The debate over whether online financial services will replace high-street banks raged at the IDC IT Banking Forum in Milan last week.
In recent weeks, the major high-street banks have announced updates to their e-commerce offerings to compete with Internet-only banks like Egg and First-e. Last week Internet banking suffered a setback when a security breach at Egg allowed a customer to access a strangers account. Halifax also made a blunder and, perhaps in a pre-emptive strike against criticism, apologised for the incident.
A panel of software industry leaders were invited to discuss the issues and agreed that a change in attitude is needed for traditional banks to keep pace with online competitors.
Walter Seemayer, director of business solutions at Microsoft warned banks to adapt or die. "New entrants appear from nowhere and grab your clients. Allow your innovative people, your anarchists, to create new services," he advised. Marco Landi, senior vice president of BMC Software agreed. "You need different people and different attitudes," he said.
While some experts predict the death of traditional banking, Bob Giffords, consultant with IDC is more cautious. "If Internet banking is going to destroy other channels, it'll take a while," he said.
All the panellists agreed that the new age of Internet banking will give power back to the customer. Andrew Derrer, vice president of financial services at database manufacturer Oracle advised the banking industry to concentrate on customers rather than products.
Bernard Liautaud, CEO of Business Objects claimed the most important advantage of the Internet over traditional channels was its ability to personalise and advised online banks to provide more detailed and useful services than just allowing users to access statements online. "Consumers want a personalised interaction that is meaningful to them," he said. "One of the largest jobs is to personalise information."