TECHNOLOGY and the Banking Industry

TECHNOLOGY: THE BANKING INDUSTRY REENGINEERING FOR E-COMMERCE

The banking industry's top-to-bottom redesign of the entire retail operations of some of the world's largest banks to facilitate e-commerce is creating a concept some analysts are calling "Future Banks" (Kobrin, 1997; Oliver, 1997).

Accepting e-commerce must be done for banks to survive onslaughts from the Internet, brokerage firms and mutual-fund houses and from industry consolidation and technology. The critical question to be discussed in this paper is "What is electronic commerce and how will it impact banking?"

We will do this by examining the following:

Section 1: What is electronic commerce

Section 3: Alternatives for implementing change

Section 5: A look at the new business style

Section 7: Look at the new infrastructure including network design for hardware and software

Estimates of the size of e-Commerce vary, but analysts predict that the current business-to-business e-commerce market for products and services totals between $2 billion and $3 billion. Most industry analysts agree that the business-to-business e-commerce market has a very low penetration rate of 10% or less today (Kobrin, 1997).

Ninety percent of electronic commerce transactions are expected to be business-to-business by the year 2001 (Violino, 1997). Some of the cha

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tween the marketing efforts for a product (creating the want) and the channelization for that product (establishing a fulfillment system)? Some confluence of events--sales messages, word of mouth, formal marketing--must conspire before a bank can, and will embark on such an endeavor. And when it does, there are several possible alternatives (Radding, 1998). The curious thing about this banking and e-commerce is that the analysis of alternative solutions must be done within the framework of the retail construct itself, rather than any problem-solving efforts on the part of the upper management. For it is the end customer (whether individual or corporate) that is the prime mover. These customers know what they want. They know what they want to pay. What must now occur, and can occur if the bank adopts a program of E-commerce, is that a new kind of relationship marketing (typically described as being oriented toward a long time horizon in contrast to the short-term orientation) will exist. This kind of marketing consists attracting, developing, and retaining customers. In other words, it is all activities that establish, develop, and maintain successful relational exchanges. Section 4: Implementation After many strateg

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