Improving E-Society through E-Banking

Background

Driven by the challenge to expand and capture a larger share of the banking market, some banks invest in more bricks and mortar to enlarge their geographical and market coverage. Others have considered a more revolutionary approach to deliver their banking services via a new medium: the Internet. Since the introduction of the Internet in 1969, it has evolved from the sole domain of the computer nerd and the academic to a mainstream channel of communication (Nehmzow, 1997). Recently, it has been rapidly gaining popularity as a potential medium for electronic commerce (Crede, 1995; Ooi, 1999; U.S. Department of Commerce, 1999). The rapid growth of the Internet has presented a new host of opportunities as well as threats to business. Today, the Internet is well on its way to become a full-fledged delivery and distribution channel and among the consumer-oriented applications riding at the forefront of this evolution is electronic financial products and services.

The Internet is now being considered as a strategic weapon and will revolutionize the way banks operate, deliver, and compete against one another, especially when competitive advantages of traditional branch networks are eroding rapidly (Nehmzow, 1997; Seitz, 1998). As “Business Week” noted, “Banking is essential to a modern economy, banks are not” (quoted in Financial Times, 1996). This statement is supported by a recent report from Booz Allen & Hamilton (Warner, 1996) that claims the Internet poses a very serious threat both to the customer base of the traditional banking oligopoly and to its profits. Their belief is that the Internet promises a revolution in retail banking of monumental proportions. High street or brick and mortar banks as we know them may largely disappear.