Personal finance gets less personal

More and more people are taking out insurance, loans, and savings product online, according to new figures.

Sainsbury's Bank has today said the trend for purchasing financial services products online is set to increase in 2005, and reported that the number of people visiting its website has increased more than 208 per cent in the last 12 months.

The growth of broadband has undoubtedly fuelled the increase in internet banking, with faster and more convenient services making the internet experience smoother and allowing people to spend more time researching their options without worrying about tying up phone lines or the amount of time they are spending online.

Today it has emerged that BT is set to sign up its five millionth broadband user.

And new research from NOP World financial has found that purchasing things such as insurance and savings products online could jump another 27 per cent on 2004 levels this year.

That would see 4.3 million adults arrange financial services products online in 2005.

And the internet is being used for research even by those without access themselves. Recently AA Insurance revealed that three out of every four people now use the internet to research home and car insurance.

"Even those who do not have access to a computer often ask computer-literate friends or family to do the searching for them, but complete the deal offline," explained David Tyers, AA Insurance's head of marketing.

He added: "But the number of customers buying online is growing fast.

"About 40 per cent of all new car insurance and about a fifth of home cover is now arranged online."

The online financial services world was also boosted by new rules coming into force this year, which allow people applying for loans on the internet to do so without needing to sign and return paper copies of the agreement.

Before the start of the year people could apply for credit online, but still had to sign a paper copy of the deal before the contract was complete.

However, new rules brought in at the end of December mean consumers can complete the transaction electronically, meaning those with sight or mobility problems can use electronic tools to help read and complete the forms.

Sainsbury's Bank revealed today that motor insurance is the financial product most often bought online (58 per cent of those buying online), followed by credit cards (24 per cent), home insurance (23 per cent), savings and investments (13 per cent), loans (eight per cent), mortgages (three per cent) and life assurance (two per cent).

But while more and more purchases are being made online, many consumers still hanker after the personal touch in their finances.

Most Britons prefer to put money in bank and building society branches rather than only use the internet, National Savings & Investments found.

Just 15 per cent of people would choose the internet as their sole savings vehicle, despite a general acceptance of the benefits of online accounts. Instead people are favouring accounts with an internet and branch dimension - allowing them the convenience of 24-hour access, with the safety net of being able to go and discuss options face to face if needed.

"Despite the boom in new internet-based providers, savers do not seem ready to abandon traditional methods and move towards using a single remote channel," noted Dax Harkins, senior savings strategist at National Savings & Investments.