E-Business in the UK - Essay Example

?Introduction Banks have been in existence for centuries with their main role being keeping people’s money safely. Traditional methods of transactingbusiness with banks have changed a great deal over the last 30 years. Banks constantly change their operational strategies to keep pace with the changing consumer needs and preferences. A new banking environment has emerged with emergence of information technology. E-banking or electronic banking is the current trend where customers engage in financial transactions through websites offered by their banks. This trend took root in the UK back in the 1980s and has progressed well with many services being introduced under e-banking (Ali, Datamonitor (Firm) and Reuters Business Insight 2000). However, as much as online banking is present in many banks few have services worth consideration as e-banking. Banks engage in e-banking due to a number of benefits that they accrue together with their consumers and other stakeholders. This paper will look into e-banking in UK and how it is helping banks. E-banking and customers E-banking still has strides to make in order for banks, customers and stakeholders to fully benefit. In the developed world where technological literacy is high many banks have not embraced fully-fledged e-banking services. Many customers also have stuck with the traditional banking systems. This has led to a few net transactions being carried out under the e-banking systems (Helen and Fotini 2004). It is important to note that when a customer is satisfied, the service provider is satisfied in return. Customers who have chosen e-banking methods have done so to avoid standard practices that plague traditional banking (Ian 2009). Other customers do so to ensure security and privacy of transactions since banks with e-banking options offer security guarantees. Customers are able to do a great deal online for example balance and e-statement inquiries, money transfers, changing personal details e.g. PIN, control overdraft transactions, manage standing orders and payments of bills among others. There are help lines established by banks most of which operate on 24 hours basis. E-banking and banks Mainstream banks in the UK like HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds are now having a wide range of e-banking services which are clearly illustrated in their websites. They are leveraging on the potential that internet technology has in order to establish online banking facilities. These banks have gained millions of customers from all over the world due to the flexible and convenient nature of e-banking (Ali, Datamonitor (Firm) and Reuters Business Insight 2000). Some of concrete advantages are as follows; 24 hours operations This is basically the biggest advantage where banks operate even after locking up their branches in the evening. E-banking enables customers to access their bank account details on a 24 hours basis as mentioned before. More customers Banks that utilise their marketing strategies to capture more customers are sure to gain more by having e-banking services. E-banking reaches many potential customers who are able to view what a bank has on offer and apply immediately in the bank’s website (Teo and Tan 2000). Traditional banks which have physical locations tend to use more effort to physically reach the prospective customer and convince them to open an account. Innovation in product and service range E-banking enables banks to develop products and services that can only serve internet users. Some of these are the e-bank statements, DVDs, news feeds on finances and financial calculators among others (Buckle, Buckle and Thompson 2004). This has however been challenging for banks in terms of investment cost. The more the services, the more is the initial cost but due to the relative lower cost of operations in the online business in the long term, the initial costs are overshadowed. Broad customer base It is an emerging advantage with banks attracting customers who are beyond their geographical regions. Internet is everywhere meaning that if a prospective customer is appealed by the services attached to e-banking section, then their geographical distance from the bank will not hinder them from opening e-accounts. Customers mostly look into how easy it is to use the e-banking facility, privacy measures taken and security of transactions. If a bank convinces people through these channels it is easy to have customers originating from all parts of the globe (Helen and Fotini 2004). Rates and incentives Banks operating online are able to save a great deal on their operations. If this is coupled with sound management policies and streamlined savings a bank is able to offer customers lower interest rates on loans and overdrafts, higher interest rates on deposits and general lowering of transaction costs. The current global market place is highly competitive and for a bank to retain and attract customers there is need to have many incentives. Proper utilisation of e-banking gives a bank an upper hand to cope with competition and to emerge as a market leader (Jayawardhena and Foley 2000). Cost saving It is the tradition for banks to open branches all over in their geographical confines so as to reach as many customers as possible. With e-banking this trend is losing popularity with it becoming a comparative disadvantage rather than a competitive advantage for those banks with a huge branch network. Banks are now able to cut on many costs like rent and leases of buildings, employees’ salaries since only few are required, electricity and stationery expenses and security charges among others (Shah and Clarke 2009). In doing this a bank increases its profitability thereby pleasing its shareholders. For a bank management to push through with huge investments it is important to have pleased shareholders. Cost savings also facilitate lowering of transaction charges to customers through a trickle-down effect. UK banks and their e-banking Barclays Bank UK website shows that the bank has invested a great deal of its resources in marketing its online banking facilities. The site even has a chat option where a visitor is able to inquire further on the service. The site further states that online banking is free and that it operates for 24 hours a day (Barclays 2011). Free here is in respect to registration of the service and not the services provided. The bank protects its clients from fraud and loss of money through a bank online guarantee. The bank is tied by this guarantee such that in case of loss through internet fraud the sum lost is fully covered. However, the sum lost is covered by the bank in case the customer had provided correct personal and payment details, they were not committing fraud, details pertaining to security are private and that all terms of the account were followed (Barclays 2011). HSBC on the other hand offers quite similar services to those of Barclays but it has more services. It states that it offers online discounts on a number of products, offers free MacAfee security software for a year and a fraud guarantee. The site however does not immediately stipulate the rules that surround the guarantee but it explains how the bank uses a Security Key to prevent criminal or hackers from accessing bank details (HSBC 2011). It also reimburses money lost as long as account’s terms and conditions were followed. The website has a unique feature where guidance is given to clients on how to uphold internet safety. Lloyds TSB on the other hand outlines the services at the disposal of a client as follows; making quick transfers, payment to new recipients, paying bills and credit cards, direct debits and standing orders (Lloyds TSB 2011). They also have a FAQ tab in respect to online banking which helps in giving answers. The bank was voted as the Best Online Banking Provider in 2011. The RBS offers one of the most extensive information on the services they offer in regards to e-banking. The services include well elaborated international services, payments and transfers, administrative options and Bankline security (RBS 2011). Conclusion and recommendations The banking industry just like any other is undergoing numerous changes technologically. E-banking has captured the attention of many banks where customers complete their financial transactions online without necessarily visiting a brick and mortar bank facility. The response is however not as fast as expected considering that this technology started in the early 1980s in the UK. There are still some banks and customers who wish to conduct business in a traditional way. Mainstream banks e.g. HSBC and Barclays in UK have fully-fledged e-banking services which are ensuring their relevance in this age of technological advancement. In order to ensure progress in e-banking banks need to ensure their services are easy to operate, affordable and quite secure. There is also the need to increase promotional campaigns and ensure ample staff coverage. The banks should lastly establish monitoring tools and active systems of control which are regularly updated. Summary The four banks highlighted indicate that e-banking in UK is at a relatively advanced level. These banks have hugely expanded their customer base and profitability with the launching and continuous advertising of their e-banking services. E-banking has enabled banks to cut on cost of operation thereby enabling them to reinvest the earnings towards innovation. As a result customers have benefited by being able to conduct financial transactions anywhere and anytime thereby saving both time and money which translates to value addition. Banks should continue offering innovative online products to capture every client as the market is wide and insufficiently tapped. References Ali, H, Datamonitor (Firm) and Reuters Business Insight 2000, UK ebanking, Datamonitor. Barclays 2011, Bank secure online banking, viewed 15 March 2011, . Buckle, MJ, Buckle, M and Thompson, JL 2004, The UK financial system: Theory and practice, 4th edn, Manchester University Press. HSBC 2011, HSBC, Internet banking, viewed 15 March 2011, . Helen, W and Fotini, N 2004, Internet banking in the UK: Why are there not more customers? Journal of Financial Services Marketing, vol. 9, no. 1, pp. 49-56. Ian, S 2009, Online banking and the role of CRM: The impact of the internet as online business Platform on CRM (Study of online banking in the UK), GRIN Verlag. Jayawardhena, C and Foley, P 2000, "Changes in the banking sector – the case of Internet banking in the UK", Internet Research, vol. 10, no. 1, pp. 19 – 31. Lloyds TSB 2011, Internet banking: Best online banking provider 2011, viewed 16 March 2011, . Shah, M and Clarke, S 2009, E-banking management: Issues, solutions, and strategies, IGI Global snippet. Teo, TSH and Tan, M 2000, Factors influencing the adoption of internet banking, Journal of the AIS, vol. 1 no. 1es. The Royal Bank of Scotland (RBS) 2011, Bankline: Internet-based corporate banking, viewed 17 March 2011, . Read More