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    internet banking    what is internet banking | variants | advantages |indian scenerio |                                     internet banking in india | internet banking software | success models | issues| strategies| features|

For PART 1 of the article CLICK HERE

Internet Banking in India-Part II
- Dr A. K. Mishra

[Dr Mishra is Professor at IIM Lucknow. In this concluding part read some compelling research findings of Claus Nehmzow, a Principal in the Information Technology Group in London at Booz Allen & Hamilton and also the STRATEGIES TO BE ADOPTED BY INDIAN BANKS.]

Concluding Part

Claus Nehmzow, a Principal in the Information Technology Group in London at Booz Allen & Hamilton, writes of some compelling research findings and offers his projections for European banks in The Internet Will Shake Backing's Medieval Foundations. He believes the low transaction cost will make banking on the Net irresistible, but also that this will require institutions to carefully consider and plan customer relations programs.

It is believed that everything will be determined by content and context, and where execution will be key. From a customer and service provider perspective, this is where the world is moving-it is going to be real-time, on-line, personalisation for both marketing and the service experience. If existing banks don't want to disappear, it is this challenge of Integration that they need to embrace in order to win and survive. The more things change, the less they change. In the months and years-ahead are going to be how Service Providers integrate and market their offerings across different channels. The strategic and executional battles of the future are going to be fought for Channel Integration. What does Channel Integration means? It means that an institution presents an identical face to the customer-be it in the branch, on the web, at an ATM or for that matter, through a sales representative or a broker. An identical face, an identical message. Or better still, messages that reinforce each other. If a sales representative tries to sell you a housing loan, you get e-mail a day later reminding you about the loan. That's called Integrated Sales, which results in incremental economic activity and improved efficiencies of communications. Channel Integration across the phone web can clearly lead to a gain of several percentage points of GDP. The beauty of this approach is that one channel does not displace another. They feed on each other to create incremental value for the customer, as well as the institution. The incremental value comes from two distinct sources. Firstly, you reduce inefficiencies. You don't send people junk mail because you know that they are not likely to buy a particular product or service today. That results in net saving for the economy. Secondly, you persuade people at the right time (the right time from the customer's perspective, not from the service provider's perspective) to opt for a tailor made offering. This too increases value. Actually, this has to do with the Internet itself, and more to with the underlying technologies of the Internet which allow incremental efficiency, and empowers the customer to make more enlightened and timely choices.

Lastly the product range is another issue which becomes important. It will take a technological revolution to make available advanced banking products on the net and given the rate at which the technology is developing we can expect this to happen in near future.


Internet banking would drive us into an age of creative destruction due to non-physical exchange, complete transparency giving rise to perfectly electronic market place and customer supremacy. The question to be asked right now is "What the Indian Banks should do" Whatever is the strategy chosen and options adopted, certain key parameters would determine the bank's success on web:

1. For long term success, a bank may follow:
Adopting a webs mindset
Catching on the first mover's advantage
Recognising the core competencies
Ability to deal multiplicity with simplicity
Senior Management initiative to transform the organisation from inward to outward looking
Aligning roles and value propositions with the customer segments Redesigning optimal channel portfolio
Acquiring new capabilities through strategic alliances.

2. The above can be implemented in four steps:
Familiarising the customer to new environment by demo version of software on bank's web site. This should contain tour through the features which are to be included. It will enable users to give suggestions for improvements, which can be incorporated in later versions wherever feasible.
Second phase provides services such as account information and balances, statement of account, transaction tracking, mail box, check book issue, stop payment, financial and customised information.
The third phase may include additional services such as fund transfers, DD issue, standing instructions, opening fixed deposits, intimation of loss of ATM cards.
The last step should include advanced corporate banking services like third party payments, utility bill payments, establishment of L/Cs, Cash Management Services etc. Enhanced plan for the customers in future can include requests for demand drafts and pay orders and many more to bring in the ultimate in banking convenience.

All the above strategies will help banks in translating their traditional business model into an Internet one, falling into three main categories
One stop shop
Virtual one-stop-shop
Best of breed supplier.


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