Electronic commerce and the marketing of Internet banking in the UK: INTERNET BANKING part 3

Electronic commerce and the marketing of Internet banking in the UK: INTERNET BANKING part 3

Alternatively, one can focus upon the ways financial providers have sought to market this delivery channel to consumers (see Table 2) to promote adoption. From this review it appears that the main factors that have been used by financial providers to promote their Internet offerings have been those of convenience, access, control and increased flexibility and choice.

Table 2 The marketing of Internet services (as at 19th September, 1999)

Provider

Positive consumer

How explained

advantages cited

Barclays

Money management

‘Make your money work harder.’

Accessibility/Control

‘It’s your money. So why shouldn’t you be able to manage it

whenever you wish, wherever you wish? With Barclays Online

Banking, you can.’

HSBC

Comfort

‘We’re opening a bank in your living room.’; ‘TV Banking gives you

the freedom to get on with your life.’

Novelty/Excitement

‘TV Banking is a new and exciting way to access your account

information and to buy our products and services on your
television.’

Lloyds

Access

‘Lloyds TSB online gives you direct access on your computer to

manage your day-to-day banking via the Internet, for real control of

your finances.’

Control

‘Easy money management.’

Egg

‘It pays to be Online.’

First Direct

Control

‘pc = personal control’; ‘Our aim is to
provide you with even greater

control, convenience and choice in how you
manage your money.’

Flexibility/Choice

‘First Direct’s telephone banking service provides our customers
with

flexibility in how, when, and where they bank. PC Banking provides

even greater freedom, control and access to day to day finances.’

Access

‘We have built a personal banking service around you and your

needs, so we’re available 24 hours a day,
every day, by telephone or

on-line, via PC Banking. There’s no more queuing, or rushing to beat

closing time, or having to make special appointments. You’ll find
our

service is responsive and friendly, and all your normal banking

transactions will be free.’

Halifax

Access

‘Everybody’s time is precious, so our new Online Banking Service

will be open around the clock for Halifax Current Account customers.

With no more waiting in queues, you’ll be able to make the most of

Control

your free time and take control of your money whenever it suits
you.’

An interesting example is First Direct whose Internet site does not simply advertise its services in the conventional way of listing services, ie mortgages, savings etc; they have also sought to advertise their services via appeals to consumers ‘lifestyle choices’ and presumed consumer needs. For example, under the heading your needs the following needs are identified: enjoying success, travelling, separating, improving your home, having a family, buying a home, retiring, getting married, changing job, buying a car, changing banks. Each ‘need’ in turn links to a conversational style appeal to consumers’ presumed concerns and the offer of linked services. For example, ‘having a family’ is linked to the perceived ‘need’ for the following financial products: a direct savings account, loans, a Visa card, insurance and repayment protection.

Equally important has been how financial providers have sought to address the concerns they perceive consumers might have regarding the use of the Internet for their financial needs. In Table 3 an illustration is provided of how selected UK financial providers have sought to allay consumers’ perceived reservations.

Table 3 Addressing consumers’ concerns (as at 19th September, 1999)

Provider

Negative factors

How negative factors addressed

Barclays

Security

‘Worried about security? Don’t be? Thousands of people in Britain

already bank confidently and conveniently on the Internet. Two
levels

of security are required to access your account details. We use the

Encryption Technology

very latest encryption technology. So nobody will be able to access

your records.’

HSBC

Security Assurance

‘Most of all, it means banking on a service that’s designed to be
fast,

easy
and

secure.’

Lloyds

Safety and Security

‘And you can be sure your money and personal details are safe and

Encryption

secure, because we use the very latest data encryption.’

Egg

No reference

Not Applicable

First Direct

Security

‘Security is of paramount importance to us, and we’ve utilsed the

latest technology and password only access to ensure the safety of

your account.’

Halifax

No reference

Not Applicable

From Table 3 it is apparent that UK financial providers have focused upon the security issue, with little or no explicit reference made to privacy issues, ie the subsequent usage of customer behaviour data held by financial providers.

Ghosh (1998) in his assessment of the opportunities presented by Internet-based transactions suggests that they enableuse of electronic delivery channels has enabled UK financial providers to alter, and arguably improve, the nature of service provision (see Table 1). This is especially so in the following ways:

— offering consumers the ability to acquire financial products online
— exclusive ‘Internet’ financial products with preferential customer rates, eg mortgages, savings, credit cards
— online account services (see Table 1), ie balance enquiries, transfer of funds, bill payments and setting up of standing orders and direct debit facilities
— call-back facilities, for requesting further information
— online calculators for consumers to work out likely costs of loans and mortgages
— frequently asked question sections to answer customer queries
— online chat forums, eg Egg’s ‘e-forum’ which aims to encourage customers to ‘have their say’ on financial issues.

The development of online banking has also had an impact upon how financial providers are seeking to differentiate themselves from their competitors. One way a number of financial providers have sought to compete in the electronic domain is to establish a separate brand for the bank. Possibly the best example is the Prudential’s Egg, but another good example is the Co-operative Banks’ new development of Smile. This raises important questions with respect to the issue of branding in cyberspace. For example, are these new operations meant to appeal to new consumers? What is the significance of the use of lifestyle terms such as ‘Smile’ and ‘Egg’. These terms have no perceived relation, or connotation with existing banking. Is this why they have been employed, to break away from the stereotypical view of banking?

CONCLUSION

Llewellyn (1996) in his review of the future of banking in the 21st century argues that the Internet represents both an opportunity and a significant threat to the current position of financial providers because ‘consumer preferences change as alternative ways of satisfying demand emerge’. This paper has, therefore, tried to illustrate how financial providers have sought to change consumers’ delivery channel preferences by a review of selected UK financial providers’ promotions of Internet banking to their existing and potential customers. It has been demonstrated that Internet banking has tended to be marketed to consumers on the basis of its potential to empower customers, the key terms being the appeal to increased consumer control, accessibility and convenience. However, to overcome consumers’ doubts regarding the security of this channel for financial transactions, a number of financial providers have made explicit reference to the safety mechanisms they have put in place. For the future, the main threat posed by electronic delivery will be the extent to which consumer empowerment will be compatible with any degree of customer loyalty. Finally, how can financial providers satisfy consumers’ burgeoning needs and expectations in the electronic domain?

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

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