E-Banking
Scott Pochurek, Adan Raya, Javier Valenzuela,
Lyrae (Lorraine) Perry & Rania Sarraf
University of Phoenix
EBUS 400
Group: ON03BSA11
Joseph Lewis Aguirre
July 26, 2005
Introduction to E-Banking
The creation of the World Wide Web can be compared to the invention
of the television. Before television, companies advertised through their local radio station reaching only their home community.
Once television came in to play, a new genre of advertisement was born. Companies were now able to advertise to the masses.
Color billboards became a 30-second short story. During the last decade, our nation, the world for that matter has found a
new way to offer goods and services to masses. Advertising to the world using one source is to all businesses what dreams
are made of. This dream made reality is known as the World Wide Web. With this advancement in technology, both small and large
businesses benefit. In today’s market if you which to buy homemade barbecue sauce from a mom and pop store in Kansas
you can do so by going on line. If you want to buy a sofa from Target stores, you can do so by going on line as well. When
it comes to convenience and sometimes a greater selection of good or services that otherwise would not be offered locally
the World Wide Web is the answer. In today’s world, the internet has evolved from an advertisement only industry to
a full out blown market place/advertisement source. In other words, businesses are using the World Wide Web as a store shelf.
A store shelf in which the products are creatively displayed and the consumer is able to have a pretty good look of what the
product or service is before purchasing a few clicks latter. The three companies’ websites to be compared are Wells
Fargo, Washington Mutual and Bank of America. Each website has its own look and feel, which will be reviewed and compared.
Introduction to Wells Fargo Bank
Henry Wells and William Fargo created Wells, Fargo & Co. in
1852 to serve the West. The new company offered banking (buying gold, and selling paper bank drafts as good as gold) - and
express (rapid delivery of the gold and anything else valuable). Wells Fargo opened for business in the gold rush port of
San Francisco, and soon Wells Fargo’s agents opened offices in the other new cities and mining camps of the West. Wells
Fargo sent its business by the fastest means possible: stagecoach, steamship, railroad, pony rider, or telegraph. In 1861,
Wells Fargo took over operations of the western leg of the famed, but short-lived, Pony Express. Today in the 21st
century Wells Fargo, serves 23 million customers of which 73% percent use electronic banking.
The Wells Fargo home page is a reflection of today’s lifestyle
in the bank’s hometown of San Francisco, California. The look of the Wells Fargo web page seems to have been created
with an appeal to those that are all about maximizing their time, whether online or out and about. The web page is as long
as your screen (no scrolling needed in the home page with a 1024*768 screen setting (usually the standard)) it displays the
most sought after services provided by the company (http://www.wellsfargo.com). The focus is on the individual consumer with
links to small and large business. It reaches the Spanish speaking audience at a click of a button. This feature is on the
forefront of the page to make it as visible as possible so as to not deter potential non-English speaking customers. Wells
Fargo’s home page is very direct and to the point, reinforcing the no-nonsense presentation. When logging on to the
site, the customer can immediately locate links, thereby minimizing the time spent searching and finding the correct links.
There are no new jazzy advertisements distracting the user from the intended tasks, saving precious time.
What the Wells Fargo website gains in efficiency from the lean design
approach, it loses in creativity. Wells Fargo’s home page does not have very many graphics, and it lacks a sense of
hominess. It is uninviting to potential customers. It appears to be a very business oriented web page. The entire design is
cut and dry, and to the point. Therefore its greatest strengths are also its greatest weakness. This lack of hominess in the
design is apparent when it concerns attracting new customers.
Introduction to Bank of America
At the other end of the spectrum, you have Bank of America. Bank
of America’s home page contains a graphic of a little girl smiling and having fun, which automatically induces feelings
of kindness and caring. The underlying message is that the bank will care for the customer. However, the site is extremely
wordy and contains many links to other sites. Advertisements that proclaim the bank’s stance on issues are posted as
well. For example: “We salute the troops that preserve our nations independence.”
(http://www.bankofamerica.com). These items really have nothing to do with the business the customer is
trying to conduct with the bank. It seems that some of these links could potentially lead to SPAM emails if a customer decided
to pursue information connected to the particular link. Customers may then become distrustful of Bank of America, and want
to look for a different bank. As with the Well’s Fargo website, the Bank of America website also serves it’s Spanish
speaking community by including a link to a translated version of the home page into Spanish. Being user-friendly to the Hispanic
community as well as the English speaking one, allows these banks to market themselves as a community caring business. The
underlying message is that no one will take better care of you than “family”.
Bank of America invites you to take your time and browse their homepage
by providing a spacious, clean, web page with large print. They are trying to invoke the feeling that they cared enough to
take the time to create an inviting homey website therefore; they will take the time to care for the customer. This further
acknowledges the individualism of customers and that the bank cares.
Introduction of Washington Mutual.
Our third option seems to embrace the best of both worlds. The homepage
for Washington Mutual is not only inviting and friendly but also plain and simple. It contains emotion-based graphics which
again invoke feelings of caring and kindness. The homepage itself is clear, succinct and to the point. There are no frivolous
links or advertisements. At first glance, you can get a feel for all the services the bank provides. Service is focused primarily
on the individual consumer, with clear noticeable links to business services and investor links. Washington Mutual’s
photographs are of one so that the main individual gains all the attention. This helps give the perception that the bank will
provide individual care and will not treat you like a number. Washington Mutual wants its customers to believe that they will
be treated well, with respect and that each customer is important and not just one of thousands of depositors. Washington
Mutual like Bank of America uses wide spacious print to illustrate their willingness to showcase their desire to conduct honorable
and reliable business. The layout of the page allows fast and efficient use, minimizing time spent searching for the correct
links in order to conduct business (http://www.wamu.com/personal/default.asp).
Comparison of Brick and Mortar Business with Internet Business
A brick and mortar company is just
how it sounds, a building. This feeling of physically going into a store and picking out your product. It is what most people
grew up and what they know. For those who are not familiar with the internet or do not have access to a computer, this is
still the only way to do business. The internet has changed banking by making all transactions electronic. Customers no longer
need to go to the brick and mortar bank to get paper dollars. In banking the supply chain exists for the purpose of getting
money to, and from the customer. The supply chain is changed in internet banking by the fact that the money transfers electronically,
and the payment for goods and services can be handled directly from the bank at the request of the customer.
Privacy
In the past people had to go to the bank to do any type of
financial transaction. In the three banks chosen for comparison, all brick and mortar business is conducted in a similar fashion.
Banks are usually small buildings and thus services are crowded together. Many times the persons standing near you are able
to overhear your communications with the bank personnel. On Friday’s there can be as many as 50 people in a small area.
Most people want to keep their financial issues and transactions private. This is now possible as the internet allows for
complete privacy. Banking customers now have the option to do their banking from home or the office. No longer is someone looking over the shoulder or listening to private conversations on financial matters.
Convenience
Direct deposit and online banking have made it so that a person
may never have to go to the bank again. Accessing money is only a click away. Regardless of what state a person resides, the
internet allows access to banking information 24 hours a day. No longer is a customer restricted to the short weekday hours
of the banking industry in a brick and mortar business.
This type of convenience saves time. What is more important
to a person than their time? Saving customers time will help gain customer loyalty. How many times have you waited longer
than 30 minutes in line at a bank simply to make a deposit? In the brick and mortar environment, is not uncommon for customers
to wait for a slow day to do banking. On Fridays the wait can be over twenty minutes, which is frustrating to customers.
Service
In order for banks to attract more customers, and service
many existing customers properly, the bank must hire people who are bilingual. Banks also offer other services with which
many customers may not familiar. Some of these services are unused because the customer either does not know it exists, or
worse the customer is too ashamed to ask. As silly as that may sound people shy away for asking for help in front of other
people.
The internet offers uninformed or shy customers those options on the screen. In the case of Wells Fargo, changing languages is only a click of the button. Services such as loans, credit
cards, access to accounts, calculators, and recommendations can be done on line. Answers to questions are usually given within
minutes and sometimes even live attendants are there to chat.
In the brick and mortar environment, many of these special services
carry a high cost. While there is still a cost associated with providing any service, the internet banks can often reduce
many of the costs of doing business.
Brick and mortar companies
have long dominated the world of business. Today’s world is pushing for a more global solution for business. The internet
makes global communication possible for every person, whether it’s banking or shopping for the newest toy. The web gives
customers and businesses more options.
E-Banking and Marketing Online
The World Wide Web has brought a new level of convenience
for consumers and businesses alike. For businesses, it means the ability to gain additional access to existing and new customers
through increased product placement. A company can now place its products in front of millions of customers all from its web
site. For consumers, this convenience means that a person with access to the web can search the world twenty-four hours a
day, seven days a week. They can surf, shop, seek entertainment or access a variety of personal accounts from anywhere that
they can access the web. This includes accessing their personnel financial information and bank accounts since just about
all financial institution provide some type of online access. Three major banks that provide online banking are Wells Fargo,
Bank of America and Washington Mutual. Each of these institutions makes use of their web sites to market themselves to the
public.
Wells Fargo Marketing
On the Wells Fargo web site, consumers can not only
gain access to their bank accounts, but can also learn about all of the other products that Wells Fargo offers. These products
include all types of loans, investment and insurance services as well as financial planning information. Links are also included
to direct customers to small business and commercial account information. In so doing, Wells Fargo is promoting and advertising
all of its products in one place. Rather than having to target individual market segments, like most television, radio or
print ads, Wells Fargo can target all of its potential customers simply by including links to its wide-ranging services. Additionally,
prices for most of these services can be determined from the web site. Current loan rates, interest rates and checking account
fees can be reviewed. Finally, by providing a picture of Wells Fargo’s signature stagecoach and horses, the web site
is tying itself in with its more established and traditional brick and mortar stores.
Customer service on the Wells Fargo web site
can be accessed through a link at the top of the web page. From there a customer can get around the clock help with online
banking and bill pay through a toll free phone number. Other phone numbers are
also provided for banking questions and fraud prevention. Additionally, Wells Fargo customer service can be contacted through
their secure email links. Lastly, Wells Fargo provides links to check the status of services such as loan applications as
well as providing a link to frequently asked questions.
Bank of America Marketing
The marketing tools used by Bank of America are very
similar to those used by Wells Fargo. All of Bank of America’s products and services are included as links from their
web site’s home page as well as links to small business and commercial accounts. Bank of America, however seems to do
a little more marketing towards different segments of its customers. For instance, their web site has different banners that
advertise specific loans. One of these is a picture advertising student loans to a group of college students. By using pictures
that a customer can click on rather than just text links, Bank of America is attempting to personalize their web site to specific
groups of customers. Neither this web site nor Wells Fargo’s site does
much in the way of individualization or interactivity, however. If a customer already has an online account, then they can
access their account and perform a variety of transactions, but beyond that there is no customization available for specific
consumers.
Unlike Wells Fargo, Bank of America does not provide
a direct link to customer service. Instead, they provide a link titled: contact us. The customer than has to choose which
state that they reside in and from there a web page displays showing frequently asked questions and links to all of the different
products that Bank of America offers. By clicking on one of the links, the appropriate phone numbers and email addresses are
displayed.
Washington Mutual Marketing
While Washington Mutual’s web site is similar
to the web sites of both Wells Fargo and Bank of America in that it heavily promotes all of its products and services, it
goes one step further. This web site is set up to help and encourage the first time user of online banking. It targets this
group of consumers by providing links and helpful information in an easy to read and non-technical format. Additionally, Washington
Mutual provides a link called, Planning Kits. Under this link are several categories aimed at bringing in new customers. These
categories include: switching banks, new to banking, bringing your banking online and buying a home. While still providing
the links for its established customer base, Washington Mutual is clearly using its web site to market itself towards new
customers and new online users. Furthermore, Washington Mutual is the only bank of the three that advertises its prices and
fees for online banking and bill pay on its home page. This is probably because Washington Mutual is the only one that does
not charge for these services. The price is right… it’s free!
Customer service is accessed thru a “contact
us” link similar to Bank of America. From this link however, a consumer can access toll free phone numbers as well as
email addresses without having to visit additional web pages. This is on par with the Wells Fargo system and is much better
than the Bank of America web site.
The World Wide Web has significantly changed the way
a lot companies do business. By establishing web sites, businesses can now place and promote their products in ways that were
unheard of a decade ago. Businesses from all sectors, including financial institutions, have taken advantage of this and now
market their products aggressively on the World Wide Web.
Legal and Regulatory Issues Affecting the Banking Industry
The US banking system is regulated by a complex set of federal and
state laws. Both the federal and state governments share the responsibility for banking regulation and enforcement. Bostrum
(July 2003 Supplement) states the general framework and conduct of business within the banking system as follows:
The United States
banking system is a dual federal-state system where the responsibility for banking regulation is shared by the federal government
and the states. Banks in the U.S. receive their charters either from the federal government through the Office of the Comptroller
of the Currency (OCC), or from a state. In addition, banks must be insured by the Federal Deposit Insurance Corporation (FDIC),
a federal agency that provides up to $100,000 insurance for each deposit accountholder in each bank against the loss of funds
due to the failure of the bank. National banks must, and state-chartered banks may, become member banks of the Federal Reserve
System.
The most significant regulatory issues facing financial institutions in the US today include a number of
domestic and international supervisory initiatives. U.S. bank regulators have a broad range of options when taking action
against banks and their directors, officers and shareholders, including requiring specified remedial actions, imposing civil
money penalties, forcing closure or a change in management or ownership and filing criminal charges. U.S. banks are subject
to a wide range of rules governing their interactions with customers who are consumers and providing various protections to
consumers.
There are a number of recent and significant regulatory issues affecting
the entire banking industry and the e-banking system as well. The recent developments include but are not limited to the following:
- The internet – added more dimension and layers to the regulatory and management processes for banks and other
businesses
- Sarbane-Oxley Act of 2002 – added personal responsibility and disclosure for management executives in the areas
of accounting practices, corporate governance, risk management, business conduct, composition of board of directors
- September 11 – changes in business and banking security in the aftermath of the terrorist attacks
- Enforcement Actions against investment banks in the wake of Enron
- The USA Patriot Act – anti-money laundering regulations and enhanced risk management (Bostrum, July 2003 Supplement).
- Electronic commerce – the borderless nature is making traditional and geographically based regulation less effective
- Lack of efficiency in government organization(s) to regulate e-banking and commerce (Kamihachi, 12/29/2000).
Some fundamental changes have taken place. For example, credit card
companies have teamed up with software companies to develop programs and protocols providing secure services to businesses
and customers using the internet. Unfortunately, there is no broad and consistent domestic and international regulation for
e-commerce and e-banking. This deficiency will impede the growth and efficiency of e-business and e-banking for the near future
(Kamihachi, 12/29/2000).
In traditional brick and mortar banking, there are many opportunities
for theft and fraud, but there are also many protocols and regulations for dealing with these crimes. The internet banking
business is faced with additional threats to security by hackers. Consumers are especially concerned with safety of internet
transactions, and particularly with regard to the threat of identity theft. Banks must address these concerns with additional
safety measures in programming. They must be ever vigilant with regard to changes and have safety measures in place for those
who manage the programming and maintenance of the internet business. There is only a limited amount of regulation and enforcement
of laws for internet transactions presently. However more stringent laws are being enacted as internet crime grows more sophisticated.
Banks must do all they can to reassure the customer that the transactions over the internet will be safe.
Ethics in E-Banking
Human management and the functional aspects of marketing are the
ethical issues in electronic banking. Face to face transactions allow customers to assess trust based on physical information
conveyed in conversations and body language. The internet by its very nature does not offer this component to customers. Customers
must therefore assess trust based on a bank’s reputation rather than on personal experience. According to Harris and
Spence (2002), “The best the bank can hope for is to trade on its terrestrial reputation.” “Building high
ethical standards and systems in which transaction partners can trust are imperative management requirements of the sustainable
ethical enterprise.”
Ethics in banking has tended to focus on the individual consumer.
However high net worth individuals and B2B transactions are where ethics IS an issue. Harris and Spence (2002), have identified
a scenario in a case study in their research on Ethics in Ebanking:
There are increasing
numbers of people in the world who are classified by banks as ‘high net worth’ meaning they have more than $300,000
in liquid assets. All banks are chasing this business from which they can earn high fees for arranging and managing investments.
It is estimated that XYZ earns some 40% of its profits from just 12% of capital usage in this area. There is absolutely no
incentive for the bank to offer this group of customers web-based services that will cut out the banks intermediary and advisory
role and hence reduce income by cannibalizing the existing lucrative business.
One of the
benefits of online business is that the high quality systems and services are available to all customers, not just the wealthiest
ones. This addresses one of the more important ethical issues, by opening up fair access. On the down-side, B2B choices may
be restricted by the bank enabling the sophisticated software and hardware for accessing the banking systems. “The key
ethical issue here is that the business customer should be quire clear that there are significant implications for future
freedom of choice of suppliers of foreign exchange and related services. In much the same way that Microsoft has been criticized
for implicit locking in of customers to is software, electronic commerce through reliance on customizing computer access to
the specific service encourages, even forces, the user to come back to a supplier once used “ (Harris, Spence, 2002).
Conclusion
With the age of technology upon us, businesses have and will continue
to evolve to create a niche in the market in which they encompass; banking is no exception to this rule. Utilizing all resources
available to reach the world masses at a low cost will continue to entice banks to provide more of their services at the click
of a mouse. The challenge lies in their marketing strategy. A larger audience poses a bigger challenge to reach the marketing
target.
The focus of ebanking and ebusiness is very much on the individual
consumer and there is a significant disregard in the area of electronic commerce that is B2B. This is likely to change as
more and more business is transacted on line. “Banks have resisted pressures for modernization of business practices
for many years. The opportunities for eBanking may be the catalyst for change that will force the banking sector to reorganize,
restructure and reconsider its institutional arrangements. The ethics in banking cyberspace will have to be sufficiently robust
to ensure public and commercial confidence and use” (Harris, Spence, 2002).
All three banks reviewed, Bank of America, Wells Fargo and Washington
Mutual Bank created competitive web sites. Each focused on similar targets, primarily the individual banking consumer, yet
each offers a look and feel for a slightly different segment of the market. This presentation of the websites is likely to
change and evolve along with the legal and ethical standards for B2C and B2B operations.
References
Bank of America (2005). http://www.bankofamerica.com. Retrieved from the World Wide Web on July 1, 2005.
Bostrum, R.E. (July 2003 Supplement). United states. International Financial Law Review. p. 133. Retrieved from
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Harris, L.,
Spence, L.J. (2002). The ethics of ebanking. Journal of Electronic Commerce Research. 3(2). Retrieved from the World Wide
Web on July 24, 2005 at: http://search.netscape.com/ns/boomframe.jsp?query=ethics+in+e-banking&page=1&offset=0&result_url=redir%3Fsrc%3Dwebsearch%26requestId%3D19c8c13fb24f8a26%26clickedItemRank%3D1%26userQuery%3Det…
Kamihachi, J. (12/29/2000). Cooperation needed to forge global e-business guidelines. Amercian Banker. 165(249),
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Washington Mutual Bank (2005). http://www.wamu.com/personal/default.asp. Retrieved from the World Wide Web on July 1, 2005.
Wells Fargo Bank (2005). http://www.wellsfargo.com. Retrieved from the World Wide Web on July 1, 2005.
