UK online bank Intelligent Finance has reported a GBP88 million loss for 2000.
Intelligent Finance was launched as UK bank Halifax’s stand-alone telephone and online banking operation in December 1999. The firm this week announced that about 82,000 account applications had been made to the bank and GBP500 million of new borrowing approved during its first year of operation. About 54% of all transactions made were through the Intelligent Finance website. As for IF’s customer base, 90% of business from December 1999 to December 2000 originated outside the Halifax Group.
For 2001, Intelligent Finance aims to attract 500,000 new customers by the end of the year. While this figure may seem high, the bank reports that since the beginning of January 2001, about 2300 applications have been made to the bank every day and that approved borrowing is currently just under GBP1 billion. After all, online banking is gaining popularity and has proven efficient.
In spite of this, banks that offer only online or telephone banking services may not enjoy the success they were hoping for. Most banking customers do want to have a choice between online and face-to-face facilities and services, so banks that offer a first-class online service in addition to an existing branch network have the potential to thrive in today’s banking environment. A good example is Halifax’s own financial services website, Halifax-online. It saw substantial growth in existing online registrations, from 63,000 in 1999 to 409,000 in 2000.
Banks such as IF, which only offer online and/or telephone services, may experience difficulties reaching the number of customers and level of transactions hoped and planned for. While seeking efficient banking methods, banking customers are still relatively traditional in the sense that they are not willing to abandon the branch entirely, so IF’s reported loss is not too surprising. The surprise may be greater if the bank reaches its targets for 2001.
