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Monday, 21 August, 2000, 14:18 GMT 15:18 UK
Online banking gets poll boost
Bank customers queue at a counter.
Some customers are leaving the counter behind.
Two million people in the UK are now buying financial services over the internet, an increase of 11% from six months ago, a new Mori poll shows.

Screentrade, an online insurance supermarket which commissioned the poll, says the results show that consumers are not being put off by fears over internet security.

But other polls suggested doubts remain.

Screentrade said a rise in general internet usage was the main reason for the increase in financial product sales, with 32% of people questioned saying they used the internet compared with 26% six months ago.

Most popular purchase

The research also showed that 6.3 million, or one in seven, adults had used the internet in the past 12 months to seek information about financial services.

This compared with a figure of 3.1 million recorded in a similar Mori poll in mid-1999.

Purchasing car, home or travel insurance and arranging credit cards were the most popular activities, accounting for 11% of online financial service transactions each.

Arranging current or savings accounts came next, with 10% of transactions, followed by share dealing (6%).

Key challenge

Screentrade spokesman Paul Charles said more complex products such as ISAs or mortgages were "hardly selling at all".

It would be a "key challenge" for the industry to raise purchases of such items, he said.

Technical problems have hit several online banking and financial service providers in recent months, including Barclays, Abbey National's Cahoot, Egg and the French-registered First-e, prompting security fears.

But the fears have done little to dampen financial product sales, Screentrade said.

So far no consumers have lost money, Mr Charles said.

"And normally the [technical] glitches are found pretty quickly."

Lingering fears

Other polls suggested lingering fears existed about online shopping and banking.

In a survey being conducted online by Interactive Investor International, 59% of respondents say they are not confident about the security of internet banking, while 41% say they are.

This appeared to support the findings of a Mori poll for the National Consumer Council earlier this month in which 55% of internet users responding said online was the riskiest way to shop.

Just 3% of all respondents said they shopped regularly online.

UK lags US

The UK still lags well behind the US in terms of e-commerce, with a US poll published on 20 August showing that 48% of respondents had used a credit card to make purchases over the web.

Screentrade said the market for online financial services was growing rapidly in the UK and more than 4,000 websites were now offering financial services.

Projections for its own business were for sales growth of 25% each month.

But it said the proliferation of websites was likely to lead to "massive consolidation" in the sector and an eventual reduction in the number of online financial service providers.

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See also:

02 Aug 00 | Business
Barclays admits new security breach
26 May 00 | Business
Online banks scramble for customers
12 Jun 00 | Business
Abbey National launches Cahoot
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