A&L abandons online bank for 'mass affluent

Mortgage bank Alliance & Leicester has ditched plans for an online private bank aimed at the "mass affluent".

The bank has poured £15m into building the new wealth-management service - which was due to launch early next year - but now intends to absorb the developments into its existing multi-channel operation, using traditional branches and the telephone as well as the web. A spokesman said that A&L had never been certain of the appeal and viability of internet only banking: "We have always been in the sceptics camp as far as standalone internet strategy is concerned".

He added that the A&L had now concluded that wealthier customers with cash to invest are likely to demand a more personal service: "They want options," he said. "Some will be happy to transact largely through the internet but the majority will want some form of personal touch."

Last night the A&L's decision to ditch its standalone plans was being interpreted as an acknowledgement that the Alliance & Leicester brand name is not one which would automatically attract "mass affluent" customers - usually defined as those with more than £50,000 to invest.

Building the right image would have demanded sub stantial marketing resources.

The A&L, which has a 6m-strong customer base, had planned to offer its mass affluent customers stock information and stockbroking as well as financial advice alongside its banking services.

These products will now be made available through the bank's main website, and other traditional channels.

"Most of what we have done so far is recyclable", said a spokesman for Alliance & Leicester yesterday. "None of the development work will have been wasted."

The 60 staff working on the project are expected to be offered other jobs within A&L.

Several British banks have already launched internet banks for the mass affluent market - which banks generally view as a lucrative, fee-driven sector with significant growth potential. Among these are Abbey National, Barclays and Halifax.