Strategy Development for E-Banking

Introduction

Whilst e-banking is a relatively recent phenomenon, the strategic issues relating to it are well documented and may be drawn from existing studies. In essence, it will be shown that the key strategic problem in e-banking derives from a number of clearly definable factors:

• 1.

  As with all banking, but arguably in a more critical sense, e-banking is highly dependent on technological development. Any strategy has to combine often unknown technological improvements into the strategic process.

• 2.

  E-banking links customers to suppliers in a much “looser” relationship than traditional banking, giving rise to security issues which must be addressed strategically.

• 3.

  With “counter based” banking, it is much easier for the bank to set up rules and procedures which include elements of customer behaviour. E-banking offers opportunities for enhancement of the customer experience, through which banks are able to leverage competitive advantage.

All of this requires a strategic approach which differs from that taken to traditional banking, but which has a wealth of other strategy experience on which to draw.

Key to understanding this is the extent to which the scope of information systems (IS) analysis (and hence e-banking analysis) is often seen to be problematic: IS ‘problems’ are frequently ‘solved’ by redefining organisational and human issues in technical terms, and developing the necessary technical solution. Significant questions have been raised regarding such approaches, exposing many IS developments as not susceptible to a technical solution, but exhibiting complexities stemming from high levels of human activity. Arguably, such findings are of particular importance in e-business applications, depending as they do on the understanding and commitment of users who are often remote from and external to the organisation. A clue to how such complex, human-centered issues may be dealt with is to be found in the scoping of these studies which, in systems terms, implies a need to assess the system boundary. In Chapter VI, boundary setting was discussed as an issue to be settled before further progress can be made. This does not need to be repeated in detail here, but it must be kept in mind that determining the boundaries of any e-business implementations is an essential part of their management. A view of information systems as a purely technological domain reduces the complexity of the system of study, and attempts to define it in terms of rules and procedures by which given inputs can be turned into predictable outputs: a so-called deterministic system. A human-centred approach is quite different. Human activity systems are ‘complex’ and ‘adaptive’, and cannot be fully described in terms of rules and procedures: to understand such systems requires recourse to social theory.

Furthermore, such a conclusion demonstrates the relevance of this debate to e-banking. In the last twenty years or so, information systems have become more fragmented and distributed, ‘user’ issues have grown in importance. Arguably, all forms of e-business represent the most distributed form of technology-enabled information, in which a disparate user base needs to be catered for. In effect, the social system to be ‘served’ is gaining ascendancy over the technical system: this latter has the task of facilitating or enabling – technology has finally ceased to be an end in itself!

To address these issues this chapter focuses predominantly on the development of a toolset for e-banking strategic planning. But before moving on to this, the following section briefly outlines some of the relevant issues drawn from the domain of corporate strategy.

Corporate Strategy As Plans Or Patterns

Is it possible, in an IS domain such as e-banking, to write objective strategic plans, agreed on by all concerned, and forming the basis of future development? Or are IS strategies just patterns of activity which, whilst evident subsequent to their emergence, cannot be seen in any prior plans of action?

The planning approaches to strategy may be seen as highly design oriented, whereby plans are drawn up which the organisation then uses as a framework for development over the following planning period. This traditional view of strategy as a planning activity, it has been argued, is particularly ill suited to information systems, where both the human centred nature of the domain, and its reliance on ever changing technologies, makes planning difficult.