A riot of routes to your loot

Millennial prophets predict a future in which consumer choice has run riot. Twenty-four-hour shopping already appeared this Christmas; television-to-order is soon to pour from the skies. And the same will happen in the marketplace of financial services, with technology bringing not just new ways of banking to our fingertips, but a new range of banks bargaining for our business. But as the wise warn, with choice comes confusion. Which delivery channel will you choose?

Before long, it is predicted, customers will surf the Internet 24 hours a day in search of the best credit deal or interest rate - and the only conversation to be had will be with the dialogue boxes of your personal finance software. Whatever the truth of that, there is already a foretaste of what might come, since 1997 is likely to see online banking become mainstream.

Online banking, in which the details of your accounts and, crucially, the ability to execute transactions are made available from the home, is not new. The Bank of Scotland has offered such a service to customers since 1985. The difference now is that the method of delivery of online banking services will become a standard and will move from being a luxury afforded only by affluent individuals to being an expectation of middle- income earners.

Last year saw a range of pilot projects from the big names in the UK: Lloyds began experimenting with Psion organisers, TSB launched some PC- based software, Barclays got into bed with Microsoft to deliver online banking via the Money 97 personal finance application, and NatWest chose to stick with a friendly Netscape browser and connect you up direct via Java programming. Midland, telephone banking pioneer with its subsidiary First Direct, appears to favour the proprietory PC route. With all this choice and more, it is here that the quandaries for the customer begin. Which is the best route to your loot?

Two of the big boys in computer software are already fighting to win hearts and wallets: Microsoft (of course) and Intuit, consistent holders of approximately 75 per cent of the finance-software market with Quicken.

In 1995, Microsoft tried to buy Intuit for $2bn, but the bid was quashed by US anti-monopoly laws. But Microsoft has hit back in its own inimitable way, making its Money 97 offering irresistible to banks and customers alike. For example, banks can brand the interface with their own logos, and customers simply have to click a couple of buttons upon set-up to make the online connection. (For current Quicken users, the package will even extract your account data and leave the Intuit solution discarded, like an empty husk.)

The big question is whether the average customer will be interested in online facilities, or, more precisely, whether they will trust them. Will Cappelli, of the research group Ovum, believes customers are hesitant about transmitting their financial details over an unfamiliar medium. "There are a number of mythologies surrounding the online world," he says. "The publicity over security has been bad and this creates a barrier in people's minds."

A recent Mori/ICL poll showed that less than 10 per cent of individuals believe that "banking from home" need be in the top three banking services on offer.

For now the process is more one of education. So, for example, the bundling of modems with home PC packages will encourage "newbies" to dip a toe into the online ocean, from which demand for services to the home will increase.

Already this year banks have expressed concern over the threat such technology poses because it will speed the movement of companies such as Virgin, Marks & Spencer and Tesco into the retail banking space. The traditional banks are likely to respond by using the same technology to offer personalised news services, financial analysis and advice.

Whoever wins this battle, customers can look forward to a bright online banking future. But only if confusion does not rule over choicen