Bankers Perspectives on Internet Banking

Short Description
In every industry, E-commerce is revolutionizing the way business is conducted. New business models are replacing outdated ones and organizations are rethinking business process designs and customer relationship management strategies. Banks are no exception to this transformation. This study examines bankers’ views on providing banking services to customers using the web. Speci¤cally, it addresses issues such as the strategic need for Internet banking, its effect on customer-bank relationships, and customers’ experiences in Internet banking. Data collected from 75 banks show that most banks do not yet offer full-¶edged Internet banking. However, most have plans to do so. Furthermore, bankers see Internet banking as a strategic opportunity that can reduce transaction costs, enhance customer service, increase the customer base and improve cross-selling opportunities. Also, Internet banking is perceived more favorably by banks that offer it compared to those that do not.

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Content
Innovations in information and communication technologies are incessant. Increasingly ¤rms are turning to the Internet and related information technologies to improve business ef¤ciency and service quality, and attracting new customers. The use of the Internet in the conduct of business is growing at a rapid pace. According to a recent study more than 9 0% of ¤rms studied have plans to buy and sell on the Internet (Forrester Research, 1999). Revenues generated via e-commerce are growing at an exponential rate. The amount of U.S. e-commerce revenues created by business interaction with consumers (b2c) is predicted to reach $147 billion by 2003 from $20.5 billion in 1999 (Gartner Group, 2000a). The business-to-business (b2b) e-commerce revenue ¤gures are signi¤cantly higher: $91 billion in 1999 and expected to reach $2.7 trillion within the next few years (Forrester Research, 1999; Gartner Group, 2000b). Prominent among the many factors contributing to this growth is the rapid increase in the number of online users. Currently about 49% of U.S. households have PCs and 37% of U.S. households have access to the Internet. By 2003, the number of households with PCs is expected to reach 65% with nearly 58% of households with Internet access (Orr, 1993).
The dramatic effect that e-commerce is having in changing fundamental business processes and strategies cannot be underestimated or ignored. E-commerce is breaking down traditional boundaries between internal functions, customers, and supply-chain partners, and virtualizing the marketplace in a way never before possible (Wah, 1999). Due to this potential, every ¤rm is scrambling to get on the e-commerce bandwagon. Even in the well-established business of banking, a revolution of sorts has taken the industry on a new dynamic path in the last few years. This path has been forged partially due to the growing acceptance of Internet banking. Currently, an estimated 3– 4% of U. S. households bank on the web. By 2002, the number of Internet banking customers is expected to rise sharply to 20% (Leuchter, 1999). This growth in Internet banking is expected to be at a rate of anywhere from 40% to 80% over the next three years, leading to an estimated 24 million individuals banking online by the year 2003 (Orr, 1999). The overwhelming majority of these online customers are individuals as opposed to businesses.
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