Electronic commerce and the marketing of Internet banking in the UK

Electronic commerce and the marketing of Internet banking in the UK


Recent evidence suggests that electronic commerce will play an increasingly important role in terms of how consumers acquire and maintain products and services, including financial products, in their daily lives in the next five to ten years. This paper seeks to explore the factors affecting this push towards Internet provision, and is achieved through an analysis of market research data and consultants’ reports on Internet banking. These findings are contextualised through a discussion of the governmental position on electronic commerce and a study of consumers’ behaviour with respect to new delivery channels. Finally an examination is provided of the services UK financial providers are currently retailing through the Internet and on what bases these services have been marketed to consumers.


The US Department of Commerce suggests that ‘electronic commerce’ includes ‘all forms of business transactions, such as the purchase of goods or services, undertaken through electronic means, such as telephones, televisions, computers, and the Internet’. Using this definition the magnitude of electronic commerce, both current and potential, starts to be appreciated, as every time a consumer uses an ATM, purchases goods or services with a credit or debit card, or orders a service over the telephone, they are arguably participating in the world of electronic commerce.

Electronic commerce is considered to include four principal delivery channels: ATMs, the telephone, PC and the Internet. However, recent developments in the area of digital television, or what has been termed ‘TV’, ‘armchair’ or ‘sofa’ banking by companies such as HSBC, Barclays and Abbey National, suggest the development of a fifth delivery channel. A recent study by Datamonitor (1999) found that 71 per cent of UK retail banks, will either offer or are developing their ‘TV banking’ services within the next six months. Further, they suggest ‘Interactive television presents a long-term solution to many of the problems facing retail banks. It combines the visual basis and low running costs of the Internet with the convenience and usability of the telephone and the mass appeal of the television.’ Research by Fletcher (1999) appears to confirm this conclusion suggesting that 10 per cent, or 2.2 million people, have so far registered for digital TV. At present, however, telephone banking remains the most popular remote banking method, with the number of users forecast to double by 2008 to 12 million UK users.

In terms of the future growth potential of electronic commerce, Datamonitor forecasts that the global online population will exceed 250 million by 2002 and be over 300 million people by 2005.┬áThe Association for Payment Clearing Services suggests that electronic commerce will have a ‘substantial influence’ upon consumers’ payment preferences. They further forecast that the volume of remote banking payments will rise by over seven times in the next ten years, from 25 million in 1998 to over 190 million by 2008.


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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