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Starting 16 September 2002, AIB will pay 0.5 percent interest on credit balances over EUR1 on business current accounts in the Republic of Ireland. However, the bank qualified this announcement by limiting interest payments to those business customers who use one of AIB's on-line banking services. Customers will also only accrue interest on cleared credit current account balances.
"We think we have a very compelling Internet option," explained John Kelly, head of Business Banking for AIB. Kelly told ElectricNews.Net that the bank elected to limit interest-bearing accounts to Net users because AIB is "trying to solicit some change in their (customer) behaviour." He explained that many of the bank's larger business customers are already willing to switch to on-line banking or have done so already, but smaller firms are more resistant to making the change.
"Around 90 percent of the businesses in Ireland are family owned or have less than 10 employees. We want to try to encourage a positive change in behaviour from this group," he explained. He went on to cite some of the benefits of making the switch to e-banking, including time-saving advantages, less paperwork, lower prices for some services and 24-hour access to accounts.
The bank also said that the availability of credit interest will be "particularly attractive" for customers who need to keep large credit balances on current account for their short term cash flow needs. Interest of up to 0.5 percent will be credited to accounts on a quarterly basis net of DIRT (deposit interest retention tax), where applicable. It will also be paid on the credit element of an overdraft account, which swings from debit to credit, the bank said.
Alongside the new interest-bearing accounts, AIB announced a new range of deposit accounts for business customers that provide up to 3 percent interest and allow customers to withdraw 35 percent of funds on demand without penalty. These accounts, known as the "AIB flexi deposit range", will become available from 6 August 2002.
Already, AIB has 25,000 business customers in Ireland using on-line accounts, and this figure is expected to double over the next 18 months, said AIB managing director Donal Forde.
Though not yet launched to the general public, a service called AIB iBusiness Banking will be one of the cornerstones of AIB's business e-banking offerings, explained Kelly. IBusiness Banking will become more widely available in the autumn. The new service differs from the bank's existing electronic business banking services in that it is Internet-based, whereas existing services require a special modem and dial-up number to conduct remote financial manoeuvres.
IBusiness banking will also give users access to foreign currency accounts held in Ireland. According to AIB, it holds 180 days' worth of account history and gives users a fairly detailed breakdown of recent transactions as well as balances, overdraft limits and interest. Finally, the service includes cross-border payment options and a service called EMTS (electronic money transfer systems) to let customers pay salaries, creditors and direct debits.
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