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January 10, 2007

Online banking: does Nationwide dream of electronic trees?

Nationwide Building Society has unveiled plans to go green and give credit cardholders the option to swap monthly paper statements for electronic ones. This comes as one of a number of enhancements made to Nationwide's online banking service. The company's focus on improving its internet banking offering is a shrewd move given the growing importance of this channel among almost all retail banks.

By CBR Staff Writer

Nationwide Building Society has enhanced its internet banking service for credit card customers.

Nationwide has expanded its online credit card facility so that customers can opt out of receiving paper statements. Nationwide sees this as part of its strategy to improve the environment, although the significant cost saving for the bank must also have acted as an incentive.

However, Nationwide’s changes to its online banking service provide a number of additional benefits for customers, including the options to request a credit limit increase, order replacement cards, request a PIN reminder and change the amount they repay each month. This is a typical example of how retail banks are searching for ways to improve their online offering.

Within the last decade, online banking has become an integral part of the distribution strategy of almost all retail banks. Online banking is important for a number of reasons, including its use as a research tool for knowledge-hungry customers, the fact that it offers instant communication between customer and bank, and its ability to act as a ‘no pressure’ sales tool. It also frees staff from having to deal with time-consuming transactional work in branches, therefore allowing the branch staff to concentrate on sales. Indeed, online banking and the general advancement of banking technology has helped to raise the profitability of retail banks.

However, banks have recently been concentrating on branch distribution, with many banks reversing previous strategies and expanding their branch networks. This is because a multi-channel strategy is, for now and the foreseeable future, the only way for major retail banks to be successful. However, within this strategy, online banking is an essential element, whether it is paperless or not, and so Nationwide’s moves to improve its internet banking service should prove to be a worthwhile investment.

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