E-Banking’s Benefits
For Banks
Cost savings, efficiency, gaining new segments of customers, improvement of the bank’s reputation and better customer services and satisfaction are primary benefits e-banking may bring to banks (Jayawardhena & Foley, 2000).
Booz-Allen and Hamilton (1997) argue, based on their global survey, that setting up a specialized e-banking infrastructure costs about US$1 - 2 million, which is much lower than setting up a banking branch. In addition, the authors conclude that costs for running a traditional bank account for 50% to 60% of its revenues.According to Robinson (2000), costs for conducting a banking transaction online are much lower than at a brick and mortar branch. Moreover, Sheshunoff (2000) contends that one of the most important factors influencing the adoption of ebanking by banks is the need to build up strong barriers to customer exiting. According to Shes- hunoff (2000), once customers become familiar with the utilization of full service e-banking, it is unlikely that they will change to another financial institution. Such an argument can be supported by the consumer behavior theory that switching costs (e.g., time and effort) are often very high. Finally, the author emphasizes that the implementation of e-banking can bring about many competitive advantages for banks in today’s highly competitive banking market.
Research on e-banking has been carried out in Denmark by Mols (1998). The author argues that e-banking can play an important role in enhancing cross-selling and price differentiation. E-banking allows banks to provide customers numerous services 24 hours a day and 7 days a week and so can improve customer satisfaction. This in turn makes customers less price sensitive, improves their intention to repurchase, increases customer loyalty and results in more positive words of mouth.
For Customers
E-banking not only brings about benefits to banks but also to their customers. Thanks to the emergence of the Internet, banking transactions are no longer limited to time and geography. It is very easy for consumers throughout the world to have access to their bank accounts 24 hours per day and seven days a week even from the privacy of their own home. Customers can enjoy a variety of services, including services not provided by traditional bank branches. It is argued that one of the greatest benefits of e-banking is that e-banking products/services are inexpensive or may even be free and that customers save even more money as well as time because they do not have to travel to or from a bank branch (Pham, 2010). However, some people believe that prices appear to be one factor that impedes the diffusion of e-banking (Sathye, 1999). The price debates revolve around geographical differences between costs of Internet connections and telephone call pricing.