First Online Bank in the United Kingdom: The Egg Bank - Case Study Example

EGG BANK INTRODUCTION Established in the United Kingdom, Egg is the first online bank in the country. It was operated under the name of Prudential as a subsidiary of Citigroup. The company was re-launched in 1996 by the name of Egg Bank. It is purely an online bank in that an account can only be operated from the internet or through their call center. EGG bank is successful as it caters to the need of the customer for managing their money effectively. The areas of specialty are borrowing, saving and insurance which they offer with great service. PESTLE ANALYSIS Political It has been heard since the beginning of the year the financial reforms will take place but it is still unsure how it will affect the banking system in the UK. According to this reform, banks are required to increase their amount of capital to support their activities. Banks are still unsure of how strong the reforms will be and what will be its effects. Economical The credit crunch has also had its effect on the UK banking sector. Bank of England is slightly changing its monetary policy as a means of quantitative easing hoping that the economic conditions would become better. The UK is also working in close collaborations with China to develop the financial and capital markets. Social Many jobs have been lost due to economic slowdown that has had a huge impact on the thinking and the demand of the population. People are now looking away from the banks as they have no means of re-payments of loans from the banks. Also, many people are indifferent to the products that are offered by the banks and are looking for some better options in which they could invest. Technological Technological breakthroughs are occurring all over the world and not just in the UK. The banks that were operating offline are now establishing themselves over the internet offering more products for different segments than they were doing in their offices. The rapid progression of banks on the internet has introduced a new banking industry called e-banking. Banks are now fighting to capture more target markets than their competition using heavy online and offline marketing. Legal The legal issues concerning the banking industry are where they would invest people’s money as the customers demand details and guarantee on their returns. The paperwork and documents on the customers’ information as well as the banks’ information is now of vital importance before entering into any type of transaction due to increased fraudulent activities. Environment Banks are deriving their campaigns toward green and friendly environment as a means of attracting new potential customers. In addition to this, it is also a legal requirement for the banks to be environment-friendly as many complaints have been lodged against the banks by environmentalists. INDUSTRY MARKET Over the past few years, the banking sector has evolved greatly and rapidly. As the age of the internet dawned and many new technologies emerged with it, the concept of electronic banking also emerged. In UK the concept of electronic banking is spreading like fire and is rapidly becoming the conventional channel for almost all the banks. Certain concerns have been aired recently in the country regarding the security of the transactions through the internet. Although this concern has always been there, the other problem that has emerged is related to customer-relationship. The management of the banks is now looking towards ways that can help manage the customer needs and their concerns for privacy and confidentiality while working with click and mortar business. Egg Bank, solely established on the internet, has more marketing and operations problems than other banks. As the company does not have any visible establishment accept for its customer call centers, the ability to market itself is narrowing down as more and more banks enter the e-banking industry offering more flexible products in competition. CUSTOMER ANALYSIS Customers are the most important piece in retail banking. The egg is in the business of online retail banking. It is a standalone e-bank as, during its inception, it was the demand of the customers. The customer wanted a banking solution that can save their time and money of visiting banks in person and also get a full banking experience from the comfort of their home or office. The official figures from the Office of National Statistics state that the internet subscription in the UK has grown from 15 million in 2000 to 35 million in 2005(ONS, 2006). It is also said that more than 60% of the population use the internet in their daily lives. The customers of Egg Bank are people who are looking for insuring, investing and banking opportunities. They can be related to any aspect of life as Egg caters to the basic needs of customers who do want an easy and hassle-free way to manage their money. Customers of Egg Bank can log in to their accounts any time they want as it is functionally 24 hours a day/7 days a week. The products offered by the bank include from credit cards to car and life insurance to investment portfolios. The bank is positioned itself to provide one-stop banking to its customers. The egg has been monitoring customer attitudes since its inception and therefore provides demand-driven facilities and choices. The customer database of 3 million people is proof in itself about the success of the bank. More and more customers are opening their accounts and getting facilitated by the products as it offers the lowest possible rates in the market. SWOT ANALYSIS Strength The first all-alone online bank, therefore, is the leader in the online banking in UK Strong customer database Ability to connect with customers and provide best online customer service Weakness Lacking in new innovative products Opportunities Changing economic and social demands can help the bank to develop more demand-driven products Reach more customers through its 3 million customer database. Threats Customers can switch to other online companies as there is no visible cost Almost all the established banks are coming online offering homogenous products Economic recession can prolong AFFECT ON EGG’S MARKETING & OPERATIONS STRATEGY Keeping in view the above analysis, the Egg Bank’s marketing and operation strategy are failing as the company is unable to compete with the new rivals on e-banking. The new e-banks have strong support from their bricks and mortar establishments which gives the customer a sense of security. Egg Bank is competing in a homogenous market environment where its advantage of being the first e-bank has long disappeared. By sticking to its current marketing strategy any innovations will provide its short term benefits as the customers are now finding it difficult to distinguish between other offerings of competitors. As a result of this, Egg bank might fail because of the rapid improvements in the ways of online marketing by brick and mortar banks over the internet banks in the UK. The analysis also shows that Egg Bank has assessed the marketing and environmental challenges well and in response, the bank is moving towards an integrated and extended marketing campaign that can once again make Egg Bank the leader in the industry. RECOMMENDATIONS As the bank is operating in a homogenous environment, the first step it has to do is differentiate itself from its offerings and then it has to ensure that the level of service provided by it remains higher than other offerings. Egg Bank should add more information about its products and offerings so that it is easy for customers to understand, The bank can also increase its role in the society through different environmental acts such as Green Day and so on. This way the company can increase awareness about the environment and create awareness about the banks existence in the minds of potential customers. The bank should undertake more outdoor marketing activities rather than occasional advertisements. As its website it the only way customers can communicate with the bank, Egg management should establish more call centers and customer centers to establish its creditability more securely. CONCLUSION Egg Bank has been the leader and pioneer in e-banking, but recently with an increase in competition, this position is no longer available for it. It seems that the bank has become a follower. To gain its original position, Egg Bank’s management should consider the macro-environment as well as the internal environment and make the necessary changes. The bank can play on its strengths of providing the best customer relationship online and capture the opportunities that the changing environment is providing it. REFERENCES Barrow, Simon (2009). Assessing the UK political climate. Ekklesia. Retrieved October 14, 2009 from Egg Bank. Accessed October 14, 2009. Marketing (UK). 2004. Egg fills head of marketing post. p. 2. ONS .2005, Office of National Statistics, Ptacek, M. 2000. ‘Hack Attack Scrambles U.K. Web Bank, Egg.’ Bank Technology News; Vol. 13, Issue 10, p. 17. Turner, C. 2005. ‘Egg beaten at its own game.’ Marketing Week (UK); Vol. 28, Issue 27, p. 26. Read More