A spokesman for A&L said that the bank had srapped its plans because it had never been certain of the appeal and viability of Internet-only banking: 'We have always been in the sceptics camp as far as standalone Internet strategy is concerned,' he said, adding that A&L had now concluded that wealthier customers with cash to invest are likely to demand a more personal service: 'They want options,' he said. 'Some will be happy to transact largely through the Internet but the majority will want some form of personal touch.'

Some observers have said that A&L's decision to shelve its standalone bank is an acknowledgement that the Alliance & Leicester brand name is not one which would automatically attract "mass affluent" customers, and building the right image would have demanded substantial marketing resources.

A&L's Internet bank was to have offered its mass affluent customers stock information and stockbroking as well as financial advice alongside its banking services. These products will now be made available through the bank's main website, via the telephone and in its branches. The spokesman said: 'Most of what we have done so far is recyclable. None of the development work will have been wasted.'

Peter McNamara, A&L group managing director, pointed out that a lot of banks were already targeting the mass affluent. Several UK banks - such as the Abbey National, Barclays and Halifax - have set up shop in recent months in a sector generally viewed as lucrative and fee-driven, with significant scope for growth. Mr McNamara said: 'We decided we could get a better return building this [service] as part of our existing website.'