10m online bank boom predicted

Up to 10m people could be banking on the internet in a year's time, according to predictions from Barclays, which yesterday added to the range of online products it is offering.

The estimates by Barclays, based on an NOP survey, dwarf previous predictions of the use of internet banking. According to the report, 41% of the 1,002 adults it surveyed said they would use internet banking within a year, rising to 56% in five years.

Another NOP poll for Barclays found that increasingly few bank customers have visited branches in the past five years, opting to use cash machines instead.

Barclays, which claims to be country's biggest internet bank, with 450,000 customers, believes that 1m - 1 in 10 of its customers - will be using internet banking by this time next year.

Peter Duffy, head of screen banking at Barclays, estimates that 10,000 new users are signing up for its internet bank each week.

The bank yesterday introduced its first internet-only product offer, by scrapping for net users the £150 booking fee it would normally charge customers for taking out its tracker mortgage.

Barclays, which this week announced plans to close another 200 branches, said the NOP survey found that most people using internet banking do so because they find it more convenient than other forms of banking. According to the survey, 1 in 3 people uses a computer at home and the average internet user is aged 25 to 34. However, only 45% of people are confident about using internet banking.

Another NOP poll showed that the use of bank branches by all age groups has fallen dramatically over the past five years. In the 25-34 age group usage has almost halved to about 35%. Even in the 55-64 age age group, use of branches has fallen from 71% to 52%. However, customers 61 and older are more loyal to their branches, with 61% of them - the highest proportion - continuing to visit them.

The survey provides ammunition for banks which are proposing to close branches. In addition to Barclays, Northern Rock - which said 60% of its mortgage applications now take place over the telephone - this week said it would cut its branch network by a quarter by the end of the year.

Despite the rush to register for online banking, Mr Duffy said its internet facility was being used in addition to, rather than instead of, other means of undertaking transactions, such as visiting branches and telephoning.

"Customers are still using branches for more complicated transactions."