Alternative Distribution Channels vs Traditional Banking - Coursework Example

Since the 1980s, electronic banking has been available in the United Kingdom; still, only a fraction of the banking public regularly make use of its several services twenty years into its implementation (Daniel &Storey, 1997). There are several types of electronic banking that have evolved over the years.  Some ten years ago, the basic form of Internet banking would involve the use of web pages that provide information about the bank and its products.  The web page would allow companies to access groups of customers never before reached.

  At present, all banks in the UK have web pages that increasingly allow customers to interact with the information provided.  This includes calculating payments on a mortgage or making use of bank services.  The web page also acts as a mechanism for handling customer complaints and for soliciting suggestions for improvement.  As well, promotion and selling via the web page have already made it a distinct form of remote distribution. The interactive nature of this distribution channel makes it an especially potent tool for keeping the product/service within customer recall and encouraging customer involvement.

 At present, more often than not, electronic banking refers to an electronic fund transfer (EFT).  It now entails the use of a computer and electronic technology as substitutes for paper transactions and checks payments.  EFT transactions are initiated through cards—with magnetic strips or codes inputted through a handheld device—that are enabled by the account owner or those he/she may authorize.  Many financial institutions now use ATMs or debit cards activated by a Personal Identification Number (PIN) (FTC, 2006).

There are various reasons for banks to employ electronic banking, foremost of which is as a new distribution channel.  Financial services may be made accessible to more potential customers than before at a lower cost for an equivalent quantity.