Financial Services Customer Conference 50 pages

E-Banking its History and Current Customer Behavior

This work demonstrates the growth trend of ebanking first by developing a brief history of the trend and then by focusing on the development of customer use and adoption of the various forms of ebanking. The work will then focus on a case study methodology that will enlighten the reader as to the needs of customer care and usage patterns and provide some recommendations to banks about growing market share, gaining new customers, retaining customers and innovating for the future of ebanking.

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E-banking in general is a trend that has grown and evolved consistently over the last 30 years. E-banking can be defined as any banking transaction that takes place via electronic means, including automated teller transactions, the oldest form of e-banking, to wireless transactions via a cell phone, but most commonly e-banking is associated with account management tasks and transactions that involve the internet. Internet banking has a history that runs concurrent with the world wide web in general as a result of the fact that very early in its inception creators and users began to see the internet as a way to develop commerce and to reach a greater number of people with it. E-banking then became a natural progression of the growth of internet shopping, and made it possible for bank customers to safely and securely conduct their banking business online. From about 1983, just a few short years after the launch of the world wide web some of the first internet transaction models were launched and since then the growth of the service options as well as the possibilities for transactions has grown exponentially.

Internet banking has now become a mainstay of the banking industry and there are even a few banks which are internet only based. Customers of these banks receive digital automatic deposits from various resources, most commonly employers and then all transactions, excluding a few possible cash transactions are then supported in an entirely electronic format.

Security First Network Bank (SFNB), the world’s first Internet-only bank. When it opened its virtual doors in the fall of 1995, SFNB was using internally developed technology that was based on two then-radical premises: 1.the software required for remote banking works better for everyone if it lives on the bank’s network server, not inside every customer’s PC; and 2. The Internet can be made secure for financial transactions. SFNB did indeed prove that the concept worked. For three pioneering years it successfully, but not profitably, ran its e-bank and convinced some 15,000 depositors that the Internet was both convenient and secure. That pathbreaking approach caught on with a good share of the country’s biggest banks (Orr 1999:32)

Looking at a European alternative is the success story of

“THE internet is here to stay,” says Andrew Firth, marketing director of Egg, the country’s first and best-known internet bank [UK]. “People are signing on as never before, buying PCs….”Up to 80,000 people visit Egg every day. The reason is straightforward, says Andrew.”We were the first company to popularise the net as a place to bank. Nearly 90 per cent of people recognise our name. They know we have great deals, better than any high-street banks. Banking is a service which lends itself to an interactive medium. “There are no products to be delivered. It’s a case of being able to access your information whenever you want. “Two seconds at work will tell you what’s going on in your account. Once people have overcome the initial fear they never go back. (“- — : Safety Net for” 2001:44)

Yet, for most banking customers the electronic options of their retail bank are supplemental to live transactions. Customers can choose to pay bills online, transfer funds from different accounts and a variety of other things in supplement to making live deposits of funds and managing their account information and content via a live teller. The current system also has begun to expand again in a new direction where wireless banking is now supported by wireless technology and many transactions previously only possible live or via the web are now available via wireless devices or even interactive television. This trend is much more common in Europe as the wireless devices and systems utilized there are more commonly capable of digital information transfer. For the purpose of this dissertation customer behavior in the later example, i.e. with the customer banking with a retail bank that has e-banking functions, will be used as this currently constitutes the largest percentage of e-bank users, using all forms of e-banking venues. The fact that this is the largest group of e-bank users can be supported by the fact that though the overall banking industry has had a reduction in number of organisation banks branch demand is still on the rise. In other words customers still wish to use branches but many choose to supplement bank use with the convenience of e-banking in its many forms. (Gup 2003:2) This trend then requires that most if not all retail banks innovate and adopt technologies that support this supplemental ebanking standard in a format that is still customer friendly and supportive of all the necessary security standards that support customer confidence and ensure secure transactions.

For the purpose of demonstration the following graph demonstrates the growth of ebanking in the U.S., as it is in correlation to the growth of the internet in general. In other words as customers became more savvy of the use of the internet for a variety of other commerce practices they also began to see and use it as a supplemental banking system, where the bank is just another retailer utilizing internet technology to improve access and provide convenience for customers, just as any other retailer would for any other customer.

A particularly strong trend in ebanking is the utilization of the internet to pay bills online. Much of this has previously been supported by the banking industry and most banks now offer direct payment options that are coordinated not by the retailer but by the bank and therefore do not require the customer to utilize their debit smart cards or credit cards for every billpay transaction. Banks are attempting to secure a greater market share of these transactions and reduce the number of billpay sites that have developed around this trend. Again this is a U.S. demonstration but would likely mirror the changes and standards in other parts of the world where the internet proliferates the marketplace.

The writer of the work that graphed these trends from a larger survey conducted by CheckFree notes that within the survey that was completed to demonstrate the utilization of electronic billpay customers noted three main reasons why they use the internet to bank: “Respondents identified 24/7 access to account balances, time savings and better organization of their finances as the most important benefits of conducting banking activities online.” (Frank August 28, 2008:

For a more precise look at the internet banking trend in Europe one must look at European-based research, such as that conducted by Thomas Meyer at Deutsche Bank Research. (Meyer 2006)The discoveries of this work mirror those of customer bases in the U.S. And elsewhere, excluding two particular issues. Europe has a smaller percentage overall of online bankers and wireless transactions are more available in Europe due to the technology of wireless devices and networks’ digital formats. It remains to be seen if such availability will be highly utilized, but if the trend associated with wireless dependence continue it is likely that banking in Europe will also see this as a growing avenue of service in ebanking.

Meyer has developed a comprehensive snapshot of internet banking in Europe. The above map (see figure 3) explores the regional differences of the adoption trend by customers and can easily be used to frame the thesis that usage rates for ebanking run concurrent to internet usage in general. Additionally, Meyer notes a strong regional north to south decline in adoption of ebanking in Europe as well as a remarkable difference in percentage of adoption, 36% average usage compared to 44% in the U.S. Meyer also notes that the GDP of a nation in the EU correlates to ebanking, as the lower the GDP the lower the rate of adoption of online banking and ebanking in general. Education also seems to drive ebanking trends in Europe as the higher the level of education and individual has the greater the likelihood of adopting ebanking.

Security fears are also adoption barriers though they do not seem to correlate to any real security breech events.

Age is not a factor and generally those who are shopping online are also more willing to adopt online banking and other forms of ebanking. (Meyer 2006)

“The main worry for online banking customers, of course, is security. Andrew explained there are three levels of security at Egg. First is a 128-bit SSL encryption engine, as used by the United States military. Second are ‘Firewalls’ (software which acts as a virtual shield to protect the vital servers) and monitoring tools to identify potentially fraudulent behaviour, plus virus protection software for customers’ own PCs. Third is a series of passwords and personal information chosen by the customer. On top of this they guarantee customers that if they are victims of fraudulent activity on their Egg accounts, any losses are covered in full. “This has never happened,” says Andrew. “There has never been any breach of internet security.” (“- — : Safety Net for” 2001:44)

Again internet and bank security are largely overexagertated yet they are occurring more frequently all banks and many other institutions are taking daily active precautions to reduce risk to customers and they are largely successful in doing so Electronic banking can take many forms. A recent trend that is a direct threat to banks is the development of e-money which takes the jurisdiction of stored financial value away from banks. The trend is growing as an alternative way in which to do online commerce transactions without utilizing bank systems including credit and debit cards and other forms of bank payment options. The user receives a voucher of sorts in an email and is then able to spend the money electronically. Service sites like Paypal and others support this venue even by going as far as to create Paypal debit cards which are issued by Paypal, can be used in most ATMs or retailers that take debit payments and reportedly get you the money faster than their free service which deposits the funds in a previously agreed upon bank account, but can take up to a week to process. The conception of this service by PayPal and other services like Paypal was developed to bypass banking and offer services to people who for one reason or another do not have a traditional bank account or wish not to use one to make purchases or receive payments via the internet. (Harper and Chan 2003:46) To some degree these services offer a service that is needed as there is a trend that demonstrates that many individuals do not for various reasons have a bank account or one that allows a debit card and that these customers would still need to access ebanking and ecommerce functions offered via the internet. Those individuals associated with the financial limbo that is involved in not having a legitimate bank account are often forced to use what are thought of as fringe lenders or predatory lenders, cheque cashing fee services, payday lenders and other not necessarily positive service providers to do personal business and internet services such as Paypal are fundamentally more cost effective. (Buckland, Hamilton and Reimer 2006:109)

Electronic banking technologies have proliferated in recent years, and the availability of a wide range of products has led to increasing adoption among consumers. These technologies include direct deposit, computer banking, stored value cards, and debit cards. Banks and other financial institutions have worked hard to develop and deploy these technologies because of their potential to increase efficiency, cut costs, and attract new customers. Consumers are attracted to these technologies because of convenience, increasing ease of use, and, in some instances, cost savings (Anguelov et al. 2004). Electronic banking, in particular, has grown at impressive rates. Between 1995 and 2003, e-banking increased eightfold (Hogarth and Anguelov 2004). Between late 2002 and early 2005, use of online banking increased 47%. There is some evidence that computer banking is associated with better household financial management (Hogarth and Anguelov 2004). However, financial literacy, the digital divide, and other issues that separate disadvantaged groups from the financial mainstream make it difficult for low- and moderate-income (LMI) individuals to reap the potential benefits associated with computer banking. (Servon and Kaestner 2008:271)

Sevon and Kaestner go on to stress that concurrent internet technology proliferation and ebanking and other commerce leaves those individuals already challenged by the digital divide, i.e. lacking technology knowledge and access further behind and further out of the loop with regard to money management. These individuals are then forced to either use other services or obtain ebank services in some form or another. Paypal and other payment for service sites have responded to this need, and some would say more rapidly than retail banks to support and retain this entirely new customer base, who find ebanking a necessity to personal financial sustainability and development. In turn retail and internet banks are also seeking this customer base as part of their market share. (Servon and Kaestner 2008:271)

Internationally, the ebanking trend is on the rise, again often concurrent with online and wireless technology infrastructural growth and development. Growth trend for bank offerings of internet banking in 2002 demonstrates the growth trend of ebanking internationally. More recent trends in ebanking proliferation would clearly put many of these nations and their banks at the 100% mark as the trend growth since 2002 has been substantial. Yet, this graph does show again that ecommerce and internet dependence and usage rates correlate almost directly to ebanking trends and offerings. With this growth of offerings by various banks individual options offered by each bank has both streamlined and diversified and customer access has increased concurrently.

Literature Review

Harper and Chan stress that banks who are successful or who will be successful in the future are focused on innovation in the area of internet communications technology. As these banks respond to the massive changes in technology and customer usage they must center their focus on innovation and continued expansion of known and projected customer wants and needs. Harper and Chan provide a short list of possible areas of serious inquiry on the part of banks to ensure a competitive edge in change and market share:

Advances in ICT have profoundly altered the banking business. This is not surprising given that banking is an information-intensive industry. Technology has enabled banks to innovate in a range of areas, including products, distribution channels, organizational structures, internal processes, and customer relations management. These changes create both new threats and new opportunities. In particular, technology has increased the competitiveness of banking as an industry, not least because it facilitates comparison-shopping and the entry of new providers. Some areas in which technology is changing the face of banking include:

• Automation/computerization of standard transactions; for example, — automating payment services, thus reducing the need for paper checks, paper records, and bricks-and-mortar branches; — standardizing credit analyses for loan applications. (Harper and Chan 2003:36)

Within these two examples above are offered a whole set of new challenges and opportunities for both banks and customers as they seek to maintain a balance between providing a competitive service that is easy to use and well utilized and producing reasonable restrictions on standards that meet the needs of the desired customer. Harper and Chan then move on to discuss some of the ways that information technology has changed the actual running of the bank:

• Decentralization of back-office support — modern communications networks allow back-office support and operations (including call centers) to be located at a distance from retail points of delivery (sometimes even offshore). (Harper and Chan 2003:36)

These changes focus on the need for banks to develop systems that respond to internal and external electronic communication volumes, and also speak secondarily of the fact that many of these services are being provided globally and are therefore a part of the ever expanding global market. Harper and Chan then move on to discuss the growing sense of customer related changes in delivery of service and customization, which form many banks is seen as a challenge but for many customers is seen as a foundational reason for utilizing electronic banking services. With the reduction of hard copy information and the switch to electronic records and integration customers have a wider variety of account options and integrated account functions. This as well as the last two bulleted items are probably the most significant customer needs-based changes that have effected banking:

• Creating value for customers — integrating different types of financial accounts — across multiple vendors, checking and mortgage accounts, car loans, mutual funds, and so on; — customizing products to specific needs and circumstances; — improving service times and sales capabilities (e.g., cross-selling).

• Making payments — facilitating customer-initiated electronic payments; — creating digital cash.

• Customer information and data-mining systems — improving services to existing customers or bundling information for sale to other players. (Harper and Chan 2003:36)

Harper and Chan have therefore developed a relatively comprehensive and detailed list of the standards and changes that have taken place in banking and for the most part all of them meet the duel needs of better customer service and more functional knowledge of customer usage patterns and needs. There is some challenge to the idea that branch offerings are less needed, as this is a contradiction offered by some researchers who claim that retail centers are still desired by the customer for some of their banking needs.

Early developments of electronic banking in the form of the ATM brought many banking minded individuals to the center of the trend of challenging innovation prediction of change. ATMs, the first form of electronic banking have saturated the market, are supported by both banking and subsequent alternative industries and have clearly been well received by customers who found their ease of access essential to the change from a cash and cheque-based banking system to a smartcard system. Here are a few things that were predicted about ATM and other electronic banking use in the early years of their development:

In the early 1980s, industry observers continued to predict growth in ATM use and deployment, possibly followed by a decline in favor of home banking. Here are a few examples of predictions about ATMs made during the early 1980s: ATM growth is not at maturity but at its beginning. There is a tremendous amount of growth still to take place. (Edwards, 1982) In 1980 a milestone was passed, with ATM shipments passing the 5,000 unit mark. 1981 was a record-smashing year, with 8,456 machines shipped, bringing the cumulative net installed base in the U.S. To 26,800. Forecasts for 1982 are even brighter, and it would come as no surprise if ATM shipments this year surpass 10,000 units. (Zimmer, 1982) By 1990, forecasters say, there will be 125,000 ATMs in place. Even if home banking catches on, ATMs will still be useful for on-the-spot cash needs. (Credit Union Magazine, 1983) During 1982, consumer usage of ATMs showed stunning growth. […] Indeed, several estimates suggest that by 1985 the number of ATMs in the U.S. will reach the 84,000 level. (Duffy, 1983) Generally, the ATM may be viewed as a major success story for EFT [electronic funds transfer] in the 1970’s, with impressive growth in installations adoption by consumers. […] Indeed, the [adoption] pattern is similar to the demographic patterns of adoption of checking accounts in the early 1950’s. (Murphy, 1983) This delivery system [self-service banking] will develop very quickly up until 1990 when it will start to slow down and eventually decline in favor of home banking. In the year 2000, home banking and self-service banking will compete for routine transactions. (Loviton, 1985) (Cobas, Mote and Wilcox 2003:55)

ATM use as apposed to live teller transactions during banking and off hours was the customer’s first exposure to EFT and electronic banking in general and many found them exceedingly useful, especially when off hour banking was a necessity. ATMs today are still used and to most people feel secure as an alternative to live teller banking. Nearly anyone who has a credit or debit card uses ATMs frequently but most commonly to get cash. Some customers use the systems to deposit cheques and cash during not banking hours and banks have had to seriously compensate for the demands of rapid turnover on balances, as customers demand such service even when they are using an ATM. Some banks such as Wells Fargo offer the ATM user who deposits cheques via an ATM the ability to withdraw a certain amount of the face value of the cheque at the time they deposit it, and even before the processing of the cheque has taken place within the system. They do this to meet the demands of customers for rapid response time and equal service delivery for teller vs. ATM transactions.

… the advent and rapid growth of automated teller machines (ATMs) gave rise to predictions that they were the vanguard of a major shift toward electronic banking. The shift toward using ATMs was envisioned to involve their providing many additional services, such as deposit-taking and acceptance of loan applications and displacing physical branches and paper-based payments. (Cobas, Mote and Wilcox 2003:72)

Cobas, Mote and Wilcox do however stress the fact that ATM use has been relatively simple in the manner in which customers use it, and the projections of the early proponents of ATM use were highly optimistic. Finally, the researchers also claim that ATM development may have even forestalled development of other forms of electronic banking in part because banks presumed that because such services as depositing and application processing were available via ATMs and considerable resources where allocated to ATMs the need to expand ebanking was limited. Cobas, Mote and Wilcox state, “…despite the continued rapid expansion in the number of ATMs, their use has overwhelmingly been confined to dispensing cash and occasionally providing account balances. Ironically, by bringing new security and convenience to getting cash, technological advances in ATMs probably retarded the adoption of electronic banking.” (Cobas, Mote and Wilcox 2003:72)

Customer use models for electronic banking and especially international electronic banking have been established in many ways by the Swiss system of banking as it has been highly involved in international/global banking for nearly the whole history of banking in Switzerland. This banking model therefore serves as a template for the global banking and commerce trends that are overtaking the more nationally-based systems today. From a European perspective and especially with the recent development of the Euro as a collective currency much is still up in the air with regard to how these older examples will influence banking in general. Cocca and Csoport first discuss the nature of change associated with electronic banking and then elaborate on some ofo the facts associated with customer care and the Swiss advantage:

Banking in the age of information technology is subject partly to past success factors and partly to completely new ones. The competitive advantages of Swiss banks with regard to an international alignment of Internet banking can be identified as follows:

• A major condition for success in e-commerce is the customer’s confidence in the bank or the bank’s reputation. In addition, the customer of the future will not simply conduct his or her banking transactions with the cheapest supplier. (Cocca and Csoport 2003:302-303)

Cocca and Csoport discuss the fact that internet or distance commerce requires a higher set of standards, largely as a result of the need for trust. Consumers seek out purchases and transaction offerings not based upon the cheapest supplier of a service or product but upon the trust and confidence they have in the supplier. For this reason the researchers believe that brands with the greatest advantages will be those that are easily recognized by the customer and have a clear reputation for secure service delivery. This is true of internet commerce in general but can be seen to be playing out in electronic banking as the number of banks declines even while demand is higher than it has ever been for banking services, as banking is now nearly essential to conducting any individual life even for people who have no business interest and are simply employees to others.

Analyses of Internet purchasing behavior show that even with unproblematic and standardized products, such as books or music CDs, customers often do not buy from the cheapest supplier but from the one they know and trust (Bailey, 1998). Time and spatial separation between customer and supplier seem to increase the need for trust when compared to the more traditional ways to purchase items (Smith, 1999, 12). The trust factor could lead to the largest and best-known banks having the best chances of success in e-commerce. Trademarks receive more importance in the new world, although well-known brands do not necessarily have to have their roots in banking. A good rating will also be of importance for e-commerce banks, which goes beyond evaluating debt instrument creditworthiness. Similarly, the quality of the financial center and the banking supervision, to which ecommerce banks are answerable, will be an important element of trust, as will be the technical security of the information technology solution and the protection of the client’s privacy. (Cocca and Csoport 2003:302-303)

According to Cocca and Csoport the strengths of the Swiss system as a market leader in internet and international banking are clear, as the Swiss system already addresses many of the above mentioned concerns but researchers elaborate even farther stating that all the above have been met by the Swiss banks as well as language diversification universally, big Swiss banks are already counted as the best in internet banking, financial strength of the market and the banking system, technology and financial infrastructure are strong. (Cocca and Csoport 2003:302-303)

Consumer Confidence and Care

There is nothing about ebanking that is different than any traditional form of commerce excluding that some of the most important aspects of it with regard to the customer are even more important than they are in face-to-face contact formats. As has been mentioned earlier in the literature view consumer trust and confidence are crucial to customer satisfaction and utilization of ebanking. (Cocca and Csoport 2003:302-303) Yet, this is such a crucial aspect of ebanking that it deserves a full subheading or chapter.

Business Week ran a cover story a couple of months ago entitled “Internet Anxiety.” Anyone in what are now being called “traditional business” (which includes banks) probably understands the meaning of that headline all too well by now. The counterintuitive, meteorically paced world of Internet business is causing many people sleepless nights, including, no doubt, web practitioners who “get it.” And it just keeps getting worse. Listen to some of these comments made at the recent E-Customer Forum cosponsored by ABA and Business Week:* “If you’re only thinking of providing low-cost transactions over the web [in your traditional business], you’re in trouble,” said Diogo Teixiera, president of TowerGroup. “Eventually all profits will be competed away.”* “The web is driven by much lower transactions costs, which is good for business,” but also bad, said McKinsey (Streeter 1999:7)

The manner in which banks and any business addresses this issue is crucial to the lasting power and full potential utilization of ecommerce options. There was a time when those who were fearful of the internet simply chose to do business in a more traditional manner, yet these traditional options are becoming more and more limited as banks and other organisations increasingly invest in and therefore streamline services to internet only function options. In response to this even those most leery of the online void are forced to do business online and therefore demand secure and trustworthy access, concurrent with the increase in security breech options for unscrupulous practitioners. (“Identity Fraud, Round Two: Fraudsters Are Recruiting Trojans and Men-in-the-Middle to Help Themselves to Your Money. Banks Need to Work Differently to Stop Them” 2005:64)

Osberg [CEO of Wells Fargo] concurred, adding, “I don’t think people in the online space are forgiving anymore — that’s changed since last year. “Wells has installed automated email response software but faces some challenges getting it up to full speed, said Osberg, because a lot of back-end investment is needed. Wells Fargo, both before its merger with Norwest and since, has been hugely successful in building interest in Internet banking — it recently reached one million online customers. It has done this within the traditional bank holding company structure. (Streeter 1999:7)

Wells’ structure choice is not alone, as other banks have chosen to reach out to customers in a different way and build branding on more than one entity. In other words they have chosen to branch off to serve customers in an intent only format separating their retail bank from their online bank services, or simply creating a subsidiary online bank, which can act as a portal to bring in new customers. It remains to be seen which strategy will prove more fruitful but it is presumed that creating anew brand could be a mistake in the case of internet banking as consolidation continues to be the decision of many banks to keep one strong well-known brand out there to build customer confidence and draw in more market share.

A second approach, begun last year, is to partner with popular Internet portals and sites such as Yahoo, Excite, and eBay. This is targeted for online customers who want multiple brands and multiple online channels… [or diversify with additional branding]The payback, said Luecke [CEO of Bank One who lanchwed Wingspan], comes in two ways. First is that it halts market-share erosion. Customer retention can make a strong case very quickly, he said. The second payback comes from gaining new accounts, which will take longer. Luecke summed up his presentation with three points:* Have a clearly defined strategy;* Commit sufficient resources;* Help customers win. “The public is not an observer [of Internet developments], but is in control of the race. (Streeter 1999:7)

Customer trust is crucial to the development of any functioning strategy. It is likely that though the diversification may have some strengths as were noted by the CEO of Bank One the need for customers to know the name in order to trust them with their most precious commodity is essential to ensuring growth and sustainability in the online venture. Customer service knowledge and the real knowledge of who the customer is and what he or she wants is the most fundamental aspect of successful growth in ebanking. This aspect of the traditional business dynamic is even more full of opportunity than it has been in the past as so much more information is availed to the bank, in a much more easily accessed format than ever before. The information collected regarding usage patterns, complaint or satisfaction driven comments and many other bits of information are right there at one’s fingertips if the organisation team players know how to get it and use it the fullest advantage for innovation and improves quality of service.

Future success in financial services depends on an ability to build profitable customer relationships. This requires being able to identify customers by their tastes, likely behaviors and potential profitability. It also requires the finesse to turn this insight into the right set of solutions to fit customer interests. (“ABA Financial Services Customer Conference: What Do You Really Know about Your Customers?” 2002)

The promises of the web and ebanking in general have yet to be fully realized and increased commercialization of the media poses a challenge to some, though these situations are actually improving through better technology and safeguards.

The Web promised customers personalization and customization; it promised marketers deeper insights into the habits, feelings, likes and dislikes of customers. But has it lived up to these promises? According to Don Peppers and Martha Rogers, authors of The One to One Future, among the “new rules of engagement governing business competition” were “initiating, maintaining, and improving dialogs with individual consumers, abandoning the old-fashioned advertising monologs of mass media” [1:1]. Weiss (20) argues that CRM drives relationships and purchases (both online and off) and drives brand loyalty by fostering trust. Sowaiskie (18) suggests that CRM is driven by three factors: 1) consumers empowered by information, technologies, choice, globalization and deregulation; 2) increased competition; and 3) the Internet and e-business, which facilitate the emergence of new distribution channels and enhance sales and marketing as well as service effectiveness and efficiency. (Ragins and Greco 2003: 25)

Ragins and Greco then go on to discuss the fact that to really utilize customer resource management, systems they must be applied in a manner that allows the technology one already has to fully analyze the CRM needs and to link with customer patterns and desires. This often means investing in costly software programs that track customers based on a set of industry parameters. In banking there are several reputable products that do this.

Blue-chip companies are investing millions in software products from CRM leaders like Epiphany Kana Communications and Siebel (9). Strategically effective CRM requires the intelligent application of technology…. The B2C [business to consumer] consumer may be seeking a mix of convenience, price and product capabilities. Information gathered about the consumer typically includes demographics, past and current purchase behavior, preferences and psychographics. The contact strategy for the B2C market includes using past purchase patterns to anticipate new needs and wants that can be targeted with new offers. Two-way communication on the Internet offers more immediate and direct consumer feedback. (Ragins and Greco 2003: 25)

The massive amount of customer feedback that has begun to develop as a result of ease of access and online home banking will be discussed later in this work, as banks again must find systems to seize the opportunity of rapid and frequent customer contact and mitigate the shortcomings, not the least of which is the quantity of personal communications that need and deserve rapid answers.

In a recent survey of consumers using online banking and other e-commerce sites, the following key findings relevant to banking service issues emerged:[check] Only 52% were completely satisfied.[check] Up to 38% of banking customers had to pick up the phone or visit branches concerning their issue.[check] One quarter of all banking emailers had to “pick up the phone after all” to get it resolved. This was a frustrating experience for the customer and generated unnecessary added expense in extra channel usage cost.[check] 30% reported that it took longer than two days to receive some form of resolution and only a quarter received a reply within 12 hours.[check] On an up note: 88% received some sort of immediate response either offering an answer, more information, or setting expectations for a future reply. Source: TARP (Bielski 2005:33)

According toe Bielski there is little that banks are consistently doing right when it comes to ecommunications with customers and this is likely due in large part to the sheer volume of communications as well as the possible distance of the respondent to the actual functioning of the customers’ needs. (Pal and Buzzanell 2008:31) The way to mitigate this, according to many is to allow call center employees real time access to the back end of the bank, which clearly challenges many of the industry players with regard to security.

Customer eCommunication Volume

Again the response of many institutions has been to seek out supposedly customer centered communications software that logs, offers response time estimates and might be able to route customer query needs to the proper channel for resolution. Though branch tellers and managers were previously able to deal with the volume of live queries, as a result of the fact that they were physically present when transactions were being handled now customers ebanking must wait for a response from the appropriate agent and hope there is resolution from this. According to Bielski above the current attempts to develop technology to improve service are lacking as many customers simply had to call a live person during the next business day to get a resolution. This is clearly not acceptable if customer service is the central goal of the institution.

Before bankers sign on the dotted line for new software…they need to keep in mind all of the now-conventional wisdom about call centers. This includes: 1. The desktop equipment of agents should be integrated with all the back office silos of data in order to present both management and agents with the most complete view of the customer; 2. agents should make use of all relevant customer data (both historical and transaction-based) in real-time to assist them on a call, preferably with some sort of screen pop technology; 3. A bank’s e-mail/webchat system should support all types of statistical and anecdotal analysis about the e-mail handling process. This includes statistics such as time to answer, or the number of nonroutine inquiries that the bank gets and whether policy is sufficient to address them. (Bielski 2000:45)

Again according to Bielski the ability of a call center, software product or even a retail bank to deal with the volume of inquiries rapidly is absolutely essential to the sustainability of the current customer base. Customers do not like to wait for a routine or complex answer when their money is the question.

Financial issues are among the most sensitive and anxiety-producing in peoples’ minds, so nothing will make a customer more frustrated than getting caught in the “VRU vortex” when they have a problem. The value of responding effectively at pivotal moments is paramount. (Michael 2007:42)

Living ones life on a daily basis requires a detailed understanding and control of ones’ money and banks who are not rapidly responding to these needs, especially for the majority of customers (moderate to low balance customers) will not be perceived as responsive or effective in customer service when transitioning to ebanking.

4. Effective customer service is part of a continuum that includes sound sales and marketing practices to identify, reach out to, and retain the customer, assisted by data mining and analysis. If, for example, a bank wants to transform its call center into a profit center, it will have the tools to do so if sound customer relationship management (CRM) and customer care practices are in place. Everybody’s cyber issue The need to handle a volume of non-routine e-mail is starting to generate concern for a larger group of banks — not just the early web adopters. Handling it right has broad implications for a company, and can impact its retention and reputation. (Bielski 2000:45)

There is no question that call volume is a serious issue for banks, yet one researcher interviewed by Bielski stresses that as the system of offerings associated with ebanking becomes more complex more and more stress will be seen with regard to non-routine queries. The que time for calls during business and nonbusiness hours, the response time during ebanking situations will get worse, unless there is a rapid response by bank investors.

Jon Anton, a professor of communication at Purdue University, West Lafayette, Ind., runs a benchmark analysis project that looks at retail and financial services industries and tracks call center performance based on a number of criteria. E-mail is one area they look at. Anton concedes that banks “may be feeling less pain” than retailers so far, but believes that communications such as webchat and e-mail will only become more prevalent. (Bielski 2000:45)

The main development is that ebanking will become responsible for providing livechat functions, i.e. functions online that are available during extended hours, even possibly 24 hours a day to bank customers so that a real person, likely in a call center can answer their non-routine inquiry as rapidly as possible via instant messaging. Though livechat has a long history on the internet it is relatively new to banking and the system would need to be adapted to make security a top priority as well as to get the least amount of needed information to the call center to respond to the customers’ concerns without putting the bank information or the customers’ information at risk.

“As more banks go online with transactional websites, and as they place more complex products like mortgage applications online, the problem will become more apparent.” “Many of our customers are beginning to feel the pinch of rising e-mail volumes,” says Colin Bruce, vice-president of marketing, with Chordiant Software, a CRM and call center vendor in Cupertino, Calif. “Only about 40% of these inquiries will be FAQ-related,” he says. Chordiant’s recently issued eBusiness software, v2.0, allows companies to integrate a wide range of devices, including websites, cell phones or palm pilots (and other WAP-enabled devices) traditional call centers, and retail sites. “The next step for banks is to finally integrate their brick and mortar service centers with their virtual channels,” Bruce explains. (Bielski 2000:45)

Retail banks must integrate and innovate to create standards that meet the needs of the majority of their customers and according to most projections the frequently asked questions page linked to many websites is clearly not enough with regard to what customers need and demand from ebanking, which is rapidly expanding in options and even device delivery of service.

Integrated Customer Satisfaction Surveys

Most people who have any experience on the internet at all have run across customer satisfaction surveys that ask a series of marketing and satisfaction questions at the close of an ecommunication or transfer of data. The fact that most of us have also rapidly answered either neutral, positive or negative answers to all the questions without reading them calls into mind just how effective these surveys really are. Yet, when they work and people truthfully answer questions and consider their answers adequately they can create a wealth of information that can be used to improve performance and better tailor options to customer needs. Integrated customer service software, such as is detailed in the following case study is the answer for many banks.

Surely any executive would love to know how satisfied the bank’s customers are with their online experiences. And how that satisfaction translates into profitability. And how customer satisfaction with e-banking changes — feature by feature and week by week. That’s precisely the vital marketing intelligence that Gary Jackson, interactive marketing group vp at SunTrust Bank, Atlanta, gets three times a week in reports generated by ForeSee Results, an online management-services provider. (Orr 2003:60)

Rapid and hopefully honest customer survey materials are provided to the bank on a regular basis and the program works like this:

ForeSee gathers information from visitors to SunTrust’s website by means of questionnaires that pop up about every three minutes. No visitor gets a questionnaire more often than once every 90 days. The questionnaires pop up before or after the customer gives out her password and gets access to her private account; this preserves the customer’s privacy, since even SunTrust doesn’t know who is responding. Each popup asks 12-17 questions, which typically take 3-5 minutes to answer. The program selects respondents by scientific sampling methods that ensure statistically valid results. For example, a questionnaire designed to measure customer satisfaction might pop up with every 200th visitor who has opened more than two pages at the website. That excludes customers with single burning gripes that they are anxious to unload. (Questions about those gripes might be handled by another questionnaire, weighted differently to measure their possibly transient effects on overall satisfaction.) Another questionnaire might be designed to discover unexpected correlations — between, say, high satisfaction with the billpay feature and likely interest in refinancing a mortgage. Because SunTrust doesn’t know who is responding, the system must ask the visitor (without giving her name) if she is a bank customer, of which products, and how frequently she uses them — if that information is part of the survey. The system can also pinpoint shortcomings in how easy it is for a user to navigate the website and to perform operations — for example, if some users are taking six mouseclicks to find an IRA rate, when it could be done in two. The Foresee system gathers survey information from the website, statistically analyzes it, and generates reports, which are available online to SunTrust. The system generates a new report whenever the required number of users has filled out a certain pop-up questionnaire. In SunTrust’s case, the number is 60 respondents. The bank typically gets two to five reports every week. & #8230; Most present metrics focus too narrowly on a single industry, he says. And they are backward-looking, he adds, where ForeSee is designed to project the effects of a customer’s present behavior on total satisfaction and future profitability. (Orr 2003:60)

Though this example is clearly a marketing attempt it does clearly explain how and what a bank should look for when they choose to create a satisfaction marketing tool that integrates with their ebanking system. ForeSee seems to answer many dogged questions regarding the building of customer focused marketing materials. Trade research is simply not enough and if a bank is serious about creating a positive user experience then it must take real data into consideration rather than recent historical trends.

Web site Design and Usability

The banking industry has also been accused of lack of innovation in web design and usability, offering single access points that do the same things as nearly every other web site offering. Some designers and observers would like to see design and usability improvements, especially as offerings continue to expand and become more complex.

Jupiter Communication’s Van Dyke wonders why he hasn’t seen more web innovation. “Other than some silly affinity programs, most sites look and act the same,” says Van Dyke. “Wells Fargo is one leader that has taken a portal, ‘be-all-things-to-all-people’ approach,” he notes. “BofA, [Bank of America] another standout, has worked simplified screens that lead you to other sections of the website, depending on your interests and needs,” he explains. “Both ways have their strengths and weaknesses. It will be interesting to see what model prevails and what consumers will respond to over time,” Van Dyke says. (Bielski 2001: 60)

Bank esites are strategic aspects of the overall development of ebanking as an industry and as an asset for an individual bank and they need real time adaptability to continue to gain customer support. If an online or wireless service is lacking in usability the user may simply turn to another option to do their business, be it another bank or an alternative option.

eBanks vs. eBanking

There are two types of ebanking options, as was mentioned in the introduction and both can learn from one another with regard to success and future trends.

e-: Prefix denoting an all-electronic operation over a network — usually over the Internet, always in the Internet protocols. Examples: e-mail, e-trade, e-commerce, e-check. e-bank: A “virtual” bank that exists only on the Internet. Both are in play as early adopters make them work e-banking: All-electronic banking. Same as Internet banking. “Remote” banking includes e-banking plus banking from ATMs, telephones, and proprietary PC software. e-branch: The e-banking facility of a bank that also has traditional physical branches. Any bank that isn’t planning to link its customer’s accounts to its Web site is gambling with its own survival. Already, bankers are facing competition from early-adopting banks that have added e-branches — virtual facilities where customers can bank electronically, anytime, anywhere. As if that weren’t challenge enough, there’s a wild card in the game: banks that exist only on the Internet: e-banks. An e-bank has some obvious advantages: no brick and mortar, no paper, no limitations of place or time. For a few million dollars, an entrepreneur can set up an e-bank and deliver full banking services with a total staff of maybe a dozen specialists working in an office building that could be located anywhere. These savings in fixed capital can make a difference of 50-70 basis points of interest on savings accounts, according to one e-banker. & #8230;We’ve had e-banks as long as we’ve had e-branches. But while the latter have been growing steadily, albeit at a poky pace until recently, you can still count the number of e-banks on one hand. (Orr 1999:32)

Ebanking then is of course a growing trend but ebanks seem to be less of a threat than was previously thought as it has been clearly established by branch and customer use patterns that somewhere along the line customers really want to speak to a “live” person and possibly deal with transactions like cheque and cash depositing without the delays involved in paper mail. SFNB, the first ebank in fact recently was acquired by Royal Bank of Canada, which is using the once intent only venue to expand its service offerings into the U.S. (Orr 1999:32) More commons scenarios for ebanking development can be seen in the example of Intrust, which is a local bank providing web services to existing and new clients:

In 1876 the Chandler family started this bank to serve farmers and merchants of the Wichita, Kans., region. Today it’s a $1.7 billion institution, with a fourth-generation Chandler at the helm. It delivers e-banking to an estimated 10% of its deposit accounts. It has Web customers in 38 states and one in Italy. What’s unusual about Intrust is that it views the Internet with its fabled global connectivity as just another tool for serving local customers. (The out-of-state customers mostly are college students or retirees.) Shari Bevan, senior vice-president of Intrust’s remote banking division, acknowledges that the bank’s strategy is at least partially defensive. Intrust competes with mighty Bank of America and CommerceBank, and e-banking helps level the playing field. In fact, says Bevan, community banks have an advantage over big banks: They have fewer lawyers; things happen faster. Today’s market rewards the provider who gets to the market first with a new technology. Not new technology for its own sake, Bevan quickly adds, but innovations that enhance that most-precious benefit: customer choice. & #8230; In 1968 it was the first bank in Kansas to issue Mastercards. (Orr 1999:32)

eBanking is clearly becoming a mainstay even for the smallest bank and its ability to serve its customers at the same levels or better than the larger banks do. Customers must have the opportunity to utilize new technology and a growing dependence on such technology to manage their finances in the modern world.


Innovation in technology driven sectors is essential, just as user friendly and good web design. Though banks are usually early leaders in technology innovation, due to the fact that they are in a constant rush to provide services to more people, and the competitive nature of banks is getting even greater with the advent of greater access options and technology.

…adaptability to changing business climates is the core competency that requires development in order to survive. The ability to sense the market and quickly bring to market product offerings that reflect consumer needs is the desired operating state that can only exist by leveraging technology to deliver services. Even if counterintuitive in today’s business climate, investment in technology and a fundamental rethinking of products and services are essential steps for long-term survival. (Divanna 2002:92)

It would be in error to assume that all banks should fully adopt all forms of ebanking, possibly even before they are ready to do so or before the market is ready for the change. Ideas launched to soon, especially with high investment costs can break any organisation. Yet as many would stress small changes that the market is ready for or that the market is likely to adopt, determined by well reasoned research, can fundamentally change the nature of the customer experience and the level of customer convenience.

There are times when small changes can lead to big — or big enough — results. At least that’s been the experience of several top-tier institutions, which have gradually redesigned their consumer-facing banking sites and hastened adoption with detail-oriented labors of love. Clicks and bricks may be the defacto “standard” at most retail banks in the U.S., but that doesn’t mean that internet banking for consumers is running on auto-pilot. Take Bank of America, which recently announced free online checking and bill payment. Long hours of research went into the decision to change the pricing model, notes John Rosenfeld, Bank of America’s vice-president of consumer e-commerce. Even though the service was already popular, the bank hoped to encourage even wider usage and maintain stickiness” among the more than eight million current online customers, who have gradually been empowered to do more themselves. “According to our stats, online bill payers have a 30% lower attrition rate and they tend to be highly profitable customers with a 35% higher base of deposits and 10% higher loan balance,” Rosenfeld says. (“Retail E-Banking: Tinkering Pays Off” 2002:11)

There are other examples as well, where targeted research has created change and innovation that rethinks the way that customers access transactions and processes.

Wells Fargo, which created a single sign-on framework that arranges all of its consumer-facing products including mortgages, student loans, basic financial accounts, IRA funds, and mostly recently, brokerage under one umbrella. The bank is working now to integrate all bank channels to facilitate features like email alerts for loan applications that were initiated in the branch or on the telephone, & #8230;Wells has also added tools to the site that can help walk a customer through a process, and track them as they work their way through an online application so that a customer service agent can be brought in to help, if needed. & #8230;These and other “tinkerings” are part of its overall effort to improve cross-sell and enhance customer loyalty. (“Retail E-Banking: Tinkering Pays Off” 2002:11)

Another example Bank One has also made a few crucial changes to its online and ebanking presence and usability:

Bank One has also made a multitude of arguably small changes, recently announcing it’s reworked website & #8230;Single-click access to all areas of the site from the homepage and the ability to browse consumer-specific product choices organized under a tab called “Bank One for You” were among the changes the institution announced. (“Retail E-Banking: Tinkering Pays Off” 2002:11)

The online banking industry in Europe has also developed concurrent “tweeks” or small changes that are the result of a desire to meet customer needs more effectively. In Europe the basis of many of these changes in ebanking, and especially in high use areas are also focused on a greater number of access points, such as wireless devices and even interactive television.

Customer Loyalty

Customer attrition has always been an issue in banking as so many alternatives seem to be available, banks with branches or ATMs on every corner and now ebanking access as well. The issue with ebanking, that many have perceived as imminent in seriousness is the fact that ebanking does not promote personal service and personal service can be a big part of why an individual remains a customer. As it costs significantly more to gain a new customer than to simply retain and existing customer personal service must be something that begins to be integrated into ebanking.

The rapid adoption of online banking, electronic bill payment, and remote deposit capture is accelerating the movement away from personal contacts. Customers like the choice and convenience, but what happens to relationships as they increasingly transact via machine? How can a bank build customer loyalty in this environment? To put some numbers to it, the Council on Financial Competition estimates it costs between five and ten times more to attract a new customer than to keep an existing one. With mortgage and home equity lending on the decline; diminishing margins on commercial loans; reduced fees from NSFs and ancillary services; and increased competition from non-banks in all areas, customer retention and cross-sell remain vitally important as sources of revenue. Customers who are loyal believe the bank acts in their best interest on a regular basis and are most likely to remain with the bank, to make additional purchases, and to become advocates. (Michael 2007:42)

The real cost of attrition can be further realized in the loss of users for ebanking services when these services have cost the bank significant outlay, and are basically required by the industry. Making the impersonal personal is a highly skilled ability but to some degree this must be done to retain customers.

Celent estimates that over 60% of total financial, account maintenance, and servicing transactions now take place over the internet. This prevalence of electronic, self-directed transactions creates a greater need to provide high-quality, responsive service when things go wrong for the customer — and they will go wrong, whether because of an internally generated error or an external event, such as a fraudulent transaction. (Michael 2007:42)

Customers must ultimately come to the conclusion that the bank is not indifferent to their needs, if they walk away from any situation feeling this way they may walk away for good and tell their friends about it. Identity theft is a huge current issue in banking and it strikes frequently.

Identity theft is the most prominent consumer financial concern today. In response, many banks offer identity theft solutions that limit customers’ liability and immediately refund disputed balances while claims are being investigated. This immediate restitution fulfills the financial need of the customer, but what about the emotional need? Customers want to know what their bank is doing to protect them going forward. Did the provider immediately cancel the card and send a new one? Did the call center agent advise them on how they should monitor for future problems? (Michael 2007:42)

Michael uses INGDirect a U.S. based online only bank as an example for how to be online and still in touch with customer needs.

Although it is strictly an online bank, ING Direct engages its customers in a way that encourages loyalty and advocacy. The bank’s offerings are simple, straightforward, and easy to purchase. Beyond the basics, the company strives to position itself as an active ally to customers, offering specific, tangible payoffs that seem to resonate on an emotional level. The bank’s formula for building loyalty has helped it generate over $47 billion of deposits in six years. (Michael 2007:42)

They offer the highest savings rate in the U.S., advocate for financial literacy among its customers, have top of the line secure features, continually survey and communicate with customers and offer referral fees to customers that open new accounts. (Michael 2007:42)

Factors driving loyalty in retail and small business banking


1. Convenience

2. Product quality and fit

3. Satisfaction with problem resolution


All of the above plus:

4. Ease/simplicity

5. Transparency

6. Trustworthiness


All of the above plus:

7. Emotional connection (Michael 2007:42)

Loyalty issues clearly transcend the format which banking is delivered and may be even a more important issue with regard to ebanking as taking the personal interaction out of banking can have a serious impact of whether or not customers consider the bank or any of its employees indifferent to their needs.


The case study methodology will be utilized in this work to demonstrate the concepts and concerns that were raised by the literature on the subject. Understanding holistically how a single customer makes choices about adopting and/or not adopting a certain aspect of ebanking technology will enlighten the reader in a greater understanding of why ebanking adoption may be slower in Europe than it is in other nations or even why the seemingly biggest personal obstacle to adoption is security when real security breeches are rare. As there are no real clear answers as to why a certain demographic who would be likely to adopt ebanking has not or has abandoned the case study methodology is ideal. The case will consist of three individual customer experiences that were discovered through electronic [email] survey and interviews. The first customer, we will call Dave, has not adopted ebanking technology and has never tried using his retail bank’s online or other format ebanking. The second customer we will call Jane, started using ebanking concurrent with other forms of ecommerce but has since stopped using it and now exclusively banks at a retail location. The third customer we will call Liam, began using ebanking technology many years ago and is very satisfied with the ebanking services offered by his retail bank and will likely continue to use them for the foreseeable future.

Case Study

Dave a 52-year-old man married with no children, has not adopted ebanking technology and has never tried using his retail bank’s online or other format ebanking. Dave stated that his biggest concern regarding ebanking was security, most demonstrably identity theft, which he has heard is on the rise. He has been banking with his current bank for more than 20 years and though his retail bank does offer online and other ebanking options he has never used them and prefers to go to a retail bank to do his transactions. Case Study 1 Dave

Dave’s employer, a commercial gardening company, pays Dave via a cheque, rather than direct deposit and he makes most of his purchases with cash, though he does have a credit card with a small balance. Dave has been offered a direct deposit payment from his employer but he opted out preferring a physical paper cheque to electronic funds transfer. He does not have a debit card and still writes cheques for all of his bills, which he posts monthly. He feels that his finances are relatively secure and he has been able to save a modicum of earnings for retirement. He feels he has no incentive to take undue risks with his money, as he has worked hard all his life for what he has and he would like to keep it. Dave does not shop online but his wife occasionally makes purchases with their joint credit card from mailers. Neither Dave or his wife have experienced a security incident regarding identity theft but his aging mother was once robbed of her chequebook at a store and lost several thousands of dollars before she noticed the chequebook missing. Dave aided his mother by going to the bank with her to try to sort out what purchases were actually hers and which where fraudulent. The experience left a mark as Dave felt that the bank was not overly concerned and resolved only to return a small portion of the losses to his mother, sighting that she should have paid better attention and responded as soon as the chequebook was lost. The event occurred many years ago and the only recourse of action was to freeze the account and wait for the good and bad cheques to be processed, unfortunately his mother had waited a week to respond only looking for her chequebook when she needed to post a bill. The result was several good cheques bouncing and additional fees and the bank made no attempt to mitigate or aide law enforcement in finding the culprit of the theft.

Dave is an extremely tough customer, not only has he frequently read about ebanking and online fraud he has an experience regarding identity theft which stifles his ability to trust the system. He is unlikely to change his habits any time in the near future unless one of his creditors force an electronic only billpay function [which many are likely to do in the near future] or his employer demands that all employees accept direct deposit. (“The Only Thing I” 2005:1)

Case Study 2 Jane

Jane, 32 and single, started using ebanking concurrent with other forms of ecommerce ten years ago but has since stopped using it and now exclusively banks at a retail location. Jane gets paid via direct deposit from her employer, a clothing retailer, where she is a corporate administrator in the main office. Jane frequently makes commercial purchases and transactions for her employer and often purchases clothing online. Recently she changed banks as her local branch closed and there was no convenient alternative. Her new bank does not offer extensive fraud protection, as her old bank did and their website is not as easy to use. Jane chooses an alternative billpay site to her own bank when she has to make transactions online and uses her debit card to make most purchases both online and in retail locations. Jane only makes purchases from trusted sites, i.e. those she personally has experience with and has never had problems with. Though she appreciated the convenience of ebanking with her old bank the lack of fraud protection at her new bank and the non-user friendly website has turned her away from ebanking at her new bank. She is also considering changing banks again to possibly get better fraud protection and online service. When asked if she would retain her current bank if they expanded their fraud protection policy and updated their ebanking website she said she would definitely retain her new bank.

Jane is a customer that needs to have her needs met at a specific level and wishes to continue to utilize both retail and ebanking options offered by a single institution. To some degree and according to the literature reviewed here she is the typical customer, seeking service over cost as she is willing to pay for services her bank might provide for less simply because she feels they are more protected and easier to use. (Orr 1999) Though her exposure to virtual purchasing at work and in her personal spending pattern leaves her likely to be satisfied with ebanking options her bank did not meet her needs, closed a branch and lost her as a customer. Her new bank is not meeting her needs because she has found its ebanking systems lacking. Jane is currently ripe for either retention by her current bank if it improves services or for changing to another bank that better serves her retail and ebanking needs. She has little loyalty to her old bank as her local branch closed and she prefers to deposit funds other than her paycheck there, and she is not loyal to her current bank because it offers only limited ebanking services and does not have a good customer fraud protection policy. (Chung and Mack 2007)

Case Study 3 Liam

Liam, 56 and single began using ebanking technology 15 years ago and is very satisfied with the ebanking services offered by his retail bank and will likely continue to use them for the foreseeable future. He has watched the system expand, rework and revise over the years and states he is happy with the changes and that the bank seems to be responding to customer demands. Liam is paid via direct deposit by his employer, a private university. His work as a professor, lends itself to being a book hound, both new and antique and he was an early internet commerce fanatic, when he realized how much easier it was to find and buy books online. He has rarely been dissatisfied with purchases and shops for books via the web internationally. Though he usually uses trusted sites such as Amazon, Amazon UK or Alibris [online book retailer in U.S.] he is not apposed to buying from independent retailers online if the price is right and the book is what he is looking for. Because he has been buying things online for so long and has had little if any problem, short of a few broken book bindings, he is confident about the security of ebanking. Liam transitioned to direct deposit and debit banking as soon as they were available. He uses home banking options offered by his retail bank and will likely learn how to use wireless services in the future. All of Liam’s bills are paid by direct billpay via the service offered by his bank, rather than the many individual services offered by individual agents or alternative billpay sites. He has banked with the same retail bank for more than 15 years but notes that if they stopped promoting and innovating ebanking he would seriously consider changing banks as he has become accustom to the convenience of it and has only qued up at the bank three times in the past year. He feels like his money is secure and that his bank is looking out for him. He has never had any problems and states that his bank has a comprehensive fraud protection and recovery system, which he hopes he will never have to use.

Liam is the ideal customer, he is well educated, makes a relatively good living, frequently utilizes the internet to make purchases and is very dependant upon the ebanking system offered by his retail bank. (Meyer 2006) He is loyal and states that he is willing to try new things as he has over the years as ebanking options and technology have improved. (“The Only Thing I” 2005:1)

Conclusions and Future Perspectives

Future customer usage of ebanking is obviously a matter of conjecture. Continued consolidation of banks may take place as some of the lesser known banks become unable to meet the needs of customers or lose market share to the big names. Branch banking may continue to decline, at a rate appropriate to meet the still duel demand of customers for retail as well as ebanking services. (Gup 2003) Technology will likely continue to add to the many options currently available for ebanking as wireless becomes more capable and adaptable not only for online surfing but for ebanking. Internet proliferation will likely continue but slowly in the more southern nations of the EU and will likely drive the ebanking percentages to greater levels in these nations. What is very clear is that;

…electronic delivery channels raise prudential issues that must be viewed in a new light by supervisors. These include the oversight of outsourcing and partnership arrangements, and the oversight of security and data integrity controls and safeguards, especially when the supporting operations are located in another jurisdiction. (Gup 2003:140)

Customers must feel protected and cared about, regardless of the reality. Systems that continue to focus on customer-based solutions and strategies will likely continue to flourish and the numbers of ebanking users will likely increase with the development of strategies to resolve the digital divide. The more individuals who are comfortable with electronic commerce in all its forms, as is discussed by Meyer regarding Europe the greater number of ebanking customers there will be in the pool of potential customers.


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Figure 1 U.S. eBanking Growth Concurrent to the Growth of Internet Technologies and Use (Frank, August 28, 2008

Figure 2 Graph of U.S. Billpay Trends (Frank, August 28, 2008

Figure 4 Education and Internet Banking in Europe

(Meyer 2006:

Figure 8 Intentational Ebanking Offerings (Nasouli and Schaechter September 2002:

Figure 3 Internet banking Adoption rates Across Europe (Meyer 2006:

Figure 5 Online Banking and Ecommerce in Europe (Meyer 2006:

Figure 6 Security Breech Experience is Rare in Europe (Meyer 2006:

Figure 7 Limited Real Experiences With Payment Card Fraud in Europe (Meyer 2006:

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