Phone Banking Calls the Shots; High Street Rivals Climb on the First Direct Bandwagon

The Mail on Sunday (London, England), November 15, 1998 | Go to article overview

Phone Banking Calls the Shots; High Street Rivals Climb on the First Direct Bandwagon


Byline: CLARE HALL

TELEPHONE banking pioneer First Direct has really set the industry buzzing.

It was a revolutionary concept 10 years ago and the firm virtually had the field to itself.

Now most banking rivals have switched on to the idea and there is only one major current account player - Woolwich - which does not offer a similar service.

Since its early days, the customer

What is on offer at the end of the line base of First Direct, the 'branch-less' offshoot of Midland Bank, has expanded from an experimental few to 900,000. It attracts a further 10,000 new customers each month.

The appeal is clear.

While most people were struggling to get to their banks before the 3.30 closing time, First Direct customers were nonchalantly paying bills at midnight, or checking balances before dawn.

At first the only rival was Girobank, but its service never really captured the public's imagination.

However, the bigger banks know a nice number when they see one. Four years ago Barclays launched its phone service Barclay-call, and was followed swiftly by almost all its other rivals.

Unlike some of its competitors, First Direct does not offer a computerised telephone service - all contact is person-to-person.

That apart, there is little to choose between the telephone services available. Most charge calls at local rates whatever time people call.

Once passwords or personal identification numbers have been sorted out customers have the full range of banking services available, from checking balances to arranging mortgages.

Many of the banking lines are available 24 hours. Those that are not tend to open early and finish late.

Advice First Direct is unusual in offering investment advice over the phone - customers can arrange a pension or Pep while paying their gas bill.

Other banks offer information about execution-only products but anyone wanting advice has to go the old-fashioned way and visit a branch.

First Direct commercial director Peter Simpson says the competition has not caused problems for his company.

He says: 'When we launched telephone banking in 1989 it was a pioneering thing. Over the past three or four years many banks and building societies have based their services on ours and yet we are growing as fast now as we ever have.' The competition, he thinks, has simply opened up the market, and accustomed people to the idea of phone banking. That has benefited First Direct.

Lloyds Bank launched its Lloydsline four years ago in response to customer demand. Now one million of its eight and a half million current account holders are using it.

Anne Gunther, director of telephone banking at Lloyds TSB, says telephone banking has paved the way for the latest industry buzz Internet banking.

'By and large the sort of people who wanted telephone banking are early users of technology, so now they want Internet banking. Telephones were step two and now we're at step three,' she says.

Ruth Shone, a housewife and Lloyds customer of 38 years, is happy to stick with step two. She switched to Lloydsline two years ago and can't remember the last time she visited her local branch in Chester.

Ruth, 56, says: 'It saves a lot of time. You can do things straight away instead of waiting for the bank to open. …

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