The listening bank is about to take on a new dimension: researchers in Scotland and Denmark are investigating a banking system based on automated speech recognition. The 18-month project has won a Pounds 485,000 grant from the European Commission.

Around 20 per cent of UK bank customers use phone-based services, with calls answered by human operators, or an automated voice response based on pressing keys on push-button phones.

But Mervyn Jack, director of Edinburgh University's centre for communication interface research, which is working alongside Aalborg University, said it seemed many customers, particularly older ones, did not like the push-button system.

The project will examine using automated speech recognition to allow customers to talk to the computer about topics including their bank balance, paying bills, or making fund transfers.

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The Edinburgh centre will set up a few hundred "bank accounts", and volunteers will ring up with enquiries. "We'll find out where they have difficulties, and if they're trying to do things the bank can't cope with," Professor Jack said.

"We have been researching the software for speech recognition for the past ten years, developing applications such as rail timetable inquiries and telephone directory services. This project gives us an ideal opportunity to test and develop its application in the banking world."

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The researchers are working with the Royal Bank of Scotland, Barclays Bank and a Copenhagen bank as well as English and French voice control systems companies.