According to King, McKay, Marshall, Lee and Viehland (2008) online banking or electronic banking (e-banking) includes various banking activities conducted via the Internet from home, business, or on the road opposed to at a physical bank location. This paper shall compare and contrast both the online and offline retail environment for banking services. Internet banking offers great opportunities to the financial-services industry, including: •
a huge potential customer base
large economies of scale in investment
the possibility for services to be delivered using standardised modular software •
easy management of software
a common browser front end
the possibility to be equipped with good security protocols •
the easy application of pre-packaged communications software, enabling customers to communicate directly with the bank •
instant access to the bank for all connected customers
significant prospects for development and for adding value cheaply. Source: Keynote Report (2009)
Online banking presents many advantages in comparison the ‘bricks and mortar’ offline environment. In terms of placement consumers can access banking facilities from the comfort of their own home or workplace as opposed to visiting a branch on the high street. Online banking is extremely time-saving providing instant access to online services. It reduces and in some cases even completely eradicates the need to contact a local branch to make transactions. Consumers can use ‘e-banking’ to check their accounts, pay bills online, transfer funds from one account to another and in some countries even secure a loan electronically. In today’s fast moving society time is money. Customer not only saves valuable time by avoiding a trip to the branch but also may save on any travel expenses they may have incurred embarking on a trip to the local branch. Another benefit of e-banking is that’s the system is accessible 24 hours a day, 365 days a year. Funds can be transferred at any time of the day, whenever the customer needs not constricted to the sometimes inconvenient opening hours of the high street branch. This freedom gives the customer added value. Internet banking is both cost effective for the customer and the banking institution. Electronic transactions cost much less than paper based transactions. With fewer customers using the off-line retail environments there can be a reduction in the need for staff to engage in face-to-face interactions and less administration costs through the reduction of paperwork. In the online environment the customer is in control of his or her own banking transactions. The customer can decide when and where they make transactions or check their account details. The customer has the peace of mind in being in control of their own finances. For example, instead of waiting for monthly statements, customers can keep a close eye on their funds and alert the bank promptly if there are any discrepancies with their account. This responsibility of managing accounts online can be seen as a daunting experience for certain customers, especially if they are not I.T. literate. Some customers prefer to leave the accountability of their finance to the staff present in the offline environment and take comfort in the fact that the physical support in hand should anything go wrong. In removing the support of a member of staff that is associated with using an off-line medium, the online environment requires considerable trust from the customers to mitigate risk. Trust indicates a positive belief about the perceived reliability of, dependability of and confidence in a person, object or process (Rempel, Holmes and Zanna 1985). Ciancutti and Steding (2000) postulate that companies that have earned trust from their public have indeed created a competitive advantage. It is the issue of trust that creates a problem for the online banking environment. Customers are wary of disclosing personal...
References: • Bradley, L., Steward, K. (2002), "A Delphi study of the drivers and inhibitors of internet banking", International Journal of Bank Marketing, Vol. 20 No.6, pp.250-60.
• Ciancutti, A.R. & Steding. T.L. (2000), Built on Trust: Gaining competitive advantage in any organisation, McGraw-Hill, United States
• Key Note Report 2008, Internet Banking, [online resource] available at: www.keynote.co.uk
• King, D., McKay, J., Marshall, P., Lee, J. & Viehland, D. (2008), Electronic Commerce 2008: A Managerial Perspective, Prentice Hall
• Porter, M. (2001) “Strategy and the Internet”, Harvard Business Review.
• Moules, J. (2006), “Online Banking Giants Popularity”, Financial Times, October 14th
• Rempel, J.K., Holmes, J.G. & Zanna, M.P. (1985). Trust in close relationships. Journal of Personality and Social Psychology, 49, 95-112.
• Saleh, Z. I., (2003) “An examination of the Internet security and its impact on trust and adoption of online banking”, Capella University
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