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Subject: Re: UKNM: Halifax suspends net dealing
From: Ray Taylor
Date: Mon, 29 Nov 1999 11:20:09 GMT

> The Halifax has suspended its internet-based share-dealing service after
> customers were able to access other people's accounts...
> http://news.bbc.co.uk/hi/english/business/newsid_538000/538285.stm

Most major banks can't keep control of their security offline, so how are
they going to do it online? The difference is that, when they make mistakes
offline, they get away with it because nobody gets to hear about it. Because
of all the interest in everything netwise at the moment, the slightest
mishap will get right royal treatment in the press.

But the biggest problem is the fact that the banks are all busy introducing
supposedly new sytems, but that import all of the crummy things about UK
banks. This, at a time of golden opportunity for reorganising the whole
range of banking business processes.

As an example, when HSBC/Midland Bank UK set up First Direct, they set up an
entirely new operation with an entirely new set of business processes and
managed to avoid repeating most of the mistakes of their bricks and mortar
cousins. But rather stupidly, when I talked to my previous bank about
transferring they said "but we can do telephone banking too!" Which somewhat
missed the point that direct banking is about a different way of banking not
about using a telephone to find out what your balance is.

So far, all of the online banks are making the mistake of trying to squash
their clumsy old-fashioned cobwebby business models into a web site
interface. As an example of this, I was in a meeting with a bunch of VC
big-wigs the other day and one of them, a director of a 100 m+ company,
said that he had been refused a current account with Co-op's Smile on
grounds of credit-worthiness. Which made me feel a whole lot better when the
same thing happened to me (though perhaps with more justification).

But then you could say the same about retail. Few UK retailers have yet
sussed what e-commerce is all about. And yet all they have to do is look at
Amazon for a clear picture. Though I am not entirely sure that everone at
Amazon understands the difference between what they do and what so many
others have so far failed to do.

Question is, who will be the banking equivalent of Amazon? Who will be the
first to set up a properly functioning direct banking operation on the

Smile has a long way to go before they even have a properly functioning
account application process. I have tried First Direct's online equivalent
(in test phase) and it is too slow and clumsy to be of much use. We use
Royal Bank of Scotland's business online banking system - it works fine and
is very useful for bypassing paper transactions, but it is somewhat basic
(and not internet). And I am testing out the various egg accounts. Anyone
tried any of the US offerings?

Ray Taylor

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  UKNM: Halifax suspends net dealing, Robin Grant

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