Who's winning the race?
While many of the retail banks have seen their user base increase in line with increased flexibility on their sites, others are targeting Web customers with high interest, or fee-free investment accounts, focussing their energies on high value customers.
The slimmed-down functionality of the Internet has allowed new players such as HSBC and ING Direct to take highly attractive or fee-free investment products directly to market.
In fact, the Internet has facilitated entry into the usually highly competitive retail-banking sector, with commercial banks using it to capture the cream of the retail customer base.
Patrick Kelly, e-commerce marketing manager for HSBC, suggests that its slimmed-down online offering had won the bank double-digit growth, with more than 80 per cent of new customers signing up online.
"This is a whole new demographic for us. We are talking forty-plus double income with kids, a mortgage and no time to waste in bank queues," Kelly says. -We have tried to aim at the middle ground, offering a savings product which earns real interest, but also enables clients to use it to do all the things they normally would in a branch."
In a similar vein, AMP BankNet provides a complete suite of bank products and services, dangling a carrot of higher interest rates and minimal service fees in front of wary consumers.
-We are somewhere in the middle of the traditional retail approach and the specific online savings accounts," explained e-commerce manager of banking for AMP, Michael Conner.
Not to be out done by the new kids on the block, retail banks are proving that two can play at that game. In an effort to keep up with their new rivals, traditional retail banks are also offering high-interest, online-only accounts such as St George's "DragonDirect".
However, feature-rich sites have come at a high cost for most banks, and even with the significant increases in active customers over the last 12 months, most are reporting losses due to escalating infrastructure costs.
This has put the newcomers in the retail market at an advantage, as they receive the kudos that comes from being first movers in the high interest products set.
-The most important thing I can tell you is that we only do business direct, either online or over the phone," toned Craig Kennedy, head of direct banking for ING Direct. -We have only been around for a short period of time and we are already profitable."
According to Kennedy, ING Direct savings accounts are attracting up to ten thousand new clients per month, and have already seen Australian's stow AU$5.2 billion in the Netherlands-based bank. While the bank also services clients over the phone, Kennedy says that more than 40 percent of its new listings are generated by the Internet.
While Kennedy concedes the product was first trialed in Canada, and that the bank locally had been able to leverage from its experience overseas, he pointed out that most of the technology was developed locally.
-We picked up a little from ING's experience in other countries, but out expenditure in terms of the initial development was high, so we weren't placed at any particular advantage," Kennedy says.
All of this is good news for the online banking consumer, as the industry eyes the success of high interest online accounts, plotting and planning their own offerings.
Why didn't you include Adelaide Bank (http://www.adelaidebank.com.au)? It provides a good range of services with the exception of not being able to credit someone else's account quickly.