The New Trend of Online Banking

The New Trend of Online Banking

Picture what our bank looks like today: the brick building, the drive thru window, large vaults, and the counter full of tellers waiting to service their customers. This is the traditional bank that we have all grown up with, the classic brick-and-mortar business model, a fundamentally sound business model that has been successful for hundreds of years. So what has changed with our banks today? Well, the brick-and-mortar model still exists but there is a new trend that all banks are moving towards, the click-and-brick e-business model. On-line banking and electronic bill payment systems are rapidly moving trends that have been adopted by the banking industry within the last two years. It has been the banks number one priority for not only servicing their current customers, but to also attract new customers to their high tech e-business model. It does have a high price tag for implementation, but the market advantage and the cost savings to the bank can potentially be much greater.

The traditional banking model that has been in place for hundreds of years has served well not only to banking customers, but also to banks. It's quite simple: open an account, the bank will provide you with checks, write checks to cover payments, the bill payee cashes the check, and your account is debited. Each month, the bank sends you a bank statement detailing all your deposits, withdrawals, and checks cashed. The world of paper has fulfilled our needs to buy goods and services for many years. But this was the past. Today, the banking industry, like many industries, is looking for ways to cut costs, increase profits, and attract new customers while keeping the existing customers. Banks are merging and...

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... struggling to get the word out to their customers. They are offering fee free banking and free electronic bill pay for three months or longer to promote their product. Many of the smaller banks are lagging behind because of the high cost of putting these systems in place. There is certainly a very big cost savings to a bank if their customers use these tools. There is also a very big benefit to customers who like to use these services. Banking from home is a very simple transaction, it's getting the customer to actually try the service that's difficult. The future of banking is most certainly B2B and B2C. The million-dollar question is when will it be fully implemented?

Bibliography:

McPherson, Aaron (May 18, 2001). On-Line Payments Shackling E-Marketplaces. CIO Magazine [On-Line]. Available: http://www.cio.com/analyst/051801_idc.html