E-marketing in the financial services sector (which is covered later) was made possible by the arrival of e-banking. E-marketing builds on the e-channel’s ability to provide detailed data about customers’ financial profiles and purchasing behaviour.
Detailed understanding of customers enables customised advertising, customised products and enrichment of the relationship with customers through such activities as cross selling. Other potential benefits of e-banking to organizations may include: improved use of IT resources and business processes; better relationships with suppliers/ customers; quick delivery of products and services; and a reduction in data entry and customer services related errors. It is important to note that e-channels do not automatically bring these benefits, as other organizational issues also have been dealt with. There are only a few examples reported in the literature where e-banking is realising its promised potential. One such example is the Royal Bank of Canada, where its number of online relationships was 340,000 and was growing at a rate of almost 700 new enrolments a day during year 2002-2003.
Another example of realisation of the above benefits is the Woolwich Building Society in the UK, which is described in Chapter VIII. The number of its online customer was growing so fast that it was cited as one of the main reason for
its takeover by a much bigger bank, Barclays. Not only did the number of its online customer grow very quickly, but the new customer base was also very profitable.
According to Woolwich’s own figures, its online customers bought four financial products each - much higher than its ‘branch banking only’ customers.
Chapter Summary
This chapter introduced the main theme, e-banking, covered in the book. It has set the background, defined e-banking, and briefly discussed its evolution and importance to the banking industry and customers worldwide.
E-banking is fast becoming a norm in the developed world, and is being implemented by many banks in developing economies around the globe. The main reason behind this success is the numerous benefits it can provide, both to the banks and to customers of financial services. For banks, it can provide a cost effective way of conducting business and enriching relationship with customers by offering superior services, and innovative products which may be customized to individual needs. For customers it can provide a greater choice in terms of the channels they can use to conduct their business, and convenience in terms of when and where they can use e-banking.
Berger, S. C., & Gensler, S. (2007, April). Online Banking Customers: Insights from Germany. Journal of Internet Banking and Commerce, 12(1). http://www.arraydev. com/commerce/jibc/2007-04/SvenBergerFinal_PDFVersion.pdf.
Devlin, J. F. (1995). Technology and Innovation in Retail Banking Distribution. International Journal of Bank Marketing, 13(4), 19-25.
Rayport, J. F., & Sviokla, J. J. (1995, November-December). Exploiting the Virtual Value Chain. Harvard Business Review, 73(1), 75-85.
Rayport, J. F., & Sviokla, J. J. (1994). Managing the Market-space. Harvard Business Review, November-December, (pp. 141-50).
Young, R. D., Lang, W. W., & Nolle, D. L. (2007). How the Internet affects output and performance at community banks. Journal of Banking & Finance, 31, 1033–1060.
References
Avkiran, N. K. (1999). Quality Customer Service Demands Human Contacts. International Journal of Bank Marketing, 17(2), 61-71.
Berger, S. C., & Gensler, S. (2007, April). Online Banking Customers: Insights from Germany. Journal of Internet Banking and Commerce, 12(1). http://www.arraydev. com/commerce/jibc/2007-04/SvenBergerFinal_PDFVersion.pdf.
Devlin, J. F. (1995). Technology and Innovation in Retail Banking Distribution. International Journal of Bank Marketing, 13(4), 19-25.
Rayport, J. F., & Sviokla, J. J. (1995, November-December). Exploiting the Virtual Value Chain. Harvard Business Review, 73(1), 75-85.
Rayport, J. F., & Sviokla, J. J. (1994). Managing the Market-space. Harvard Business Review, November-December, (pp. 141-50).
Young, R. D., Lang, W. W., & Nolle, D. L. (2007). How the Internet affects output and performance at community banks. Journal of Banking & Finance, 31, 1033–1060.
