well be the only way to bank, and high street branches may disappear altogether. Most of us still like the option of having a branch to visit but if they start being closed down then there isn't much we can do to stop it. One suspects the bank staff would have something to say about it though, for as much as they probably dislike the queues of people they have to serve, they would dislike the prospect of losing their jobs even more.
We have had a few internet only banks such as Egg managing to tackle the online landscape quite well though, which does tend to make you wonder whether the days of the high street branch really are numbered. Their demise may not yet happen for many years, but our young children might turn round one day in the future and ask us what it was like when we actually had to leave the house to pay a bill or set up a direct debit.