Virtual bank heralds the cashless society

The Royal Bank of Scotland is to set up what it claims is the first full Internet banking service in Britain, marking an important step on the road towards virtual banking and the cashless society.

The move could lead to a stampede from other banks in Britain to offer such services, and may hasten the demise of the branch network which is already under threat from telephone banking.

Retailers already allow shoppers to buy a wide range of products on the Internet and while other banks in Britain do offer services on personal computers, notably the TSB, the Royal Bank of Scotland (RBS) claims its service is different because it is Internet-wide and more sophisticated.

RBS, based in Edinburgh, said it intended to roll out the Internet service to its half-million telephone banking customers in the spring. Some 50,000 of its customers have access to the Internet. To join, customers will need a personal computer, a modem and Microsoft software.

RBS, which pioneered telephone sales of insurance through its Direct Line subsidiary a decade ago, claimed to have overcome the security problems of internet banking. A spokesman said it would take "longer than the universe has been around" to break in.

The human face of banking is gradually disappearing as new technology, including telephone banking, allows customers to move cash and to pay bills without visiting their branches. The number of bank branches in Britain has been slashed by 3,000 to about 10,000 in the past six years and NatWest alone has announced the loss of a further 10,000 jobs. But RBS said Internet banking did not mean more job cuts.

Experts say that this type of banking could eventually be used to provide a full banking service, including the transfer of cash into electronic purses, but this is likely to be many years away.

Internet revolution, page 18