Guardian Unlimited Money | Cash clinic | Online banks ‘get top marks’

Sarah Crown
Tuesday January 13, 2004

Online bank customers are increasingly enthusiastic about their method of banking, with 70% now rating the service as excellent or very good, according to an independent survey of the sector released today.
The results from the Virtual Online Banking Survey, published quarterly, showed that customers’ assessments of online banks have improved significantly over the past 12 months. The survey asks customers to rate their banks on a scale of one to five (one being poor; five excellent). The average rating out of five for achieved by the UK’s online banks rose from 3.6 in 2002 to 3.9 in 2003.

The survey found that the greatest improvements were in the speed of the online banks’ systems and the ease of use. Ratings have also improved considerably for the payment of standing orders and direct debits function.

The results give a much-needed boost to the sector’s image, which suffered in 2003 following a series of email scams directed at banks’ online operations designed to trick users into disclosing their bank password.

The scams heightened the perception of poor security, a serious deterrent to those considering online banking, and caused several banks to close their online operations temporarily until the problems was resolved.

Despite these security concerns, however, the UK’s online banking sector is growing fast. Market analyst Datamonitor predicted that the number of online accounts in the UK would have reached 11.5 million by the end of the 2003, compared with 10 million in 2002.

Part of the increase may be down to the fact that the sector is no longer just made up of internet-only bank customers. All the big high street banks now have online operations, and while the survey shows that online-focused banks such as Smile and First Direct still have the highest overall approval ratings among their customers (4.4 in both cases), it was the online operations of the high street banks that made the most progress in 2003.

Quentin Ashby, director of Virtual Surveys Ltd, which runs the survey, said: “Ratings for most online banks have improved over the past year but improvements in overall ratings have been most marked for banks such as NatWest and Alliance & Leicester, who have previously obtained very low scores. While they have a long way to go to achieve the same scores as the best online banks, it is good to see them moving in the right direction.”

David Head, head of NatWest’s internet division, agrees. “The survey ties in with our own customer research, which has indicated increasing levels of satisfaction among our users,” he said. “We put this down to the fact that we have listened carefully to what our customers have been telling us, and have altered our service accordingly, focusing on improving download times, simplifying the sign-up process and adding features such as real-time balances.”