Personal finance providers are failing to rise to the internet challenge and the market is suffering. Industry magazine Retail Finance Strategies ranked the websites of the top 100 UK financial services providers in terms of what they provide to customers and found most of them lacking.
"The majority of financial sites have sparse functionality and limited content, while design and branding is either over-ambitious to the detriment of site navigation or so ill-conceived that it damages the image of the company as a whole," says Edward Humphrey, editor of Retail Finance Strategies. "Despite the innovations of a select few, the vast majority show an alarming lack of strategic planning."
Axa, HSBC and Standard Life Bank were among the worst scorers. Out of a possible 100 points, the survey gave them only, respectively, 56 points, 47 and 62.
Retail Finance Strategies pointed to these websites' limited functionality - customers can get online quotes but not buy over the internet - and clumsy and confusing navigation as features which let them down.
Some companies were also accused of playing catch up to keep their investors happy. Mr Humphrey says: "All the internet ventures announced during the AGM season seem to be more about keeping analysts and shareholders happy, not the customers."
Some sites, naturally, fared better than others. Nationwide Building Society topped the list, scoring 91 out of 100.
The ability to buy almost all Nationwide products, including mortgages, loans and credit cards through the internet was praised by the report's authors. High quality content, links to other sites, including its own football site - the building society is a major sponsor of football in the UK - and the fact that Nationwide is an internet service provider all made for extra brownie points.
Citibank, Egg and Natwest came second, third and fourth. All were deemed to have good functionality and an easy navigation system. These results are made more pertinent by the findings of Datamonitor market analysts on what makes people use internet banking.
The analysts conclude that the number of internet bankers will grow by 30% in the next five years, reaching 5.3m, and that the biggest determinant in who these people bank with will be the level of service they get.
The rise of tailor-made products and increasing competition over rates means the only way internet banks can distinguish themselves is in the service they give their customers, it says.
It also found that online users of financial services tend to be young and know what the internet can do and expect their banks and fund managers to know as well.
Additional services such as online finance guides, homepage customisation and the ability to access accounts through internet service providers like Yahoo and AOL are ways of giving a better service through the website, says the report.
Offering competitors' products on your website was also flagged up as good customer service. Datamonitor believes that if customers can access other companies' banking products through one website, they are more likely to use that website for all their internet banking.
Banks were the most consistent performers in the Retail Finance Strategies study, with the top 10 banks all scoring 77 points or more.
The top 10 building societies, on the other hand ranged between 91 points to 58.
The top 10 fund managers received similar rankings to the building societies. In the number one spot was Fidelity Investments with 84 points out of 100. Perpetual, in 10th place, scored 58 points.
The range of points for the top 10 insurers was tighter, with the number one insurer, Legal & General, being awarded 83 points and the number 10 insurer, Skandia Life, getting 66.
