A Commerce professor has discovered that North American banks and credit unions rate what their competitors are doing as one of the most important factors in deciding whether to boost their Internet products and services.
"Surprisingly, customer demand, increased service and availability 24 hours a day, seven days a week are no longer the prime motivators for banks pushing forward their Internet banking services," says Asst. Prof. John Tillquist. "Instead banks are waiting to see what their competition does before offering or enhancing the products and services they have online."
Improving customer service, increasing market reach and reducing costs are now basic expectations of Internet banking services, says Tillquist.
He recently released the results of a survey sent to 1,182 U.S. and Canadian banks, credit unions and depository institutions to find out what motivated a bank manager, executive or strategist to add or improve a bank's Internet products and services.
Tillquist and UBC graduate Commerce student Stan Chan found that the adoption of Internet banking practices was a consequence of competition and what Tilquist terms "operational readiness."
"Operational readiness includes such things as technical, operational and internal skill to migrate a bank's services and products onto the Internet," says Tillquist.
He discovered that many smaller U.S. banks and credit unions which face significantly less competition than larger banks have not felt the same pressure to offer Internet services or to boost what they do offer online.
"The interesting implication here is that with our current climate of competition, Canadian banks are poised to widen the gap in electronic services compared to their U.S. counterparts," he says. "We are actually better off than the U.S. in terms of what our banks offer online."
Tillquist says Canadians are rapid adopters of electronic banking services -- well ahead of Americans in the use of everything from debit cards to online banking.
He also points out that the range of Internet banking services varies throughout the industry.
"A lot of the banks and credit unions provide simple information outlets online -- phone numbers, interest rates, products and services -- while the more leading-edge sites handle advanced financial transactions including bill presentation and payment, insurance services, equity and bond trading," he says.
The survey had an 11 per cent response rate. Results are accurate to 95 per cent, 19 times out of 20.
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