On the eve of the demise of 20Twenty, we can all take a few lessons in Internet banking from the grave THE DEMISE OF Internet bank 20Twenty is proof that business decisions are made in a cynical atmosphere of what profits can be generated in the shortest possible time, rather than rewarding a loyal customer base and bringing in the best technology.

20Twenty`s birth and death have been plagued by irony from the beginning. Originally, the bank was started by a rather staid financial institution Saambou some six years ago, looking for an entry into the electronic and youth markets and a way to improve its service.

In order to protect itself in case anything went wrong, Saambou ring-fenced, or made 20Twenty a separate legal entity. The irony is that the parent collapsed, sparking one of the most serious banking crises in recent history. Saambou`s curator wanted to wrap up 20Twenty as quickly as possible, but another ironic twist followed. All the major commercial banks decided to take a look at buying the operation, meaning that each had to complete a due diligence exam that on average took about three months. This kept 20Twenty staggering along, operating with about 20 000 loyal customers.

Many saw it as the underdog in the banking world rocking the boat with the more powerful commercial banks that offered a bland set of products with little real differentiation between them. During its period of curatorship there was the very real perception by customers that this bank belonged to them and the 100 staff who operated from Cape Town.

News that Standard Chartered had bought 20Twenty for R10 million two years ago brought joy to the current and prospective customers. But the writing was on the wall and this deal was not all it seemed to be.

Initially the new owners talked about making this the only brand Standard Chartered would keep and even taking the concept to India. For two months an intensive advertising campaign was launched - but it missed the mark. New products were also touted such as home loans and credit cards. When Standard Chartered bought 20Twenty, it was busy investigating the purchase of other SA commercial banks and was in a behind-the-scenes tussle with Barclays, which culminated in the sale of Absa to their long-time rival.

The local commercial competitors knew exactly what 20Twenty`s strengths and weaknesses were and upped their game to stave off any potential threat.

PULLED THE PLUG

So when Standard Chartered eventually pulled the plug late last year and recommended the clients move another bank, it was not a surprise. Reaction was one of disappointment and resentment as customers who had stuck with the bank through thick and thin felt as though they had been made fools of.

20Twenty was never really about technology. Most of its systems were built on dated Microsoft software and they were badly in need of an upgrade at the time of purchase. It never had a proper customer relationship system in place, but it did highlight that a lot can be achieved with good service. 20Twenty`s Wired Warrior programme was a very successful customer retention tool.

The end result of Standard Chartered`s foray is that it has a small local home loan book and it has had some taste of the local retail banking market. So far the flavours have not suited it or its potential customers.