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Internet banking still has a strong future

19 September, 2007

After the Northern Rock crisis when the internet system collapsed leaving customers high and dry, there have been question marks over the effectiveness of internet banking.

But Jim Spowart, who set up Intelligent Finance, one of the UK’s first internet banks said: “Internet banking is here to stay – but there are lessons we can learn from what has happened at Northern Rock.

“It is a question of capacity. Banking systems or designed to deal with a certain amount of traffic – perhaps 10 times their normal peak daily activity. In the case of Northern Rock, they were deluged with customers and this was an unforeseen even way beyond anything that could be reasonably expected. Even around the country the branches couldn’t cope and we saw queues of people waiting for hours to get served. This was unprecedented.”

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According to Spowart, the regulators already determine a level of service to ensure customers can get their money – but what might have been missing was a combination of internet delivery with a telephone support service to assure customers.

When asked if online banking has a future, he said: “Online activities certainly do have a future. But banks have to be versatile and elarn from this highly unusual event. When I built what I called a ‘telenet’ bank at Intelligent Finance, we debated long and hard whether to have phone and internet.

“Some banks are internet only yet I feel there has to be a dual-capacity so people can be assured about their savings and investments.”