ASSIGNMENT ON E-COMMERCE

Question 1

“E-banking will have a more profound effect on banking than ATMs ever did.” Do you agree? Surf the Internet, investigate the topic, and defend your answer.Answer 1

Yes, I do agree with the above given statement.

The new information technology is becoming an important factor in the future development of financial services industry, and especially banking industry. Banks are faced with a number of important questions, for examples how to take full advantage of new technology opportunities, how e-developments change the ways customers interact with the financial services provider, etc. In paper author analyzes the main criteria for successful internet-bank strategy and brings out benefits of e-banking from the point of view of banks, their clients and the economy ingeneral.

The first benefits for the banks offering Internet banking services is better branding and better responsiveness to the market. Those banks that would offer such services would be perceived as leaders in technology implementation. Therefore,they would enjoy a better brand image.The other benefits are possible to measure in monetary terms.The main goal of every company is to maximize profits for itsowners and banks are not any exception. Automated e-bankingservices offer a perfect opportunity for maximizing profits. According to a survey by Booz, Allen and Hamilton, anestimated cost providing the routine business of a full service branch in USA is $1.07 per transaction, as compared to 54 cents for telephone banking, 27 cents for ATM (Automatic TellerMachine) banking and 1,5 cents for Internet banking . In Nordea Bank, Finland, one online transaction costs the bank an average of just 11 cents, compared to $1 for a transaction in the branch . The difference in a net cost between the USA and Finnish banks can be explained by smaller population in Finland and the scaleeffect in case of the USA.

E-banking transactions are much cheaper than branch or even phone transactions. This could turn yesterday’s competitive advantage - a large branch network, into a comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is commonly known as the "beached dinosaur" theory.

•E-banks are easy to set up so lots of new entrants will arrive. ‘Old-world’ systems, cultures and structures will not encumber these new entrants. Instead, they will be adaptable and responsive. E-banking gives consumers much more choice. Consumers will be less inclined to remain loyal.

•E-banking will lead to an erosion of the ‘endowment effect’ currently enjoyed by the major UK banks.

Question 2

“EC means the end of mass marketing.” Do you agree? Surf the Internet and try to bring recent opinions to the discussion.

Answer 2

I’m not completely agree with above sentence. Biggest example of this is the FACEBOOK. Today Facebook is the most popualr websites which actually made this world very small. Faceboook actually belives in mass marketing or we can say “It was made for masses not for classes.” They use the proper stratergy and attract the massses to their page.

In many cases, the initial financial outlay for technology and development of an e-commerce presence may be prohibitive for companies that can justify a mass marketing in a non-electronic environment. In many cases, EC must be combined with mass marketing to educate consumers about the availability of EC services/products. In addition, mass marketing has modified itself to accommodate the e-commerce environment, via spam and search engine technologies to allow an alternative delivery methodology. Finally, organizations will continue to market to consumers that are not e-literate via traditional mass marketing techniques.

Mass marketing is selling products targeted at all and sundry while mass customization is

adapting products according to customers’ individual needs.Push and pull technologies are used to disseminate information to customers at the right time and place. Push technology is akin to TV, where programs are broadcasted over airwaves. Customers can choose which channel to see, but they cannot choose the content of the programs. Firms may use push technology to bill customers or provide order tracking information. Sports services can keep fans updated on the score. Pull technology is more interactive like the internet, where customers can input information and then receive information specific to what they have specified. Financial services can use such pull technology to manage portfolios of their clients.