By John Oates, 16 November 1998 17:17
NEWS UK high-street banks were given a stern warning today by Deloitte and Touche. A report into the future of retail banking predicted they will lose as much as 25 per cent of their profits if they do not face up to competition from online rivals and retailers. The report claims financial companies based on product superiority will come under increasing pressure as rivals bring similar or identical products to market. The authors believe this will lead to a commodity market with financial packages bought and sold on price. Stuart Cliffe, chief executive of the National Association of Bank Customers, disagreed. "What customers want is better interest rates and good service, not high-tech stuff," he said. "Banks have lost sight of the fact that they are basically retail outlets for buying, selling and storing money." The report also criticises banks for failing to effectively use their databases. It claims most are still kept by product, making it very difficult to tailor services to individual customers. The report further warns that the timetable for adapting online services means that once the demand is there, it may be too late to gain share from players already in the market.
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