UK financial firms lose out to online rivals

UK banks, brokers and insurers risk losing customers as foreign rivals make the most of consumer demand for online services according Fletcher Research.

The report indicates that although seven million people will be banking online by 2003, personal finance companies in the UK have failed to build a loyal online customer base over the past two years.

Benjamin Ensor, business analyst and author of the report, said UK companies are "failing to grasp the nettle". He added: "This [online] growth will be further driven by interactive TV, but unless the major players in the UK market start to take the Web more seriously, they will find themselves pushed out by new competitors such as foreign financial institutions and UK retail brands."

Fletcher Research predicts that in banking, the winners will be Citibank, Nationwide, and the Cooperative Bank. NatWest and Lloyds-TSB in particular will lag behind.

In online broking, Charles Schwab, Barclays Stockbrokers and esi look set to do well in a market Fletcher Research predicts will be worth £19bn by 2003. And in insurance, there is an opportunity for a company to take the market by the scruff of the neck and revolutionise the industry, much as Direct Line did with its telephone service in the 1980s.