Financial sector loses interest in internet banks

Financial services in the UK have lost their illusions about the ongoing proliferation of internet banks.

Joint research by PricewaterhouseCoopers (PWC) and the Confederation of British Industry (CBI) has found that while retail banks are still expecting internet banking to grow, a quarterly survey shows they have lost their initial euphoria about quick profits and instant new customers.

John Hitchins, leader of PWC's UK banking practice, said: "Banks are now looking to internet banking as a longer haul than previously. They are now concerned with the practicalities of getting the technology, getting it to work and persuading people to use it."

He added that the Nasdaq stock market correction in April was partly to blame for the diminishing interest.

This quarter's Financial Services Survey pointed to a general drop in business confidence, mainly due to the level of domestic competition in the banking sector.

The 138 companies surveyed declared lower confidence in their IT investment intentions, as compared to September last year, but their plans remain "robust".