E-Banking

It is no secret that, for some years now, the traditional UK high street banks have been extending the choice of channel through which customers can manage their money. Customer channels range from the ubiquitous automated teller machine (ATM), through postal and telephone banking, to the increasing use of personal computer and the Internet for electronic banking purposes (e-banking). This extended choice of channel has been achieved largely on the back of advances in computer technology, which have allowed banks to offer customers more automated methods of conducting their financial transactions.

From the customer's perspective, it is interesting to note that attitudes to bank service delivery and the use of technology are changing. According to a recent Mintel1 market report on current accounts, while 64 per cent of customers still prefer to manage their current accounts through a high street branch, they are nevertheless opting to use more than one channel. For example 51 per cent of those surveyed claimed that they would use ATMs to manage their accounts. Fifteen per cent of 15-19 year olds and 13 per cent of 25-44 year olds stated a preference for using the personal computer for banking purposes - although less than 10 per cent of people currently use the Internet in this way. Telephone banking has also grown in popularity, with 30 per cent stating a preference for managing their accounts over the telephone.1

For their part, high street banks appear to have exploited technology largely for commercial reasons. On the one hand, the expansion of ATM facilities has been instrumental in helping banks to rationalise branch networks. On the other hand, the cost of servicing an average payment transaction via the Internet is around oneeighth of that in a branch (once initial setup costs have been taken into account).1 At the same time, high street banks have come under increasing pressure from new entrants to the financial services sector such as Prudential (Egg), Virgin, MBNA and CapitalOne. These organisations have been keen to exploit the commercial potential of technology-assisted banking in order to achieve operating scale economies. At the same time, they have been able to `cherry pick' the traditional banks' most profitable product lines.2

The rapid development of technology-- assisted banking makes many demands on existing banks - not least physical,

financial, cultural and emotional. Further consideration of these issues is, however, beyond the scope of this paper, which seeks specifically to understand more about the impact of technology and e-banking on the nature of the bank-customer relationship. Indeed, information technology (IT) is seen by some as having the potential to transform the very nature of traditional relationships:3

`IT changes the role of the customer and the patterns of market communication, relations and interactions. There is a pressing need to understand the sources and implications of these evolving forms of linkages: how will IT and interactivity transform markets?'

Putting this into an e-banking context, it could be argued that access to more sophisticated customer data should enable banks to offer a more personalised and more effective service. For customers, the greater personal convenience of e-banking offers the possibility of a closer bank-- customer relationship and enhanced customer satisfaction. If this is not the case, however, e-banking may merely contribute to a sense of isolation and alienation on the part of customers. Indeed, technologydriven service delivery may lead to reduced levels of personal contact,4 with customers making fewer and fewer trips to their local branch and being encouraged to conduct more of their routine business online or through call centres. In other words, customers may become increasingly 'invisible'.5 However, the task of researching the observations and opinions of customers on the changing nature of the bank-customer relationship remains outside the immediate scope of this paper. Rather, this paper seeks to explore the current mindset of high street bank marketers in an attempt to determine what can be learned about the changing nature of the bank-- customer relationship from their initial experiences of servicing remote, technology-assisted marketing channels.

METHODOLOGY

The findings of this paper derive from a larger exploratory, qualitative study into the progress being made by UK high street banks in implementing relationship marketing (RM). This larger study sought to gauge whether banks had adopted the RM concept fully or had only been partially successful in its implementation. Furthermore, the intention was to establish the extent to which banks had attempted to overcome any problems encountered in implementing RM and to identify what still needed to be done. Such an approach was considered appropriate since exploratory qualitative studies are generally acknowledged in the research methodology literature as being a valuable means of finding out `what is happening; to seek new insights; to ask questions and to assess phenomena in a new light'.6

As part of this larger study, semistructured depth interviews were conducted with 13 marketing staff in three major UK high street banks. The banks, whose names have been withheld in order to respect commercial confidentiality, were chosen randomly inasmuch as they were the first organisations to guarantee research access within the timescale of the project. The 13 staff interviewed comprised a variety of managerial grades ranging from Director to Marketing Assistant. While an overall framework of questions was developed for the interviews, each interview was allowed to take its own course provided that, at some stage, views were elicited on the following broad issues:

- what does RM mean to your organisation?

- what progress has been made in implementing RM?

- what has prevented the bank from fully implementing RM?

- what does the future hold for RM in banking?

During the course of this larger study many RM-related themes emerged, which it is hoped will be reported elsewhere in due course. The theme that provides the inspiration for this particular paper, however, is the fascination of bank marketers themselves with the nature of the trade-off between technology and intimacy in bank-customer relationships. As a result, this paper seeks to develop a better understanding of whether UK high street bank marketers feel they are using technology to enhance the bank-customer relationship or whether