Why does the UK and some other countries have so few online banks

In the UK version of Microsoft Money, there is only one two-way financial institution (see Article 235 for more information on online banking types). This financial institution is the Nationwide.

The banks are regularly contacted, and tools, documentation, training notes and dedicated online banking support and certification staff are available to help them, but at the end of the day, it is down to the banks to decide what services they offer.

The rest of Europe is similar to the UK, in that integration with 3rd party software is nowhere as common as in the US. In the US, checking accounts are not necessarily free, so many things that we don't pay for in the UK, they do. They tend to write a lot more cheques and rarely use Direct Debits or Standing Orders. Many banks use 3rd parties to enable their customers to pay their bills (Checkfree), as many US banks don't offer that facility. There are a lot more banks and most if not all, are smaller than the 4 large banks in the UK, when it comes to numbers of current account customers.

The smaller ones tend to outsource their online operations, which ours don't and this is why so many small US banks have online features that UK banks don't. Also, UK banks have much stricter requirements when it comes to safeguarding data. So while a US bank can change code, test it and release within a matter of days, many of our banks operate 6 week complete test passes on any changes.

Things are improving as more UK banks are adding 1-way statement download and many of those that have just QIF have added OFX or are about to add OFX.

So, they are simply different markets, with different regulations so it's difficult to compare. They have things we don't and we have things they don't.

Thanks to Vincent Stokell, Microsoft for much of this answer originally written in 2003