'Private investors have been spooked by the recent market volatility and are holding back'

John Willcock

The recent sell-off in dot.com shares may have cheered up the Luddites amongst us as much as it dismayed the budding private investors who piled into such shares last autumn. But any hopes that the grip of technology would be loosened over our lives are illusory.

If anything the pace of technological change in the personal finance arena is accelerating. It seems that the "bubble" which recently burst was limited to the stockmarket.

Take three developments this week: Prudential's decision to float its egg internet company, and the announcement of two big internet banking ventures from Halifax and Abbey National.

The Pru has learnt from the lastminute.com flotation fiasco, where the issue was vastly oversubscribed, and is limiting its share sales to its 1 million banking customers. Customers of egg and its Pru-branded banking products will also be limited to a maximum of £1,000 of shares.

Despite the fact that egg has yet to turn a profit, the flotation looks well thought out. The recent sell-off may have even been beneficial for floats like this, in that it blew the froth off an overvalued market. Investors must learn once again to judge risk and sort winners from losers.

Then there are the internet bank launches from Halifax and Abbey National. We've already had egg, first-e, smile and so on. Now the traditional finance institutions are finally getting their web strategies off the ground.

Intelligent Finance (IF), part of the Halifax, will launch in July. I have to say I find it all rather daunting but if you're into technology, this is the one for you. One of its key features is a "sweeping" system which automatically transfers positive balances from your current account to a high interest savings account on a daily basis. This has been a common feature of American bank accounts for years, and is well overdue here.

Then there is the Abbey National, which launched its e-banking package this week, aimed at traditional customers. It is also about to launch an entirely separate internet-only bank, cahoot, next week, aimed at more self-confident netheads. Significantly, both the Abbey National and Halifax services will be available via digital television.

The stockmarket bubble for dot.coms has now burst, but the impact of the internet on the way you run your personal finances is actually accelerating.

All of this is unlikely to be much comfort to those who profited most from the rush into dot.coms by private investors before Christmas - the discount brokers and private client stockbrokers. I have spoken to a number of people this week who all say that the brokers are having a thin time of it.

Test this yourself. Last autumn if you tried to ring a broker with an order you could have waited half an hour, or you might not have got through at all. Now you will probably get connected immediately to someone desperate for your order.

Private investors have been spooked by the recent market volatility and are holding back. Until they learn to live with this topsy turvy market, the brokers will suffer.

So here's my one share tip of the weak: sell the brokers, buy banks.

John Willcock is the Personal Finance Editor of The Independent

j.willcock@independent.co.uk