Sorry tellers: online banking here to stay

Hansapank has closed 21 of its 113 Estonian branches in the last year as more customers are choosing online transactions over bank tellers.

Last month, 95 percent of the bank's transactions were done online. In July 1999, less than 30 percent of transactions occurred online.

"But for Hansapank at large, the branch network has not lost its relevance since standard banking transactions are being rapidly replaced by the sales of loan and investment service," said Ando Noormets, a spokesman for Hansapank.

He said that no Hansapank employee had lost jobs from the closing of branches because they have moved to work in other offices.

But he said a few jobs may be eliminated in the near future.

"I can't say that no one will lose his job, but it's not a big issue," Noormets said.

Eesti Uhispank and Sampo Bank, two of the country's major banks, said they had not closed any branches yet, but they have also experienced a drastic drop in the number of customers who do transactions in the offices.

Like Hansapank, their offices are transforming from money-transaction venues to consulting centers.

"The pension reform, new investment products, and credits make more consulting necessary," said Janno Toots, a spokesman for Bank of Estonia.

Customers from Sampo Bank, which has 12 offices in Estonia, do more than 90 percent of transactions are done online.

The bank does not plan to close any offices, but it is not planning to open more, said Anneli Rouk, a spokeswoman for Sampo Bank.

When this Finnish bank opened in Estonia in 2000, it had seven branches. If the Internet did not exist, the bank would probably have more offices and would open branches in smaller towns, Rouk said.

"It's only logical," she said, "because now people in small towns can just use the Internet."

Despite the increase in online banking, Uhispank recently opened another branch in Tallinn, bringing the number of its offices up to 64. With 96 percent of transactions done online last month, this new branch is serving the growing demand for financial consulting, said Evelin Pull, a spokeswoman for Uhis-pank.

"People want to speak with people, not just to the bankomat machine," Pull said.

"Right now we feel that people like to come in and ask personal advice. It's like when people said newspapers would die out because of the Internet. But newspapers are still here.

"The main reason for the development of e-technology is to offer our customers more convenience, not to replace banks."

The desire for personal interaction in banking is seen most clearly in rural areas where many Hansapank branches have closed. In these areas, more people are beginning to rely on Eesti Post's Postipank service, a cooperation between the Estonian postal service and banks that allow customers to do transactions in any of the country's 523 post offices. The service has been offered in post offices since 1997.

"We see it growing because many people are opening new accounts with the post office," said Evely Ellert, a sales manager at Eesti Post. "It's a new opportunity for us to serve our clients."

Toots, the spokesman for the Bank of Estonia, said the increase in Internet banking usually improves the lives of customers, but banks need to guarantee basic services in rural areas where Internet penetration is lower.

"By installing ATMs, cooperating with post offices and shops for cash withdrawal these problems are solved already today," Toots said.