On Some Misconceptions Concerning Digital Banking and Alternative Delivery Channels

Introduction

A substantial amount of literature has been written about electronic commerce, electronic business, digital banking technologies, channels, and innovations over the years. History shows that automated retail banking services in the finance services sector were instituted in the mid-1960s to facilitate the execution of electronic transactions using plastic (credit) cards (Benaroch & Kauffman, 2000). In the late 1960s and particularly in the early 1970s, banking companies in the USA and Europe deployed the first automated teller machine (ATM) (Hoehle et al., 2012). This was followed by the development of telephone banking services in the 1980s (Hoehle et al., 2012; Ahmad & Buttle, 2002) and point of sale (POS) debit services in approximately 1985 (Benaroch & Kauffman, 2000). With the emergence of the Internet in the 1990s, banking companies further extended their existing electronic banking outreach by offering web-based or Internet banking applications (Hoehle et al., 2012). Recently, the increasing usage of portable devices, such as cell phones, smartphones, and tablets, for banking purposes has changed the financial landscape and encouraged banking companies to provide mobile and branchless banking applications. Mobile banking (m-banking) was first introduced by the German company Paybox in collaboration with Deutsche Bank in late 1990. Initially, m-banking services were introduced and tested mostly in developed countries, i.e., Germany, Spain, Sweden, and the United Kingdom. In 2007, Kenya was the first developing country to introduce an m-banking service called ‘M-Pesa’ (Shaikh & Karjaluoto, 2015a). These innovative delivery channels enable consumers to make real-time financial decisions conveniently, irrespective of time and location (Hoehle et al., 2012). Table 1 provides the coverage and scope of the services offered through various alternative delivery channels (ADCs).

Notes: FIN = financial; N-FIN = non-financial; BAH = bank account holder; Non-BAH = non-bank account holder; CON = convenience; EXP = expensiveness; EOU = ease of use; H = high; M = medium; L = low; B = banked; UB1 = Underbanked; UB2 = Unbanked.