UK banking group Alliance and Leicester (A&L) says it has seen a 67% increase in the number of current accounts opened via the Internet in the first half of the year, compared to H1 2006.

The bank is reporting a 10% rise in first half profit, thanks in part to a steady increase in sales over its Internet channel.

Around 41% of the bank's "core four" product sales - current accounts, mortgages, personal loans and savings - were generated via the Internet in H107, up from 35% in the first half of 2006.

Furthermore A&L says the number of registered customers and users for its online business banking service increased by over 40% in the first half of 2007 and 30% of new business banking accounts were opened via the Web.

A&L says the number of current account customers using its Internet banking service has increased by around 140,000 over the past year, with the number of transactions completed online per month increasing by more than 35%.

The bank's focus on direct banking channels, such as Internet and phone banking, helped reduce its cost-to-income ratio to 51.8% from 54.8% last year.

Outgoing A&L group chief executive, Richard Pym, says: "Our direct banking business model differentiates us from our competitors. It is aligned with the changing needs of consumers, who are increasingly demanding good value products, as well as the ability to manage their financial services transactions when and where they want."

The bank is also investing in branches and says it has now revamped 78 of its 252 stores and a further 103 had a deposit-taking ATMs and welcome desks were installed during the first half of 2007. Over 34% of counter-based card transactions in the stores with deposit-taking ATMs have now migrated to the machines, improving productivity, says A&L.

Pym says progress on the implementation of the new Alnova IT platofrm - a replacement for legacy systems for commercial and personal customer current accounts, savings and personal loans - is going to plan and the first phase will be rolled out in 2008.

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© Finextra Research 2007