Electronic alliances

Technology is, however, transforming how people use their current accounts. Automated teller machines (ATMs) are the most important innovation. When first introduced at the end of the 1970s, these were quite simple machines installed in the wall outside only a few bank branches. Once a customer had inserted a special card and tapped in a personal identification number, which is embedded in a magnetic strip on the back of each card, the machine would dispense cash and tell the customer how much money he or she had in their current account.

The second and third generation of ATMs are much more sophisticated. European banks have formed a web of electronic alliances. Through these the holder of an ATM card issued by, for example, Caisse d’Epargne, the fifth largest French bank with 32,500 of its own branches, can withdraw money from 22,000 ATMs spread across Europe. The most modern ATMs can provide most services that a current account holder would usually require: paying bills, transferring money to a savings account, ordering a statement to show every movement on the account for the past month, and so on. This level of sophistication means that many customers conduct their whole relationship with their bank through a machine installed in a shopping street and never have to go inside an actual bank branch.

The next technological development, which is only just beginning to take off in Europe, is banking by telephone. Europe’s biggest telephone bank is First Direct, which is owned by Midland Bank, one of the four so called high-street banks which dominate British retail banking. First Direct is run from a warehouse outside the British City of Leeds. It has a massive room full of telephone operators, who work in teams. The bank deliberately avoids hierarchy – its chief executive does not even have his own office, instead he sits at an open table in one corner of the main room. Customers can ring 24 hours a day and tell the bank to transfer money, pay bills, or borrow money. This system means the bank saves money, as it does not need to maintain a network of expensive branches, and for the customer it is far more convenient than having to trudge along to a conventional bank.

In the next stage of development the telephone will be replaced by a computer terminal installed in each customer’s house, from which he can access his bank’s computer directly. In France, 8 million homes have a Minitel terminal installed, on which most French banks already offer at least an elementary level of service.

Technology is transforming how Europeans use their current account. How they use banks for other services is changing as fast, but in different ways.

When they look for somewhere to put their savings, Europeans are becoming far more demanding. In the not too distant past, west-European savings banks behaved like Russia’s Sberbank, offering investors little choice and poor returns. At Caisse d’Epargne most savers until recently held “Type A” passbooks, from which all deposits were invested in low-cost public housing. In Germany by law the main aim of Landesbanks is not to make a profit, but to support public aims.

In the past savers were willing to put up with this approach because inflation kept interest rates – and hence the nominal returns on their deposits – high. Now that inflation in the European Union has been reduced to an average level of 2.3% a year, the interest rates offered by most savings banks for deposits are so low that savers are looking for alternatives, and there are plenty of these on offer.

Дата добавления: 2015-12-01