Egg closes door to new telephone customers
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.EGG, the Prudential's direct banking arm, has closed its doors to telephone customers after just six months in operation, declaring it will only accept new savings customers if they apply over the Internet.
The bank said it had already achieved its targets for a five-year business plan, attracting pounds 5bn and 500,000 customers by offering market-beating rates of interest.
Mike Harris, the chief executive of Egg, said the bank would try to steal a march on the Internet banking market, aiming to attract 2 million customers by 2004.
Egg has attracted huge volumes of business by offering uneconomic interest rates above its rivals - currently 6 per cent on savings accounts. The rates entail heavy losses for its parent company, the Prudential.
Mr Harris said the need to stem losses - estimated to reach pounds 170m this year - was a factor in the decision.
"The decision we were faced with was - do we continue to invest in telephone commerce and build a new call centre at a cost of pounds 50m, when everything's moving to the Internet? In three years we think it will be as ubiquitous as the telephone," he said.
He added that the running cost of an Internet bank account is four-times lower than by telephone. Mortgages and personal loans will still be available from Egg by telephone.
The aggressive move is in sharp contrast to the strategy of Abbey National, the mortgage bank, which yesterday said it was turning its back on Internet banking.
Andrew Pople, head of retail banking at Abbey National, said: "We do not see [the Internet] as something that will dominate for the next two to three years. As a way of getting new customers I don't think the human being could be bettered."
Mr Pople described the Internet as an unpleasant buying experience inappropriate for financial products.
"The Internet is long-winded to get through, the sites are over-complicated and the choices are bewildering," he said.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments