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Keywords
Marketing, Distribution channels,
Banking, Internet, Delphi method
Abstract
Deregulation has brought down the boundaries of the banking industry, allowing new entrants and enabling a greater degree of competition. Into this scenario arrived the Internet - another radical technological innovation with the potential to change the structure and nature of banking. Many banks have adopted the Internet as a delivery channel (indeed, some banks have set up as Internet-only delivery). This paper reports a Delphi study of the Internet momentum in banking. Informed by diffusion of innovation theory, the study sought to discern the key issues and to explore the future of Internet banking. The results show that Internet banking is a very important issue in retail banking. However, the Internet will contribute as part of a multichannel (bricks and clicks) strategy, rather than as a standalone (clicks only) strategy. The developing functionality of Internet banking may enable some banks to achieve competitive advantage through delivering higher perceived customer value.
Introduction
The banking sector can hardly be regarded as a model of innovation. Indeed, its tradition, probity and established ways of doing business have been a source of pride to the sector. Banking, which has been characterised by its "tried and tested" processes of service delivery, is greatly affected by environmental change. Competition is escalating, both from traditional players and new entrants, owing to deregulation. Changing consumer behaviour and needs, globalisation, deregulation, disintermediation and the emergence of new financial service models are all dynamics in the financial services industry. Information technology is also having its impact (Chorafas, 1987; Scarborough and Lannon, 1988; Chen, 1999; Park, 1999).
The past four decades have witnessed acceleration in technological innovation within the banking industry. The increase in innovation adoption is a largely defensive measure against increasingly sophisticated and highly demanding consumers, escalating competition, and the necessity to control and reduce rising costs (Barra, 1990).
Internet banking presents the industry with an electronic and remote distribution channel. It represents an electronic marketplace whereby consumers may conduct their financial transactions on a virtual level (Reiser, 1997; Daniel, 1999). The advance of this innovation has occurred worldwide with the introduction of such Internet-only banks as Smile and Egg in the UK and Security First Network Bank (SFNB) and Wingspanbank.com...