SPECIAL REPORT I N T E R N AT I O N A L B A N K I N G
May 19th 2012

Retail renaissance

SPECIAL REPORT INTERNATIONAL BANKING

Retail renaissance

The internet and mobile phones are at long last turning boring old retail banking into an exciting industry, says Jonathan Rosenthal
IF YOUR BANK could start over, this is what it would be, trumpeted the marketing campaign for the launch in 1999 of Wingspan, an internet bank. The following year the bank was gone. In September 2000, a few months after the dotcom bubble burst, it was absorbed by its boring American bricks-and-mortar parent, Bank One (now part of JPMorgan). For all the high hopes that the internet would transform banking, most other internet banks launched around that time met with a similar fate. Citi f/i, an online bank started by Citigroup, was folded back into its parent in 2000. NetBank, an American pioneer of internet banking, soldiered on for longer than most but was shut down by banking regulators in 2007. On the other side of the Atlantic, Egg, Britain’s rst stand-alone internet bank, shook the market in 1999-2000 when it gained more than 2m customers within months of starting up. But within a few years it, too, had in e ect disappeared, its customers having been sold rst to Citigroup and then to Barclays and the Yorkshire Building Society. It was an ignominious end to a bold experiment in online banking that had caused palms to sweat in banking centres around the world. The promise of internet banking had seemed obvious. More than most other industries, banking was already largely digitised. In most rich countries the cash that people carry in their wallets represents only a tiny fraction of their assets and is used for only a small portion of their spending. The rest exists only in the pattern of magnetic charges and ickering electronic impulses of banks’ data centres. Moreover, banking