E-commerce influence on the banking sector

1. E-commerce influence on the banking sector Presented by: Ying Shen, Shan Huang, Ilya Bibik, Patricia Chalco Supervised by : Professor Jacques Robert In the Course: Économie numérique 4-870-00 2004/12/7

2. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

3. What is Electronic Banking “Electronic banking is the process by customer who perform banking transactions electronically without visiting a brick-and-mortar institution.” -----HussamAl-Abed 3

4. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

5. Opportunities • The advent of the Internet and the developing of technology are both opportunity and challenge for the banking industry. • The opportunity for the e-banking WHY? • The challenge for the traditional bank WHY? • “Online transaction costs can be as low as 1 % of an equivalent off-line transaction, rapidly increasing the popularity of the online option with consumers, as well as banks” (Turban et al. 2002).

6. Advantages • Costs reduce: accounts: much less time to set up and use. favorable terms, including free accounts, free transfers and free payment cards. interest: several percentage points higher • Convenience: No time and place limitation. “24 x 7” access and manage accounts all at online bank sites and generally execute ,confirm transactions even quicker than ATM processing speeds.

7. http: //www. bank-of-china .com E-Corp : “Cybergiro, Group Inquiry, Real-time Inquiry and other services .” Focus on both group clients(B2B) and individual clients(B2C) Example: Bank of china

8. Weaknesses • Security is a big issue. there are potential risks that you need to pay attention to. • The major service that is not provided is cash in and cash out. • The other problem is that you may make mistake when you are doing your own banking online. Therefore, there are reports of customers sending money to the wrong account. Banks also make mistakes but when they do it is comforting to have someone other than oneself to blame. That means the customer have to be responsible for their mistakes.

9. Security Quick Tips(the solutions are from bank of Singapore) • Never use the same Internet Banking PIN for other financial or non-financial web-based services such as for email, online shopping, digital identity and other online subscription services. • Protect your PC from viruses and malicious programs. • Avoid using shared/public PCs for Internet Banking. • Check your account and transaction history details regularly.

10. Relationship with customers conclusions • Electronic commerce technologies affect individual financial institutions in a number of ways, which together push them to alter the mix of services they offer. • Developing of technologies and lower transactions costs allow Banks to treat clients individually. Such as, online mortgage applications and stock trades, banks can retain their relationships with clients by creating bundles of service unique to the needs of individual clients. • Increasingly demanding customers mean that banks must continually enhance the services that they offer and more suitable for all kinds of clients. • The expectation of what technology should be able to exceed what it currently can do. The big issues of security and trust.

11. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

12. Bank needs partnership • The value of partnership is highly recognized by both bank managers and customers Source :http://www.co-operativebank.co.uk/partnership1997/97_customers_social.html

13. Who is bank’s partner • Suppliers:Bank is supported by diverse suppliers. Such as • IT Service Provider (e.g. IBM) • Information Service Provider (e.g. Reuter) • Others ( e.g. Newsagents,) • Various categories within the financial industry itself (eg. Insurance companies, broker companies, other banks) • Cross-industry partners:Bank can cooperate with the service provider in other industry to create new service product. • Online payment service • Mobile banking

14. SWOT Analysis • Strengths • Gaining customer base • Case: alliance between Royal bank and AOL • Significant cross-sell opportunities • Case: Alliance between China bank and Sunlife insurance company, Canada • Gaining economies of scale or scope • Case: bank for banks project by UBS • Procurement cost reducing • Research by Xerox shows the cost reduced from $150 per order to $25 per order • Weakness • Security concerns • System failure of partners brings troubles

15. SWOT Analysis • Opportunities • Mature B2B technology • High acceptance of partnership value (especially for small bank) • Threats • Fast changing technology tendency • Legal concerns Source: «Networking partnership» by USB news letter 2002

16. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

17. Relationship with employeesSWOT analysis The new reality of new virtual banking way of doing things has significant impacts on the relation between employer and employees. It changes the employees’ responsibilities and employees’ importance values.

18. Strengths • What advantages industry has? • What do changed industry do well? • What relevant resources industry has access to? • What do clients see as industry strengths?

19. Weaknesses • What industry does badly? • What could be improved in the industry? • What should industry avoid?

20. Opportunities • Where are the good opportunities facing industry? • What are the interesting trends for the industry?

21. Threats • What obstacles industry face? • Is changing technology threatening industry position? • Could any of industry weaknesses be serious threat?

22. Relationship with employees conclusion • Work places • Professional level • Security and Control • The quantity to the quality

23. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

24. Case studywww.netbank.com

25. Source: www.netbank.com

26. Business model Virtual Merchant o e-tailer, is a retail merchant that operates solely over the web Source: Managing the Digital Enterprise, Professor Michael Rappa. http://digitalenterprise.org/models/models.html

27. Regulation

28. Value creation sharing its operational cost savings by paying moredeposit rates and collecting lower fees

29. Products and services

30. How to open an account and make a deposit? • wire transfers • direct deposits • automated teller machines • external funds transfers • by mail

31. How to have cash?

32. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

33. Reducing cost Enhancing User Experience Creating new service and market Technology Innovations from e-commerce Conclusion Relationship with Customers Relationship with Partners Relationship with Employees Source: «e-solutions pour l’entreprise»

34. Introduction Relationship with Customers Relationship with Partners Relationship with Employees Case Study Conclusion Q&A

35. Q & A Thanks!