Load Reduction on Other Channels

E-Channels are largely automatic, and most of the routine activity such as account checking or bill payment may be carried out using these channels. This usually results in load reduction on other delivery channels, such as branches or call centers.

This trend is likely to continue as more sophisticated services such as mortgages or asset finance are offered using e-Banking channels. In some countries, routine branch transactions such as cash/cheque deposit related activities are also being automated, further reducing the workload of branch staff, and enabling the time to be used for providing better quality customer services.

Cost Reduction

The main economic argument of e-banking so far has been reduction of overhead costs of other channels such as branches, which require expensive buildings and a staff presence. It also seems that the cost per transaction of e-banking often falls more rapidly than that of traditional banks once a critical mass of customers is achieved. The research in this area is still inconclusive, and often contradicting reports appear in different parts the world. The general consensus is that fixed costs of e-banking are much greater than variable costs, so the larger the customer base of a bank, the lower the cost per transaction would be. Whilst this implies that
cost per transaction for smaller banks would in most cases be greater than those of larger banks, even in small banks it is seen as likely that the cost per transaction will be below that of other banking channels.

Having said that some sources of research in this area suggest that banks so far have made little savings from introducing e-banking (Young, 2007). It implies that, any efficiency related savings are offset by above average wages and benefits per worker due to the need for a more skilled labor force to run the more sophisticated delivery system. Other costs such as systems integration and extra security measures also take their toll.