AIB has followed the major UK banks in outlining an Internet strategy in an attempt to attract the attention of the fund managers so taken with technology and the Web at the moment. By year-end it aims to provide online share dealing and access to bank services through mobile phones and says it is spending €100 million (£78.7 million) annually to this end.
The bank is at pains to suggest it is at the cutting edge when it comes to technology and the Internet. AIB's plans to give customers multi-channel access to its services and offer greater convenience. It insists this will not lead to job losses.
Group chief executive Mr Tom Mulcahy said yesterday the bank was immediately seeking to recruit 500 staff to cope with the increased business being generated throughout its branch network, emphasising the crucial importance of branch outlets to its commercial success. In the future, he says, the bank will have to look at how it uses its branches but for now they will remain a key component of its success.
"We are already well challenged with the growth in our existing business and need people to service that. E-business is only effective within our existing business model," he says.
Mr Mulcahy maintained that while the bank had been earnestly working to develop its online services for some time, it had only become important now for it to emphasise this strategy. "This has never been of interest to the investment community until the last 12 months. Shareholders want to know about our e-business strategy now."
The bank's foray into the Internet is a purely defensive move. With four million customers it is not a question of what new business the Internet can generate but rather an exercise in retaining the existing customer base.
AIB already has a well developed ebusiness model which is gaining popularity with growing numbers of its customers. This week it introduced an Internet mortgage service and is close to rolling out a mobile phone banking service. Several joint ventures and alliances are also being discussed which should copperfasten further developments in the short term.
Mr Mulcahy said that in Ireland the relatively low penetration of personal computers per head of population would dictate against any immediate upsurge in the usage of such services with the uptake from mobile phone users more likely to make an impact.
But the announcement of AIB's Internet plans failed to make any impact on the bank's share price yesterday and Mr Mulcahy and his team seem resigned that it would be some time before the shares began to make progress.
Mr Mulcahy contended that the bank was suffering from the switch from value investing to momentum investing with fund managers selling solid earners such as AIB to raise cash to put into high growth information technology stocks.
Another priority consideration for the bank is concern among UK institutions about the state of the Irish economy.
The continuing uncertainty about the extent of any tax liabilities which might be raised by the Revenue Commissioners against the bank arising out of the DIRT inquiry was also likely to be a factor, he admitted.
