Sofa-banking from Abbey

Abbey National customers will soon be able to pay bills, arrange car insurance, seek financial advice and keep tabs on their finances from their sofas after the bank yesterday announced plans to launch its services on digital television in September.

Abbey is spending £100m on bringing the concept of "sofa-banking" and other e-commerce ventures within reach, eventually, of many of its 15m savers and borrowers.

The digital television banking service will be launched in the autumn through Open, the joint venture between BSkyB and British Telecom on satellite digital TV.

The bank, which claims the project is a "global first", denied it was a ploy to avoid face-to-face contact with customers. Earlier this year it introduced a controversial £5 levy for paying bills at its counters.

Abbey, the first building society to convert to a bank 10 years ago, is also planning to open two internet banking services, one under its own brand name and another, operating under the codeword Aquarius, which will be launched under a new brand name next year.

The Aquarius project, which is still in development phase and unlikely to be the final name for the service, is expected to be different from other "virtual" banks, such as Prudential's Egg, because Abbey is planning to offer through the net not only its own products but also those of its rivals.

HSBC, parent of Midland bank, will also launch a banking service in the autumn on Open, which is scheduled to begin in the autumn to provide a range of "interactive" services ranging from shopping to computer games. Open will be free to Sky digital TV viewers.

Initially, Abbey will offer interactive shopping via television, providing information about products, a budget planning facility and a loan repayment calculator and allow customers to select a time to be telephoned by an Abbey ad viser. Customers will be able to select services by using the Sky TV remote control. By mid-2000 customers will be able to look up their balances, transfer money and pay bills.

"This is a powerful proposition for the customer, who will be able to interact with Abbey from the comfort of their own armchair," said Gary Brown, head of e-commerce development at Abbey. Andrew Pople, Abbey's managing director of retail banking, insisted the bank was not trying to block face-to-face contact with customers but was instead committed to offering them a choice. He said the counter charge had been introduced because "some branches were struggling to provide an adequate service".

The bank reported pre-tax profits for the first six months of £875m, a rise of 17%, although its shares fell 46p to £11.37. It plans to pay an interim dividend of 13.4p. It said it was now making nearly 50% of its profits away from its core mortgage and savings business and set a target of 65% for 2004. Its share of new mortgage lending in the year fell to 2.4%, well below its target of between 5% and 10%.

Ian Harley, Abbey's chief executive, said the bank was not "planning for acquisitions", but it is clearly scrutinising a number of targets, particularly in the life insurance area.