Ebook The Evolution of Online Banking
The fact is that the Internet does hold evolutionary potential for the delivery of banking products and services. The Internet not only has an absolute cost advantage in providing financial products and services, it has the potential for enhancing the value of these products and services by making them more convenient for consumers to acquire, empowering consumers to make better choices, and personalizing those products and services to their individual needs. If the promise of this revolution has been thwarted by poor implementation, the forces driving the use of Internet banking have proved inexorable. The evolution of Internet banking strategy will continue. To the extent that retail banks resist this process, they will lose market share to others at an accelerating rate. Despite the legacy of failures and mistakes, those banks that correctly utilize the Internet will be rewarded with greater profitability and growth than is currently thought possible.
The web is a tool that may be used to create competitive advantage and differentiate a bank from its competitors. In the current competitive and turbulent environment, most retail banks have already made significant efforts to increase the value and desirability of their products and services to their customers through a variety of policies and activities (e.g., extending banking hours, developing an automated telephone response system, providing complimentary products and services such as mutual funds and insurance, and "friendly" personalized customer representatives). Such approaches to creating a sustainable competitive disadvantage have had only mixed success because they are expensive and easily duplicated by competitors. The web has a special role to play for retail bankers because it represents a potentially quantum leap in the ability of the bank to interact with its customers. The leap is quantum because the web provides the capability for an extraordinarily comprehensive exchange of information on an exceptionally cost-effective basis. A successful bank web site will foster the creation of communities of interest that can serve to truly differentiate a bank from its competitors.
Successful web sites create value for present and potential customers. Saving these customers time and money can create value. Making life more convenient and pleasant can create value. Respecting and honoring the integrity of the individual can create value. Value can be created be through empowerment, giving individuals control over their choices, lives and destiny. Value can be created through community service. Using the web as a fully integrated part of their business strategy, retail bankers have the ability to increase the attractiveness of their products and services as a way to offset the increasing commoditization of financial products and services. Indeed, the web has sufficient potential to allow retail banks to become even more profitable in an increasingly hostile and competitive environment.
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