Differences and similarities between internet banking and traditional banking services

Category: Business/Finance >> Banking

Description of the problem:

Differences and similarities between internet banking and traditional banking services

Solution:

The following is the introductory part of a paper I wrote in the first half of the year, I hope it will help you:

2.1 Characteristics of internet banking

Online banking provides a new financial business model with its unique characteristics:

1. Virtualization.

The virtual nature of online banking is mainly reflected in the online banking business location and business, as well as the gradual virtualization of the business process. The virtualization of the business location is manifested in the online banking no physical business hall and outlets, only the virtualization of the address, that is, the Web site. The virtualization of business operation refers to the fact that most of the financial products and financial services operated by online banks belong to electronic money, digital money and network services, and their products do not have specific physical form. And the virtualization of the operating process refers to the process of online banking operations are all realized through digital instructions.

2, ultra-geographical, temporal.

The virtual nature of online banking directly leads to its ability to have a full day of business, unlimited geographical and multi-service means of the characteristics of the "three A" (Anytime, Anywhere, Anyhow). Customers of online banking can use the financial services provided by the bank at any time and any place through a variety of digital means, which makes it more convenient and faster to handle banking business, and at the same time, the bank can also better meet the needs of customers. Bank of China's corporate online banking in the realization of online banking and back-office business systems on the basis of automatic online processing, can provide customers with real-time efficient, nationwide, 7 × 24 hours of financial management, centralized capital management and cash management services.

3. Innovative.

Innovative that is, technological innovation and system innovation, product innovation, close combination. Online banking itself is with the network of this new technology, so its own requirements for continuous technological innovation and absorption of new technologies. At the same time, the application of network technology has directly changed the bank's operation and service mode, which requires that the bank must be adjusted and reformed the old management style and concept, from the organizational structure and management system on the innovation. With the continuous innovation of network technology, as well as customers of the bank's means of service and product demand continues to change, but also produces the power and pressure on the development of new products.

4. Wide coverage of services.

Through network technology, online banking can centralize different kinds of financial services, such as banking, securities, insurance, etc., so that the back office for the financial institutions operating in separate industries can be expressed as a whole, thus increasing the degree of satisfaction of customer demand and meet the surface, which is conducive to the marketing of new customers and retaining old customers. The use of online banking as a channel to integrate the bank's capital, information, customer base and other aspects of the advantages of supporting the provision of securities, insurance and other financial services, will make the bank from the original single deposit and loan center and settlement center for the evolution of omnipotent "financial supermarket".

5, the convenience and efficiency of the service.

As a result of a large number of online banking transactions using automatic processing, so its services have a high-speed and efficient characteristics. Customers can learn the result of the transaction immediately after submitting the transaction instruction, which greatly improves the efficiency. Internet banking can process thousands of transactions at the same time with a very low error rate. The rapidity of the network makes it possible for Internet banking to quickly promote and introduce products and services to customers around the world through the Internet, as well as to enable the bank's various notices to be quickly and correctly delivered to customers.

6, resource **** enjoyability.

As the online banking requirements of its business access to the entity banks (branches) must have a unified, computer-recognizable code and basic information, so objectively requires that these banks must achieve synchronization of information and **** enjoy. At the same time, the remoteness and trans-regional nature of Internet banking makes it possible to *** enjoy the hardware and software resources of its system. Therefore, in practice, the banks are on the Internet banking to realize all or part of the resources *** enjoy.

7, low-cost.

The virtual nature of online banking and ultra-local, so that online banking operations center can focus on personnel, hardware, but also away from the expensive, busy business center, while the automatic processing function of online banking can assume a large number of the original traditional bank counter business, thus saving the traditional bank personnel and business area, thus significantly reducing the cost of bank operations. At the same time, the automatic service also greatly reduces the error of manual service, reduces the loss of the bank, and reduces the operating cost of the bank from the other side. According to a survey conducted by Allen Milton International Management Consultants of the United Kingdom, the cost per payment transaction using the Internet averages 13 cents or less, compared with 26 cents for personal computer banking services using the bank's own software, 54 cents for telephone banking services, and as much as 108 cents for bank branch services. The operating costs of Internet banks are only 15}20 percent of operating revenues, compared to about 60 percent of operating revenues for traditional banks.

8. Interactivity.

Online banking supports the interactivity of services. Customers can make a series of sequential transactions one by one in online banking, and at the same time in a short period of time, according to the results of the transaction at any time to adjust their own decision-making, to decide the next transaction. And this is basically impossible in traditional banking.

9, personalized service.

Relative to traditional banks, online banking customers scattered in different terminals before the traditional mass marketing approach, is not suitable for the new customer structure. In the competitive environment of online banking, how to provide personalized services to customers according to their actual needs is the key to the success or failure of online banking competition. With the help of perfect transaction records of online banking, banks can analyze and data mine the transaction behavior of customers and discover important value customers from them. Through the analysis of customer behavioral preferences, segmentation of the service market, the use of Internet interactivity features, the development of marketing strategies and service content to their liking, financial innovation of products, so as to provide customers with tailor-made services.

2.2 The relationship between online banking and traditional banking

Online banking is based on traditional banking, combined with the development of emerging information technology; online banking is the transcendence of traditional banking.

2.2.1 Traditional banking is the basis of online banking.

Online banking is based on the development of traditional banking business, whether it is the principle of business or products, or service targets, functions are based on traditional banking business. At the same time, China's current online banking, the realization of which must rely on customers to first open accounts in the business network, and the main use of online banking for the original traditional business and financial derivative services. Online banking is based on traditional banking, providing customers with more convenient, safe and fast service channels than traditional banks.

2.2.2 Online banking is an extension of traditional banking.

In addition to the realization of the technology and channels, the service object of online banking, functional coverage, product scope and so on are basically overlap with the traditional bank, but online banking and the extension of traditional banking. Internet banking is not simply move the traditional banking business to do online, but the extension of banking business from the counter to any place where the Internet can be used, so that banking business no longer have geographical limitations; at the same time, so that the banking business from the working hours of the business day to extend to the 7 × 24 hours of all-day service, so that the banking business no longer have the time now; and can also provide public **** information services (including interest rates, exchange rates, economic news, etc.), investment and financial management services and comprehensive business services, etc. (including online shopping malls, online financial supermarkets, etc.), so that the product line of banking business has been greatly expanded, so that customers can enjoy safe, accurate and fast banking services at any time, anywhere, but also to enhance the level of the bank's information services and service quality.

2.2.3 Internet banking has changed the business model of traditional banks.

Online banking breaks the time and geographical limitations of traditional banking, and can collect, mine, and utilize massive amounts of information at near real-time speeds, enabling banks to develop and serve customers in a wider range of geographies and scopes.

Online banking can make full use of the Internet to communicate with customers interactively, thus prompting the transformation of traditional product-oriented bank marketing activities into customer-oriented online banking marketing activities; at the same time, online banks can innovate personalized financial products according to the requirements of customers to meet the increasingly diversified financial needs of customers.

2.2.4 The currency circulating in online banks is different from that of traditional banks

The currency of traditional banks is mainly in the form of cash and bills, while the currency circulating in online banks is electronic currency or called E-currency. This currency greatly improves financial efficiency, accelerates the flow of funds, greatly reduces labor costs, and reduces all kinds of human error. The strong liquidity of electronic money has canceled the traditional way of dividing money, and more inevitably lead to a change in the bank's demand for liquidity.

2.2.5 Online banking has tremendous superiority over traditional banking.

First, online banking is a modernized bank based on computer network and communication technology and led by the financial services industry. Online banking not only provides rich information services. And the actual financial transactions, so that customers do not leave home to complete a variety of business transactions with the bank, to realize the bank's zero-distance service to customers.

Second, online banking breaks through the traditional banking restrictions on time, the implementation of 7 × 24 all-weather operation, so that the bank closer to customers, more convenient for customers.

Third, online banking can reduce costs, improve efficiency, and is a more effective means of bank competition. Such as the world's first online bank - the United States "security first online bank", only 10 employees, the deposit balance in 1996 for 14 million U.S. dollars, in 1997 for more than 4 trillion. Bank of Communications network banking department general manager Lan Fumin said: "We do a business on the Internet query class and transaction class costing down to only 0.16 yuan, the cost of trading a business of only 0.71 yuan, while the cost of trading a business in the bank network is 7.19 yuan, which is 10 times the difference in cost." The network brings low-cost efficiency is thus visible.

Fourth, online banking to achieve transactions paperless, business paperless and office paperless. Comprehensive use of electronic money canceled the use of paper money, all banking office documents and vouchers are changed to electronic documents, electronic bills and evidence, signatures also use digital signatures. The use of computers and data communication network transmission, the use of EDI for the settlement of transactions. These make the "instant transmission" into reality.

Fifth, the virtualization of banking institutions, so that the bank's real estate investment and investment in personnel has been significantly reduced, the bank's focus on how to improve the high-tech content of online banking and technology.

In short, compared with traditional banks, online banking has great superiority over traditional banks, online banking is not only the support point for the development of e-commerce, but also the development of the gold touch a new point of growth, is the way out of the future financial industry.