The site was launched on Monday and hit immediate technical problems

The site was launched on Monday and hit immediate technical problems. It experienced “unprecedented levels of demand”, says the managing director, Tim Murley, and its systems crashed. On day two it was processing around 100 applications an hour, but customers still faced difficulties.Interest was no doubt fuelled by the offer of a 0 per cent interest rate on credit card balances until 30 June 2001 for the first 25,000 customers. Thereafter rates will rise from 7 per cent to 11 per cent.Murley says cahoot can cut banking costs by around 60 per cent and will pass the savings on to customers.

Its current account pays between 3 and 4.4 per cent, with an enhancement for those who do not require a chequebook There is also a free overdraft limit of up to £250. But it does not offer the full range of banking services.”We only provide services where we can offer a competitive advantage. We cannot make a difference in the mortgage market, and will therefore offer products through internet site e-loan,” says Murley.Dennis Holt, e-commerce director at Lloyds TSB, says it is aiming to register one million of its 16 million UK customers with its online banking service, LloydsTSB , by the end of this year. It is currently registering 20,000 new customers a week.From July all new Lloyds TSB customers will also have access to “real-time” 24-hour banking services, which will be extended to all customers from next year. Barclays is also pushing ahead with its own real-time banking service.Holt estimates around three-quarters of customers will want this combination of internet and traditional banking services. “They want the comfort blanket of picking up the telephone or walking into a bank for certain transactions.”But like Abbey National, Lloyds TSB is also setting up a new brand — evolve. This European-wide initiative will be launched in Spain in August and reach the UK in December.The internet-only service will be targeted at the technologically literate.

“Cost savings from the service will be passed on to customers, who will get market leading rates across all product areas,” Holt says.The battle for your custom is gathering pace. Buoyed by BT Cellnet’s predictions that by 2003 more people will access the internet by mobile phone than PC, free WAP mobile phones are a popular giveaway.Halifax says that its Intelligent Finance, to be launched in July, will offer the first 150,000 customers a free WAP phone.IF claims to be the first internet bank to launch with a full range of products. Savers will receive the same interest rate on their accounts as they are charged on their mortgage, personal loan or credit card.Woolwich followed IF’s giveaway in June by offering free WAP phones to customers on its Open Plan account until 31 July — it had originally offered them at a discount.But the real attraction of internet banking should be competitive interest rates. Attractive rates are available — it remains to be seen whether these are simply loss leaders and will fall in the longer term.The Halifax Web Saver online savings account pays 6.25 per cent on a minimum opening balance of £1, falling to 5.5 per cent on £10 if you want a cash card. Fixed rates of between three months and five years are also on offer with the maximum available 6.9 per cent.

Nationwide’s e-Savings online account pays 7 per cent on balances of £1.Internet-only banking services also offer competitive rates. Egg pays 6.3 per cent to internet-only savers, and 6 per cent to those who want telephone support. It does not offer full banking services, nor does First-e, which pays up to 6.81 per cent on balances of £1 on its savings account.Smile, set up by Co-operative Bank, pays 4.85 per cent on current account balances of just £1 and 6 per cent on its savings account. It also offers a competitive credit card rate of 9.9 per cent, while Egg has just raised its rate to 10.9 per cent. Compare this to Barclaycard rates of 19.4 per cent and both look attractive — although cahoot’s 0 per cent rate beats allcomers.Thousands of bank customers are going online daily, but there is no guarantee that internet banking will prove a surefire winner — Egg has yet to turn a profit despite its massive customer base.