The Internet is reshaping financial services generally, but the consequences in the UK appear to be high-street branch closures and more redundancies.
Northern Rock, one of the UK's strongest mortgage lenders, has confirmed that the Internet is absolutely core to future growth and business strategy. The Internet is reshaping financial services generally, but the consequences in the UK appear to be high-street branch closures and more redundancies.
Northern Rock's renewed focus on ecommerce coincides with reports that Barclays Bank is also planning over 200 branch closures as its ecommerce and tele-banking volumes are growing more rapidly that expected, and the economics of high-street banking become increasingly unattractive.
Both organisations say it is consumer demand that is driving the move to fully-fledged ecommerce. According to Leo Finn, Northern Rock's chief executive, the bank is responding "early and quickly to changing markets and customer preferences. We're changing shape to meet a demanding future."
The company plans to ramp up its ecommerce activities, claiming: "Progress has been made in moving from a simple website - essentially an electronic advert - towards a full ecommerce site."
The company's core business areas of lending and mortgages, retail funding and protection insurance will be on the ecommerce site with integrated online applications, transactions and customer service. The business areas will be brought on-stream in stages during 2000, and its Together mortgage product was enabled for online applications last week.
The bank is making significant investments in the Internet and telephone services, and an automated Mortgage Decision Call Centre will be launched early next year, employing 100 staff in Doxford, Sunderland. Northern Rock says it will employ an additional 30 staff at its Newcastle headquarters to focus on customer service and support the new ecommerce initiatives.
The upshot is that 29 out of a current 105 branches will close by the year-end and a total of 250 jobs will be lost. Similarly at Barclays. Weekend reports suggest that Barclays is planning 200 branch closures and up to 700 redundancies. The anticipated cost savings from this fresh round of branch closures are reported to be between £10 million and £20 million pounds.
Many companies in the financial services sector are unready for ecommerce, losing business and customers to Internet startups and new entrants, but Barclays has one of the most successful ecommerce strategies to date. It has over 450,000 regular users and around 5000 new customers signing up each month.
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