The changing competitive landscape of retail banking in the e-commerce age

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The Changing CompetitiveLandscape of Retail Banking in theE-Commerce Age

April Wright

Executive Summary

The Internet and e-commerce have changed the competitive landscape of retail banking by eroding the barriers to entry created by physical branch networks and byincreasing the commoditization of banking products and services. Retail banking washistorically the domain of deposit-taking retail banks, credit unions, and buildingsocieties. These banks now face competition from Internet-only banks, branded non-financial firms, multinationals such as universal bancassurers, and other specialisttechnology providers. This study outlines strategies that traditional banks can use toreconfigure their value chains in order to survive in the new competitive landscape.Strategies include outsourcing Internet technology (IT) functions, forming allianceswith technology providers and competitors, becoming a global player or a productmanufacturer, and focusing on niche markets. © 2002 John Wiley & Sons, Inc.

INTRODUCTION

he financial services industry is among the most capable of exploiting innova-tions in technology because its products are generally intangible services that donot require physical delivery to consumers. While banking has historicallyplayed a central role in channeling savings and investment between various sec-tors of the economy, the movement to an “infonancial” new economy meansthat retail banks and other financial institutions have become value-adders in theprovision of financial services to end-consumers. Since 1980, the value ofdeposits, securities, loans, and other financial assets in the Organisation forEconomic Co-operation and Development (OECD) countries has exceeded theaggregate value of their gross domestic product (GDP) by more than one andone half times (Stock, 1999, p. 16). Technology has helped accelerate the mon-etization of the world’s assets in the new economy, with financial institutions inthe United States alone estimated to invest US$20–30 billion each year in infor-mation systems and technology research (Gupta & Collins, 1997). In recent

Thunderbird International Business Review, Vol. 44(1) 71–84 • January–February 2002

© 2002 John Wiley & Sons, Inc.

April Wright, is part of the Faculty of Business, University of the Sunshine Coast, MaroochydoreDC, 4558, Australia.

years, major technological shifts have occurred in the areas of dis-tributed service provision, real-time internal management informa-tion systems, and financial engineering of new products (Grosse,1997). Retail banking has been most affected by the changes in dis-tribution channels enabled by advanced telecommunications. Retailbanks were quick to adopt Automatic Teller Machines andElectronic Funds Transfer at Point of Sale (EFTPOS) in the 1980sand have been equally early adopters of the Internet as a new distri-bution channel (Bauer & Colgan, 2001).

The Internet provides optimal advantages as a transaction and dis-tribution medium when value propositions are intangible and fre-quently purchased, as is the case with many banking products andservices, (Phau & Poon, 2000). Advantages include generation ofcost savings due to delegation of tasks, which were previously per-formed by a branch teller, to the customer; expansion of the cus-tomer base, particularly among high net-worth individuals; theability to generate revenues via cross-selling; mass customization,which creates the perception among each individual user that theservice is personalized or customized to their needs; improvementof bank marketing and communication, via the interactive natureof the Internet and the ability to build and utilize comprehensivecustomer databases; and the ability to innovate banking productsand expand into non-traditional banking areas such as insuranceand stockbroking (Jayawardhena & Foley, 2000). Indeed, the bro-kerage industry has been revolutionized by the Internet with 1 in4 stock trades in the United States and 1 in 10 trades in the UnitedKingdom being conducted on-line (Nabi, 2000). This trend isexpected to speed up consumer acceptance of the delivery of bank-ing services via the Internet because individual investors withmoney deposited in an Internet bank account can use that moneyto trade shares online.

The growth in e-banking is just one aspect of the e-commerce forcethat is re-engineering business and industry around the globe.Growth in e-commerce is surging, with Forrester Research tippingthe global Internet economy to reach US$6.9 trillion in 2004, whene-commerce will account for 8.6% of worldwide sales of goods andservices (Australian Banking and Finance, 2000). The world’s majorfinancial services firms spent 9% of their IT budget on e-commerce in1999 and expect to increase this to 19% by 2003 (Cap Gemini Ernest& Young, 2000). In a recent global survey of 345 financial servicesexecutives, the majority (64%) of respondents reported that e-com-merce is transforming their role in the industry and redefining their

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72 Thunderbird International Business Review • January–February 2002

core business (42%) (KPMG, 2000). For 80% of respondents, thedriving factor underpinning the adoption of an e-commerce strategywas competitive pressure.

E-commerce changes the competitive landscape of banking in twoways. Firstly, E-commerce transactions do not require a bricks-and-mortar branch, which erodes the distribution-based barrier toentry long enjoyed by traditional retail banks. Secondly, theInternet also significantly improves price transparency, adding fur-ther impetus to the commoditization of financial products and ser-vices. Thus, Internet technology has enabled multinationalbanking and insurance firms to expand into retail banking, creat-ing a new category of universal banks known as bancassurers, alongwith strongly branded non-financial firms, such as supermarketchains and public utilities (Da Silva, 1997). The Internet has alsospawned the creation of virtual or Internet-only banks, beginningwith Security First Network Bank in the United States in 1995,which had achieved assets of US$170 million and some 46,000customers by the end of 1999 (Banking and Technology News,2000). Since such banks, by definition, use the Internet as theirsole communication and distribution channel, their cost bases arelower relative to traditional bricks-and-mortar retail banks. Thesecost-savings coupled with the convenience of Internet bankingmake it particularly attractive to younger technology-literate bank-ing customers (Mols, 1999). While some Internet-only banks weretruly new and independent start-ups, others are subsidiaries ofestablished banks, such as BankOne’s WingspanBank.com, whichhad over 80,000 bank accounts in 1999. The latter strategy isviewed more favorably by the stock market, with investors prefer-ring online platforms backed by a bricks-and-mortar infrastructure(Ayling, 2000).

Customers, too, prefer multi-channel distribution, which is goodnews for traditional retail banks. Indeed, the core survival strategy forthese bricks-and-mortar banks in the new competitive landscape is touse technology and e-commerce to deliver superior value in terms ofthe benefit-cost attributes incorporated in their products and servicesand value-chain processes (Kotler, 1997). This article analyzes theevolution towards the new competitive landscape and suggests strate-gies that may help smaller traditional banks to appropriately harnesse-commerce to survive against the Internet-only banks and other newentrants. Strategies include outsourcing of IT functions, formingalliances with technology providers and competitors, and creatingInternet-only bank subsidiaries and web portals. Mergers will contin-

The Changing Competitive Landscape of Retail Banking

73Thunderbird International Business Review • January–February 2002

ue to be used to build value via cost savings and product range exten-sion. A handful of larger banks are expected to become global mega-banks, with smaller banks supplying banking and payments productsto the bigger players or choosing to focus on niche markets suchsmall business. Regardless of the specific strategy chosen, the articleconcludes that a focus on delivering value to customers by integrat-ing the e-commerce strategy with the overall business strategy isessential to survival in the new competitive landscape.

EVOLUTION OF E-COMMERCE AND INTERNETTECHNOLOGY IN RETAIL BANKING

Internet banking is the culmination of several decades of experi-mentation by banks with the concept of banking in the convenienceof a customer’s own home. Internet banking overcomes the visualverification missing from telephone banking, the lack of two-waycommunication of cable television banking, and the need for pro-prietary software of online PC banking (Kalakota & Whinston,1997). It builds on the growing acceptance by retail consumers ofthe convenience of electronic delivery channels over physicalbranches, as evidenced by the proliferation of ATM networks andEFTPOS facilities.

The evolution of e-commerce in financial services and Internetbanking can be described using a five-stage conceptual framework(KPMG, 1999, p. 12). The depth of the financial institution’s rela-tionship with the customer increases progressively with each stage.The business value of e-commerce to the institution also increases,from defensive behaviors to strategic and aggressive responses. Stageone involves largely static publishing of generic promotional infor-mation about the institution and its products. The content is moredynamic and personalized to a limited extent in Stage two, known asthe publishing/basic interactivity stage. Stage three provides onlinefinancial transaction facilities, primarily account access and fundstransfer, while Stage four is the interactive/business integrationstage, where “financial institutions use the Internet to actively selland service individual customers in a highly personalized way”(KPMG, 1999, p. ix). This fourth stage of e-service and mass cus-tomization represents the maturing of Internet financial services. Inthe final stage, the business innovation stage, institutions re-engi-neer and redesign their financial products around the Internet suchthat the e-commerce strategy is fully integrated with the businessstrategy of the institution.

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The businessvalue of e-com-merce to theinstitution alsoincreases, fromdefensivebehaviors tostrategic andaggressiveresponses.

The first stage of Internet banking began in the mid-1990s, inJanuary 1995, led by two dozen banks on the Internet (Angehrn &Meyer, 1997). A year later this grew to over 800 worldwide, with theFederal Deposit Insurance Corporation (FDIC) estimating the num-ber of banks and thrift institutions in the U.S. with websites to beapproximately 130. The early adopters were typically large banks,who saw the Internet as a “virtual information space” to promoteinformation about the bank and its products (Angehrn & Meyer,1997). As such, their approach to the new technology was reac-tionary rather than visionary (PricewaterhouseCoopers, 1999). Untilvery recently, the majority of banks worldwide lacked an understand-ing of the strategic possibilities offered by e-commerce, includingChase Manhattan Corporation, America’s second largest bank, whichhad no strong e-commerce strategy until mid-1999.

Evolution towards the interactive and innovation stages of e-com-merce has been stalled by a lack of integration between back-officeprocessing and fulfillment systems and the bank website. Analysis offinancial institution websites conducted by Arthur Anderson consult-ing group in 2000 found that many U.S. banks require offline docu-mentation and written check payments to support online transactionssuch as loan approvals and the opening of accounts. Furthermore,while the FDIC estimates that 46% of all insured banks and thrifts inthe U.S. (some 46,000 institutions) had websites as of September2000, only 18.5% of these websites have full transactional capabilities.It is hardly surprising, then, that some 3.1 million users in the U.S.discontinued Internet banking in the 1998/1999 financial year dueto poor customer service and the complexity of performing simpletasks (Stanco, 2000). The underlying cause of these problems is thatbanks “have substantial assets committed to doing business in a none-business world” (North, 1999, p. 18) and many banks have failedto integrate their e-commerce strategy with their corporate strategy(Bauer & Colgan, 2001).

The difficulties encountered by U.S. banks in developing and imple-menting appropriate e-commerce strategies are common to banksworldwide. Only 12 banks in the UK, or less than 10% of all UKbanks, were transaction-enabled as of July 1999 (Jayawardhena &Foley, 2000). In Denmark, clusters of bank managers remain nervousand skeptical about the impact of the Internet on their bank’s closerelationships with customers, and smaller banks are reluctant tobecome involved (Mols, 2000). Financial institutions in Australia ini-tially adopted a “no-man’s land” approach to e-commerce due todoubts that customers would accept e-commerce and uncertainty



about the appropriate strategic positioning (Ernst & Young, 1998).Management uncertainties, coupled with poor economic conditions,have also caused banks in countries such as China and Thailand to lagin their Internet banking initiatives.

Perhaps the most telling indictments of the inadequacy of the strate-gic response by traditional retail banks worldwide to the opportuni-ties and threats posed by e-commerce are the results of two recentstudies of the world’s leading financial institutions. Globally, morethan 40% of financial institutions do not have e-commerce integrat-ed with other delivery channels (Ernst & Young, 1998). Worse still,PricewaterhouseCoopers (1999) concluded, “not one of the world’stop banking institutions has taken adequate measures to compete inthe Internet age” (McGuire, 1999, p. 12). This will simply not begood enough if traditional retail banks are to survive in the new com-petitive landscape of the e-age.

The New Competitive LandscapeThe development of Internet banking means that the market forretail banking products can be divided into two significant segments,an Internet banking segment and a branch banking segment (Mols,1999). Customers in Internet banking are typically computer-literateyounger people who are relatively price-conscious, affluent, and well-educated (Katz & Aspden, 1997). However, an unexpected trendemerging in the U.S. indicates that the fastest-growing segment agegroup for Internet usage is the over-50s market, a demographic seg-ment with the wealth and time to conduct online trading and bank-ing (Ayling, 1998). Regardless of age, consumers seek the followingattributes from Internet banking: convenience, including the abilityto communicate with the bank via e-mail; transactional efficiency,particularly with regard to funds transfer and bill payment; a choiceof core banking products, such as loans and savings accounts, andnon-core products such as insurance and online share trading; andaccess to competitive returns and prices (Birch & Young, 1997). Thesecurity of financial transactions is also an important attribute.

Globally, the size of this segment is currently small. Research suggeststhat only around 10% of people in the U.S. with Internet access useInternet banking (Stanco, 2000). Similarly, just over half a millionInternet banking accounts are active in the UK (Jayawardhena &Foley, 2000), and Australia had just 145,000 regular users in 1999(O’Connell, 1999). Consumer acceptance levels seem to be higher inAsian countries, with the Bank of Korea estimating there were 2.63million Internet banking users in the third quarter of 2000. Over the

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next decade, the size of the Internet banking segment is expected togrow in most industrialized countries at the expense of the branchbanking segment, which largely comprises computer-illiterate, olderpeople who value personal relationships (Mols, 1999). Globally, by2003, the number of branch transactions is expected to be just 4%greater than the number of Internet banking transactions (CapGemini Ernst & Young, 2000).

Ironically then, the very technology that has created this potentiallyvery profitable Internet banking segment has also eroded the branchnetwork as a barrier to entry to retail banking. The enormous cost andeffort of replicating the extensive geographic branch networks of tra-ditional banks has long been an entry barrier to prospective competi-tors. However, Internet banking means location and time areirrelevant (Jayawardhena & Foley, 2000). It also means that individu-al consumers can more readily determine the best value propositionamong competitors’ products and services because the infrastructureof the Internet lowers the costs of information search and increasesprice transparency (Bakos, 1991). Thus, consumers can compare com-petitors’ interest rates on loans and deposits, and transaction fees andcharges. Statistics show that 44% of retail banking customers regular-ly use the Web to gather financial information (Ehrenman, 2000).

Price transparency increases commoditization of basic banking prod-ucts such as deposit taking and loan or credit extension (Grosse,1997). This, in turn, contributes to the disaggregation or theunbundling of banking products and services. Banking products suchas current accounts, home mortgages, trade finance, consumer lend-ing, savings accounts and leasing are highly “bittable,” since they canbe purchased and delivered electronically and are commodity-likerather than unique (North, 1999). This renders them vulnerable toe-commerce compared to less bittable services such as private bank-ing, acquisition finance, and venture capital. Commoditization anddisaggregation reduce a bank’s ability to differentiate its products.Ultimately, e-commerce lowers both the differentiation and distribu-tion-based barriers to entry into retail banking and, in doing so,transforms the competitive landscape.

A major category of new entrants is the Internet-only or virtual bank,which, by definition, depend on the Internet as their primary com-munication and distribution medium (Dannenberg & Kellner,1998). First entering the market in late 1995, the strategy of thesebanks was initially founded on offering a couple of products, such aschecking and savings accounts, that were aggressively priced (Stock,



Commoditizationand disaggrega-

tion reduce abank’s ability todifferentiate its

products.

1999). The major competitive advantage of Internet-only banks,such as Security First Network Bank (now owned by the Royal Bankof Canada), VirtualBank and First-e, is their low transaction costs.However, few have proven to be profitable due to very thin interestmargins, a lack of brand recognition and an inability to provide cashmanagement services that require a physical location (Trout, 1999).Several traditional banks have attempted to take on the Internet-onlybanks by creating independent subsidiaries to launch Internet-onlybanks. For example, U.S. banks such as BankOne and Citibank andSingapore’s Overseas-Chinese Banking Corporation have launchedstand-alone Internet banks, as has Prudential with www.egg.com.

A category of new entrants more formidable than the Internet-onlybanks are convergers (Da Silva, 1997). These are non-financial firmswith high-profile brand names, large customer bases and establisheddistribution channels or interfaces with customers in national markets(Hall, 1998). Examples include airlines, consumer goods retailers,supermarket chains, and computer software and hardware companies(Da Silva, 1997). The concern is that once these branded convergershave established a foothold in the banking market, the need for banksto intermediate payments in the longer-term is reduced. In thefuture, e-money may be easily transferable among consumers andbusinesses without the need for financial institutions to act as inter-mediaries (Giannakoudi, 1999). Telecommunications providers andother utilities, such as gas and electricity providers, pose the greatestthreat in this area. For example, the growing mobile phone industryhas an extensive micropayment infrastructure already in place andoperators continue to collect comprehensive database information onindividual customers to assist in customizing marketing programs.

Another competitive threat is the entry of foreign firms. Internet bank-ing facilitates globalization of financial markets and thereby makes it eas-ier for multinational banks to encroach on the retail customer bases ofdomestic banks. For example, seven of the top ten banking and financewebsites visited by Australians are American (Bun, 2000). For smallertraditional banks, the greatest threat comes from global masters, whichare multinational financial services firms with strong home bases andbalance sheets, and vast scale in multi-product platforms (Da Silva,1997). Generally global masters are bancassurers, including traditionalretail and wholesale banks, such as Citibank of the U.S., Germany’sDeutsche Bank, and the Dutch ING bank, as well as insurance compa-nies that have moved into banking, such as AXA. Global masters mayalso be strongly branded multinational corporations not historicallyassociated with the financial services industry, such as General Electric,

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which now generates 40% of its net income from credit card, leasing,and other forms of financial services business (Stock, 1999).

Globalization is particularly strong for commoditized products, suchas mortgages and non-life insurance products, and bank interest mar-gins have come under pressure from the entry of online mortgagebrokers like e-loan and mortgage.com. In addition, Internet portalsor sites that offer search, content and online tools, such as Yahoo!Inc. and AmericaOnline Inc., also pose a threat to banks throughtheir ability to bring customer attention to the branded financialproducts and services they choose to promote on their sites. A fur-ther threat from generic portals comes from developments in aggre-gated online bill presentment, whereby various bills are deliveredelectronically to consumers for online payment (Hitchman, 1999).Consumer surveys in the U.S. show that many online customerswould be prepared to receive bills and conduct payment throughmarket players other than banks, such as personal financial softwaremanagement providers, Internet service providers, other portals andbrokers (survey conducted by Jupiter/NFO as reported byHitchman 1999, 10). Advances in smart card technology may helpfacilitate online payments, with credit card companies such as VisaInternational pioneering developments in multi-function smart cardsthat offer secure Internet access. As the technology for smart cards,online bill presentment via portals, electronic checks and digital moneycontinue to evolve, traditional banks risk losing their monopoly overthe payments system (Giannakoudi, 1999).

Survival Strategies for Traditional Retail BanksThe need to survive in this new competitive landscape has seen banksin the U.S., Europe and, to a lesser extent, Australia shift their e-com-merce objectives from cost reduction to customer retention and rev-enue generation (Ernst & Young, 1998). Achieving these objectivesrequire that traditional banks focus on creating value for customersthrough the bundle of benefits embodied in their banking productsand services (Kotler, 1997). Customer value and costs are createdthrough a value chain of primary and support activities, which, whenanalyzed relative to competitors, allows the bank to identify strategiesthat might improve customer value and ultimately assist in building acompetitive advantage (Porter, 1985). The most appropriate e-com-merce strategies for any bank are those value chain configurationsthat allow maximum satisfaction of specific customer needs.

The preceding section indicates that Internet banking customers wanta cost-effective range of quality core and non-core banking products



and transactional services offered in a secure online environment.Furthermore, value chain analysis shows that banks need not performall activities in the chain. Customer value is often enhanced whenbanks focus on their core competencies and outsource those activitiesthat third parties can perform at lower cost and with more specializedexpertise and resources. Notably, banks are realizing that their com-petitive advantage derives from their customer relationship, not infor-mation management, and have begun to outsource IT activities(Buttle, 1998). While many banks outsource only non-specialized ITback-office functions, other banks such as Swiss Bank, theCommonwealth Bank of Australia and the Continental Bank in theU.S. have outsourced almost their entire IT function.

Globally, the most successful IT outsourcing arrangements are struc-tured as partnerships or alliances between banks and technologyproviders, such as Thai Military Bank’s partnership with a telecommu-nications company to introduce e-banking services. Technologicalalliances can help small banks and banks uncertain about e-commerce,improve the transactional and functional aspects of their websites andto extend the number and type of Internet-based products. Throughpartnerships with software companies, sophisticated customer relation-ship management (CRM) systems can be implemented that allow largeand small banks to utilize information in their customer databases topersonalize or customize online services for individual customers.Technology partnerships also assist in innovating new Internet bankingapplications, such as digital TV banking, banking from Internet-enabled mobile and wireless telephones, and smart card platforms.

Alliances with convergers and other competitors may help banksretain their dominance of the retail payments system. Scottish bankshave formed alliances with UK supermarket chains Sainsbury andTesco, and the Commonwealth Bank of Australia markets in-storebanking through a partnership with Woolworths (Buttle, 1998).Banks in Europe are being encouraged by the European Commission(EC) to form joint ventures with mobile phone operators to createElectronic Money Institutions, while Australian banks have groupedtogether to facilitate electronic payments under the B-Pay system.However, while such alliances strengthen the position of banks in thee-age, industry experts claim that it is a misconception to think thate-commerce means banks won’t be needed in the future (Clarke,1998). The banking industry and central bank regulators have longensured the integrity and security of payment settlement mecha-nisms, and the track record of banks as confidants of information, astimely executors of instructions, and as fair dealers are qualities that

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Globally, themost successfulIT outsourcingarrangementsare structured aspartnerships oralliancesbetween banksand technologyproviders . . .

will continue to be valued by customers given the faceless nature ofthe Internet (O’Connell, 2000).

Alliances are also needed to develop banking web portals that allowaggregated online bill presentment. Banking portals “attract customersto become members of an electronic community, so they conduct theire-business through the portal, manage all their financial affairs from theportal and source the majority of their products and services via oneprovider—the bank” (Hitchman, 1999, p. 10). Such portals willimprove customer retention through recurring contact and createopportunities for cross-selling of other products and services. Many ofthe global masters have begun developing portals, with partnershipsrecently occurring between Citibank and Netscape and Deutsche Bankand the telecommunications company 1&1. The products marketed onportals include the bank’s own branded products as well as high value“best of breed” offerings sourced from other bank and non-bank prod-uct specialists, including traditional lending and savings products, billpayment services, credit cards, insurance, funds management, andonline share trading.

Ultimately, then, survival in the new competitive landscape demandsthat traditional banks consider their potential role as financial servicesdistributors or product manufacturers and reconfigure their valuechain accordingly. Mergers and acquisitions are forecast to lead to thecreation of fewer than a dozen global masters that will have “thebrand recognition, scale economies and versatility to succeed in thelong term as (total) solutions providers” to value seeking retail cus-tomers (Hardman, 2000, p. 48). Smaller local and regional banks arealso expected to merge to generate value from cost savings. Theirroles will be as product manufacturers and low-cost providers for theglobal masters and/or for convergers such as supermarket chains (DaSilva, 1997). Small banks may also focus on serving niche markets, asevidenced by Central Carolina Bank’s strategy to build an onlinefinancial services portal for doctors. Regardless of bank size or posi-tion in the value chain, all banks must focus on creating value fortheir Internet banking and branch customers by integrating their e-commerce strategy with their corporate strategy.

CONCLUSIONS – THE FUTURE OF INTERNET BANKING

In this new competitive landscape in retail banking, the questionremains as to whether Internet-only or virtual banks remain a viablelong-term business model alternative to bricks-and-mortar branch



banks. The opportunities of Internet banking delivery include increas-ing fee revenues for services such as online bill payment and cross-pro-motional selling of credit cards, home and car loans, certificates ofdeposit, insurance and stock trading (Stanco, 2000, p. 86). Yet, whiletransaction costs are low for Internet banks, technological and market-ing costs are high, the latter especially so given the need to build cus-tomer awareness to overcome the lack of physical presence. Furthersqueezing operating margins is the need to pay high interest rates toattract deposits. In addition, Internet-only banks have a narrower prod-uct range than traditional bricks-and-mortar banks, have fewer oppor-tunities to generate transaction fees as most transactions are offeredfree-of-charge to win customers, and are unable to provide some cashmanagement services due to the lack of convenient physical locations(Trout, 1999). Thus, it is unlikely that Internet-only banks will be ableto capture a customer’s primary banking relationship in the longer term.

What then are e-intermediaries in retail banking expected to look like asthe decade progresses? Industry experts predict that wireless devicessuch as mobile phones, game stations, digital televisions, and cars willsoon overtake Internet access by personal computers, with 40% of allEuropean e-commerce expected to be conducted over wireless Net con-nections by 2003 (Ayling, 2000). Banking via digital television isexpected to attract 7 million users in the U.S. by 2010 (Adriaenssens,2000). Consumers therefore will demand true anywhere, anytimeaccess, and the most successful players in retail banking will offer wire-less Internet banking facilities as part of an integrated financial servicedistribution system. Shareholder value may be created by equity carve-outs and spin-offs of Internet banking subsidiaries, with the online plat-form backed by some level of bricks-and-mortar infrastructure and astrong brand identity. While not all traditional retail banks will transformthemselves into e-intermediaries, all players in the dynamic retail bank-ing market will need to offer, as a minimum, fully transactional Internetbanking websites. By 2010, the boundaries between e-intermediariesand traditional retail banks will be moot, as will boundaries between sep-arate organizations. Retail banking globally will be a marriage betweentechnology partners, a few dominant multinational bancassurers andbranded non-financial firms, and many niche and product segment spe-cialists, who supply to and/or distribute for the bigger players.

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Industryexperts predictthat wirelessdevices suchas mobilephones, gamestations, digitaltelevisions, andcars will soonovertakeInternet accessby personalcomputers . . .



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The changing competitive landscape of retail banking in the e-commerce age

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