Dissertation Writing Help in The impact of the Internet upon bank marketing
Case Study on the Impact of Internet on Bank Marketing in Portguese Banking Industry
Project Report on The Impact of Internet upon Bank Marketing
ABSTRACT
Information and
communication are critical to developing customer relationships. Thus, new
information and communication technologies (NICTs) became a key knowledge tool
for the organisation within a relationship marketing strategy. Retail banking
is a good example of a sector in which the virtualisation of relationships is
increasing. However, there is no consensus as to whether banking relationships
are strengthened or weakened by the use of technology. This article discusses
the virtualisation of the interaction processes between banks and their
customers and analyses the infl uence of the Internet on these relationships. A
questionnaire was distributed by mail to 340 Internet banking services ’ users.
A principal components analysis and a multiple regression analysis were conducted
in order to discuss the relationship between the identifi ed dimensions of
Internet banking and relationship marketing. The research fi nds three factors
related to the use of Internet banking which strengthen the relationships
between banks and their customers: the intensity of Internet use, the diversity
of access locations and the diversity of Internet applications. From a
managerial point of view, these fi ndings have implications for the development
of new relationship approaches based on technology.
The
impact of the Internet upon bank marketing critical. There
is a great deal of interaction between the customer and the bank, and technology
plays a major role in that interaction. For example, the self-service
technologies such as ATMs introduced into the banking sector have become both
well known and popular, since they were readily accepted by customers, who
recognise their advantages in terms of efficiency, convenience and cost reduction.
However,
there is some doubt as to whether self-service technologies contribute
favourably towards establishing lasting relationships between banks and their customers.
Several studies have suggested that technological advances and the tools of communication
enable close and long-term relations to be created and developed with
customers. However, there is no consensus
as to whether these relationships are strengthened or, rather, weakened by the use
of technology. If, on one hand, the potential exists
for technology to improve communication and customisation, on the other hand, increasing
virtualisation may translate into no direct personal interaction, diluting
links between company and customers. This is why it is appropriate to look
further into this topic. This study seeks to understand in what way this new
practice of using the Internet as an example
of a self-service technology affects relationships that are established between
banks and their customers. The research studies the relationships between the
concepts of the use of Internet banking and of relationship marketing, which,
since these are two concepts defined by more than one dimension, means studying
the relationships between the various dimensions of the two concepts.
Ultimately, the research aims to obtain an answer to the question How does the use of the Internet by bank customers ’ relate to relational approaches developed by
banks? by examining the relationship between the dimensions of
Internet banking and relationship marketing. The article begins with a brief
literature review about Internet banking and relationship marketing and the
state-of-the-art of Portuguese Internet banking. We then propose dimensions of
both variables in order to examine relationships between them and discuss the
methodology used in the research. The empirical examination is done through factor
and multiple regression analysis. We end up concluding that new relationship
approaches can be developed by banks based on technology.
INTERNET USE IN BANKING
At
present, the market offers a large number of new information and communication technologies
(NICTs) that allow customers to satisfy many needs with minimum human intervention.
By technology we mean all the tools,
techniques and procedures used to perform a specific function. Technologies which
are individually managed by users are known as self-service technologies and
are named as Self-service Banking
Technologies ( SSBTs ) or
Electronic Banking – E-Banking when
they use the Internet and are applied in the banking sector. The development of
e-banking is a manifestation of the use of new technologies
in financial services and represents a variety of services of four types : Credit cards , ATMs , Points of Sale , and Home banking (HB) or Internet banking (IB). These
new technologies have opened very
promising opportunities for financial service companies to add alternative
distribution channels, constituting a key means of differentiation, complex but
also critical. Early studies suggested that
the Internet would have a signifi cant impact on retail banking. One
consequence of the Internet is the growing virtualisation movement.
By
‘ virtualisation ’ , we understand the removal of all constraints of time,
place and method, enabled by the convergence of computing, telecommunications
and visual media. Although the relationship with the customer is maintained, it
is carried out at a distance with little or no direct personal interaction. For Barnatt it is an ‘ intangible social relationship
’ consider it unlikely that the ‘
person-to person ’ financial counselling done via the Internet will be
materially different from that traditionally done ‘ face-to-face ’ in the
various bank front-offices. However, Harden 26 argues
that the disappearance of the time, place and method factors deprive the
traditional relationship of the characteristics that define it, since in
virtual relationships, the connection between the company and its customers is
diluted, with (social and commercial)
exchanges mediated by computer. Also Walsh suggests that traditional branch
banking will eventually cease to exist, affecting opportunities for personal
interaction and relationship building.
The
fact that technology has come into common use in the banking sector has played an
important role. Banks aim to reduce costs, enhance efficiencies and guarantee
customer retention with Internet banking. Financial institutions obtain
considerable cost reductions at the same time as they reach new customer segments, identify potential customers and cover a global geographic
field of action that no other distribution medium allows affordably. There is
no limit on advertising space; information access and retrieval are fast; the
site can be visited by anyone at anyplace; and the process is private and
one-to-one. The self-service
technologies and e-banking also
allow users to customise the service in a tailor-made fashion, which is often
assessed by the customer as a ‘ gratifying experience ’ . Rayport and Sviokla propose
that the use of new technologies is understood as a chain of virtual value used
for the greater benefit of customers and banks. Despite these positive aspects,
new technologies can also be negative for
the customer and create problems related to the reliability and security of
transactions, accessibility to the service and customer support.
RELATIONSHIP MARKETING, BANKING RELATIONSHIPS AND THE INTERNET
Relationship marketing and the internet
Some
authors have argued that the Internet would be the effective tool for
relationship marketing, constituting a revolution in the way relationships
could be managed. The Internet enables interaction between buyer and seller,
which facilitates co-creation of value and offers a unique opportunity to apply
one-to-one marketing. In this
way, the Internet can benefit the building of more loyal and longer-lasting
relationships and the creation of a wider network of contacts. Sisodia and
Wolfe argue that the use of
information technology leads to a focus on the customer. Technology enables relationship
marketing to bring about a resurgence of the human aspect in marketing concerns,
with consumers ’ individual information
being provided in real time, especially if the channel of communication is cyberspace.
On the other hand, the use of technology increases the efficiency of the marketers
’ creativity and intuition simply because more real information is provided, which
is rapidly processed. Data on transactions are held
automatically in the customer database and this is overlaid with demographic,
geodemographic and lifestyle data and a range of other data sources, becoming a
key knowledge tool for the organisation within a relationship marketing strategy.
Banking relationships and the internet
This
article now examines the impact of Internet on banks ’ activities, particularly
in the relationships between banks and their customers. There are various
schools of thought on the type of influence that the Internet
can have on the bank-customer relationship. A first line of thought defends a
positive effect of the Internet on the consolidation of relationships between
banks and their customers, due essentially to the increase
in the efficiency of communication that enables a reciprocal flow of information.
The
new means of contact favours interactivity between the parties and reduces
possible asymmetries of information. The
first argument is related to the increase in collaborative production between
the customer and his or other bank and
enables one-to-one marketing, associated
with better knowledge of customers ’ needs, in the provision of products tailored
to individual customers and in pro-active selling. Each
relationship becomes unique and each individual customer constitutes a true
market segment. The second argument is related to the
reduction in the differences of access to information between customers and
banks, which allows greater customer power and trust in the development of the
relationship. Nevertheless, the same arguments are at the basis of an
alternative view that considers that the introduction of Internet tools has a harmful
effect on customer-bank relationship. The improved customer access to
information introduces greater vulnerability in the relationship since the
control of this relationship is transferred to the customer, who
now feels more confident and secure enough to risk changing banks in search of
better returns.
Another
argument is also proposed: the existence of close social relationships develops
a ‘ psychological loyalty ’ , which is conveyed in the decisions the customer
makes. Burnham et al call
it ‘ relational switching costs ’ , a type of switching cost that involves psychological
or emotional discomfort because of the breaking of bonds. The assessment of the
customer ’ s physical encounter with his bank (human contact) is defined by
social and personal forces, which superimpose any economically more rational
alternative (since they grant, namely, greater comfort and / or savings of
costs). The lack of human contact may lead to loss of trust, affecting
loyalty and customer retention. Clearly, the use of technology in the context
of customer relationship management in banking can be a double-edged sword. There
is evidence that technologies such as the Internet can help build
relationships, but may also contribute to their erosion. In light of this, this
article aims to examine bank-customer relationships in a technology-based context. The research was conducted in the Portuguese
banking sector.
Source- The impact of the Internet upon bank marketing written by Jo ã o F. Proen ç a, Marta Martins Silva and Teresa Fernandes is taken from Journal of Financial Services Marketing Vol. 15, 2, 160–175.
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