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PEST Macro Analysis Summary
The virtual banking industry was based primarily on the confidence of the users in the web-based banking technology and the authenticity of the virtual banks. The industry also projected constant changes to the regulations and technology which would define the technology acceptance by the general public.
Virtual banking services which had been deployed since 1980 by Bank ONE of Columbus, Ohio (Darlin 1997), had a tremendous growth since then to 1,130 banks deploying online banking services by 1999 (John Frank Yother (the university of Alabama) 2007). As such, Nexity would have an increase resistance from competitors and penetration into the virtual banking market would be difficult without providing a unique combination of technology or service to the virtual banking users.
This PEST analysis is conducted at a macro level to examine the technological advancements which would propel and prove viable for Nexity to launch into the Virtual Banking industry in the 21 century.
In 1999, Rep. Bob Goodlatte (R-VA), Rep. Zoe Lofgren (D-CA), and others sponsored and submitted a bill to congress to be reviewed so as to change the export controls on encryption software or tools which could be used globally or exported out of country (Encryption rights in the U.S., and encryption export restraints. 1999). This bill which eventually was approved in year 2000 would allow clients of virtual banks to transcend physical barriers to invest and maintain accounts in the U.S. without the fear for the security of their transactions or the need for physical presence either locally or while away from the U.S. This would also allow global U.S companies to conduct the banking through the internet from their branch offices out of the U.S thus increasing the potential number of clients.
To further regulate and provide a secure environment, Webtrust was launched with guidelines and audit processes for all e-commerce entities (American Institute of Certified Public Accountants, Inc. and Canadian Institute of Chartered Accountant 1999). This e-commerce certification was spear headed by American Institute of Certified Public Accountants, Inc. and Canadian Institute of Chartered Accountants and endorsed by US Federal Trade Commission to provide seal of trust for participating merchants. The certification program will authenticate the trade and security process of Nexity, as such allowing users to be confident of the services offered by Nexity.
Though changes in laws and governance of virtual banking services assured users of their transactions, there was a lurking issue with the dawn of the millennium. The Millennium bug or commonly known as “Y2k bug”, was first mentioned on a Usenet newsgroup occurred Saturday, January 19, 1985 by Usenet poster Spencer Bolles (Wikipedia.org n.d.). A poll was conducted by CNN/USA Today/Gallup in partnership with the National science Foundation to reflect consumer believes and understanding of the Millennium Bug. The poll conducted in May, 1999 showed that 21% of people who believed that the Millennium bug would bring about major problems and 30% would withdraw a large amount of cash to be stored away. Though the numbers are not the majority, it clearly explains there are concerns, and it would be greater for services delivered from virtual platforms. Furthermore, there would be exposure to risk and cost in identifying if there are problems with the technology if launched prior to start of the millennium.
Nexity would require strategic partnerships which will enable it to launch itself into the market without huge investments costs in technology development and a quick development turn-around time for its launch. Fiserv...
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