Online Banking

Internet Service Strategy
A Critical Evaluation of the Amit and Zott framework Applied to Online Banking.

1.0   Introduction

Today’s consumer rarely purchases a product that does not involve an aspect of service.   For instance, when buying a new mobile phone, insurance is often offered, or when purchasing a new car, breakdown cover, insurance and warranty is offered.   Palmer (2008) states that, “Probably the most important development of recent times for improving the productivity of services has been the internet.”

2.0 Rationale
The aim of this report is to apply Amit and Zott’s model of the sources of value creation to the internet service strategy used by the Ulster Bank and Halifax for their online banking systems.   Amit and Zott created a framework which outlined four dimensions of value creation in e-business in the journal of Strategic Management, 2001.   These include efficiency, lock-in, complementarities and novelty.   The framework was created in order to help company executives to understand major drivers in e-commerce, which includes online banking.   Amit and Zott refer to their framework as, “...the architectural configuration of the components of transactions designed to exploit business opportunities.”   The report will discuss the four dimensions of value creation and how they can be applied to online banking, before proceeding to discuss limitations of online banking, as well as make recommendations as to how the Halifax and Ulster Bank can improve value creation through their online banking systems.

Figure one, made available by Johansson and Mollstedt (2006), demonstrates the sources of value creation in e-business.

3.0   The Four Dimensions of Value Creation and Online Banking
-Efficiency
Amit and Zott found that using e-business methods means that lower costs occur due to efficiency.   This is because information asymmetries between the consumer and the service provider are reduced.   The provision of an online banking service... [continues]

Read full essay