Slim pickings at the bank party

THIS week, Intelligent Finance, the internet banking business of HBoS, celebrates its first birthday. The party poppers have been ordered. The champagne is on ice.

Doubtless the top brass at IF will be boasting to anyone willing to listen about the operation's success in capturing 250,000 customers. Winning those customers - and many of them will have been the bank's current account holders in the first place - has so far cost the princely sum of £230m.

At least IF has made it through year one. But its birthday party will be haunted, like so many Banquos, by the ghosts of all those other internet banking follies that have burned such big holes in the collective pockets of our banking industry. Just over a week ago, Bristol & West blamed investment in its internet money site, MoneyXtra, for a 17% fall in the total group's half-year profits.

Bank of Ireland has wound up its F Sharp offshore internet bank, and First-e, a Dublin-based internet bank was also folded, but only after its foreign owners blew about £135m on the ill-fated project.

Lloyds TSB decided to pull plans for its Evolvebank in Britain after trials in Spain proved monumentally tepid, while Alliance & Leicester threw £15m at an internet venture that never saw the light of day.

Throughout Europe the picture is drearily familiar, with banks that should have known better now licking their very costly wounds.

Apart from the daft me-too frenzy that gripped almost all businesses terrified of missing out on the internet boom, the banks were trying to achieve one of two things. They aimed to set up low-cost operations able profitably to poach business from rivals or to add internet offerings to their existing ranges in the hope that customers would eventually migrate from high-cost branches to low-cost phone and internet access.

Only three examples of pure internet banks still survive in Britain. They are Smile, from the Co- operative bank; Cahoot, an arm of Abbey National; and Egg, which is now listed on the stock market but is still controlled by insurance group Prudential.

The jury is still out on whether any of them can survive once they reduce their attractive loss-leading rates for savers and borrowers and the so-called 'interest rate tarts' defect to anything that looks vaguely more competitive.

Those setting up phone and internet offerings in addition to existing accounts include not only IF, but also Barclays, which has spent more than £75m on its internet product for retail customers.

The problem for these banks is that customers still want the expensive trimmings they are used to from their bricks-and-mortar branches with a bit of internet on the side.

Clearly, the bank bosses would have been culpable if they had simply let customers defect for want of some kind of online offering. For now, though, it is equally clear that the prospect of cost savings from the internet is just so much pie in the sky. The banks have simply managed to add an extra layer of expense with remarkably little to show for it.

YET again a survey of top companies has shown up what is beginning to look like pathological resistance to appointing women to the most senior positions. Britain has only one female chief executive, Marjorie Scardino of Pearson, and it is about to get the first woman chairman of a FTSE 100 index company in the form of Baroness (Sarah) Hogg, who soon takes up the reins at 3i.

Elsewhere there are smatterings in the boardroom but, astonishingly, fewer than 2% of all executive directors are women. For comparison, women make up about 36% of lawyers, 31% of doctors and roughly half of all chartered accountants.

Girls are doing better than boys at school and women now make up about half the workforce.

The outlook is not universally bleak, however. There are women in holding positions just below boardroom level waiting for a slot at the top. And there is evidence that companies that dare to appoint a woman director then feel confident enough to appoint another.

Possibly most important, though, there are fledgling signals that companies with women on the board actually perform better. If shareholders become convinced that boardroom diversity will make a contribution to profits they may - albeit only very slowly - start to apply pressure for better representation at the top of business.

Harriet Harman is right to keep banging this drum. But, as with so many other corporate social advances of recent years, a demonstrable improvement to the bottom line is likely to speak far more loudly than any politician.