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Bank Of Ireland Merges Bricks And Clicks

by Carla Johnson, Investors Offshore, London

22 October 2001

Isle of Man Internet bank F Sharp, a subsidiary of the Bank of Ireland, will today be merged with BoI's offshore operation and will be known as Bank of Ireland F Sharp. F Sharp, which was targeted at Irish and British expatriates, has gained a mere 2,000 customers in two years, far below expectations.

Roly Alden, managing director of the BoI's 'bricks' offshore operation, will have responsibility for the merged banks. "Two years ago the research showed that internet banking was the way the world was going," said Mr Alden. "But people want a personal and a relationship management service too." He said that only a few million pounds had been spent setting up F Sharp. In total the bank's offshore operation will have about £1bn of assets, from 11,000 customers in 150 countries.

The jury is still very much out as to whether stand-alone internet banking has a future. The comparative failure of a few innovative start-ups doesn't prove much; customers have been much readier to browse on the internet than to shop on it, and that's especially true where money is concerned. But it seems inevitable that growing familiarity with the internet, and a growing degree of comfort with its security, will lead people to want to conduct the bulk of their financial transactions from home or office. Cost is another factor: the cost of human interaction continually goes up, and the cost of internet transactions continually goes down, so that there is every reason for both providers and customers to want to transact business electronically.

In practice, few stand-alone internet banks have established themselves, but many traditional banks offer internet banking services alongside their conventional branch- or telephone-based operations. This is as true or more true of offshore banking than of the onshore variety, for the perhaps obvious reason that the customers of offshore banks are highly likely to be geographically remote from any branch of the bank.

There are already a large number of offshore electronic banking operations, although most of them admittedly belong to established banks. The leading offshore jurisdictions in electronic banking terms at present are Bermuda, Cyprus, Dubai, Hong Kong, Ireland, the Isle of Man and Switzerland.

The Dubai operations of Emirates Bank Group may be an indication of the future shape of electronic banking. The Group recently opened a branch in Dubai Internet City, offering all the traditional banking services to the major corporations located at the City, as well as offering its portfolio of existing and upcoming electronic banking facilities. The bank has been awarded the 'Best Local Bank in the UAE' by Euromoney magazine for the past two years, due, amongst other things, to its various innovative and leading technological initiatives. These have included being the first to launch Internet Banking service (BankNET), the first mobile banking service (BankGSM), the telephone banking service (Bankline), as well as the first financial website in the region.

As a further development of its electronic bank, Emirates recently unveiled its 'MeBank' cafe-style banking concept. Emirates Bank managing director and chief executive, Anis Al Jallaf, said: 'Online banking is the future. Our idea was to offer customers a way to conduct their banking themselves in a relaxed atmosphere, while sipping coffee, through MeBank. It has multiple hi-tech outlets featuring ATMs, PCs with telephones, and touchscreen Internet machines to carry out a range of operations 24 hours a day, seven days a week.'

Customers have online access to products and services of Emirates Bank International and Middle East Bank, including account opening and enquiries, fund transfers, bill payments, remittances, foreign exchange and deposit rate information. John Critchley, head of retail banking and group operations, said more outlets would be opened in the future.

All services are free, as is the coffee, said Anis Al Jallaf. He added: 'These services can actually be accessed through the Internet from anywhere in the world by any Net-connected device, but not everyone may have ready access to the Web, hence the MeBank outlets.'

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