Presentation on theme: "3.4: Banking and Personal Finance Online"— Presentation transcript:
1 3.4: Banking and Personal Finance Online electronic banking (e-banking):Various banking activities conducted from home or the road using an Internet connection;Also known as cyberbanking, virtual banking, online banking, and home banking.Virtual BanksHave no physical location, but only conduct online transactionsNetBank (netbank.com)First Internet Bank (firstib.com).Make sure that the bank is legitimate before sending money to a virtual bank
2 3.4: Banking and Personal Finance Online Online Banking CapabilitiesView current account balances and history at anytimeAccess to statementsPay bills onlineDownload account transactionsTransfer money between accountsBalance accountsCommunicate with the bankAccess information anytimeAccess information anywhereUse additional services
3 3.4: Banking and Personal Finance Online Implementation Issues in Online Financial Transactions:Securing financial transactionsAccess to banks’ Intranets by outsidersUsing imaging systemsDifferential pricing of online versus off-line servicesPotential Risks
4 3.4: Banking and Personal Finance Online Personal Finance Services OnlineBill paying and electronic check writingTracking of bank accounts, expenditures, and credit cardsPortfolio managementInvestment tracking and monitoringStock quotes and past and current prices of stocksPersonal budget organisationRecord keeping of cash flow and profit and loss analysisTax servicesRetirement goals, planning, and budgeting
5 3.4: Banking and Personal Finance Online In online bill paying, funds are taken from the user's accounts by an intermediary who then arranges payments with the user's debtor.Online Billing and Bill PayingAutomatic transfer of mortgage paymentsAutomatic transfer of funds to pay monthly utility billsPaying bills from online banking accountsMerchant-to-customer direct billingUsing an intermediary for bill consolidationPerson-to-person direct paymentPay bills at bank kiosksTaxes
6 3.5: On-Demand Delivery Services and E-Grocers A grocer that will take orders online and provide deliveries on a daily or other regular schedule or will deliver items within a very short period of timeOn-demand delivery service:Express delivery made fairly quickly after an online order is received
7 3.5: On-Demand Delivery Services and E-Grocers Who are the e-grocery shoppers?Shopping avoiders (dislike going to physical stores)Necessity users (e.g., disabled and elderly)New technologists (young and technology savvy)Extremely busy consumers (time-starved)Consumers who gain a sense of self-worth from online shopping (leading edgers)
8 3.6: Online Delivery: Digital Products, Entertainment & Media Certain goods, (software and music) may be digitised completely and delivered over the Internet.
9 3.6: Online Delivery: Digital Products, Entertainment & Media Napster: Its Rise, Collapse and RevivalConsumers-to-consumers (peer-to-peer) digital distributionNapster only shares “libraries” or lists of songs, and then enables a peer-to-peer file-sharing environmentSued for copyright infringement in 2002Free file sharing is no longer allowedNapster forced to charge customers for use of its file-sharing serviceEntered into an agreement with Bertelsmann AG (large global music label that participated in the lawsuit against Napster)Went into bankruptcy in 2002Roxio purchased and reopened in late 2003 as “for fee file-sharing service”.
10 3.6: Online Delivery: Digital Products, Entertainment & Media Benefits and Limitations of Digital DeliveryThere are several advantages to the use of digital delivery including increased speed of delivery, low product cost and low distribution costs.The major disadvantage is that not all goods can be digitised.
11 3.6: Online Delivery: Digital Products, Entertainment & Media Online EntertainmentInteractive EntertainmentWeb browsingInternet gamingSingle and multiplayer gamesAdult entertainmentParticipatory Web sitesReading
12 3.6: Online Delivery: Digital Products, Entertainment & Media Noninteractive EntertainmentEvent ticketingRestaurantsInformation retrievalRetrieval of audio and video entertainmentLive events
13 3.7: Online Purchase Basics Shopping Portals:Gateways to storefronts and malls; may be comprehensive or niche-oriented. Examples:gomez.com and shopping.yahoo.comShopping Robots (Shopping Agents or Shopbots)Tools that scout the Web looking for goods and services that meet consumer’s specified search criteriaWireless Shopping ComparisonsEnable shoppers to compare prices any time from anywhere, including from any physical store.
14 3.7: Online Purchase Decision Aids Business Ratings SitesRating of e-tailers and online products based on multiple criteria.Trust Verification SitesEvaluate and verify the trustworthiness of various e-tailersOther Shopper ToolsEscrow services: 3rd party to assure qualityCommunities of consumers who offer advice and opinions. Examples: Epinions.com, PriceGrabber.com.e-wallet: A program that contains a shopper’s information.Note: Escrow services and electronic wallets are useful for online purchases because they can decrease the amount of contract risk for the customer during an online purchase.
15 3.7: Online Purchase Decision Aids Business Rating Sites. Examples:Bizrate.comConsumer Reports Online (consumerreports.org)Forrester Research (forrester.com)Gomez Advisors (gomez.com)Trust verifications sites. Examples:TRUSTe, VeriSign, BBBOnline, WebTrust.The above two tools add to customers’ feelings of security in making an online purchase. They allow the customer to evaluate the quality of the merchant, and not just the price of the good, before making a purchasing decision.
16 3.7: Online Purchase Decision Aids Role of search agents to support shoppingAgents are able to aggregate information from several sources as well as maintaining information about personal preferences to enhance the shopping experience.Amazon.com’s A9 Search EngineRemembers informationA user can make notes about any Web page and search themOffers a new way to store and organise bookmarksRecommends new sites and favorite old sites specifically for the user to visit
17 3.8: Successful Click-and-Mortar Strategies What motivates a brick-and-mortar company to sell online?Traditional firms sell online to compete with new e-commerce entrants and to preserve market share. Additionally, traditional firms may see e-commerce as a way to expand their existing market share.Click-and-mortar hybrid strategies:Speak with one voiceLink all backend systems to an integrated customer serviceEmpower the customerA powerful 24/7 channel for service and informationLeverage the channelsOffers advantages of each channel to customers from all channels
18 3.8: Click-and-Mortar Strategies Alliance of virtual and traditional retailers: Amazon.com and ToysRUsThe alliance between these two firms allowed Amazon.com to concentrate on its core competence of effective online logistics and customer relationship management, while Toys’R’Us could concentrate in their area of core competence–purchasing and marketing toys.During the 1999 Christmas season, before their alliance, both companies failed to profitably deliver toys on timePooled their expertise to form a single online toy storeThe alliance allows them to leverage each other core strengthsRevenues are split between the two companies; the risks are also equally shared.
19 3.8: Click-and-Mortar Strategies Alliance of virtual and traditional retailers: Amazon.com and ToysRUs (cont’d)After 4 years, the partners sued each otherOne reason for the difficulties was that the two companies had to coordinate disparate systems (operational, technological, and financial) as they merge their corporate cultures.For example, Toys’R’Us wanted Amazon to sell only Toys’R’Us toys, and it paid $250 million a year for this exclusivity. Amazon interpreted the contract to allow them to sell toys from any company.The alliance failed due to systems issues, corporate cultures and contract issues.
20 3.8: Problems with E-Tailing and Lessons Learned Reasons retailers give for not going online include:Product is not appropriate for web salesLack of significant opportunityToo expensiveTechnology not readyOnline sales conflict with core business
21 3.8: Problems with E-Tailing and Lessons Learned Failures in B2C dot-comsKozmo.comA creative idea for on-demand deliveries of movie rentalsDifficulty in how to return the videosFurniture.comDifficulty in delivering products in a timely mannereRegister.comRegistering for courses etc. online was not popular with consumers
22 3.8: Problems with E-Tailing and Lessons Learned Don’t ignore profitabilityOnline marginal sales don’t lead to marginal profitsManage new risk exposureWatch the cost of brandingDrive to establish brand can lead to excessive spendingDo not start with insufficient fundsThe web site must be effective and able to performKeep it interestingDynamic sites with rich databases of information appeal most to customers
23 3.9: Issues in E-Tailing Disintermediation: Reintermediation: The removal of organisations or business process layers responsible for certain intermediary steps in a given supply chainManufacturer sells directly to consumer.Reintermediation:The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles.Unbundling:Offering specialised services in small segments in order to improve speed and efficiency.
25 3.9: Issues in E-Tailing Cybermediation (electronic intermediation): The use of software (intelligent) agents to facilitate intermediationHypermediation:Extensive use of both human and electronic intermediation to provide assistance in all phases of an e-commerce venture.The use of EC and IT can create changes in a traditional supply chain. These changes can remove existing players (disintermediation) and can bring them back with different roles and functions (reintermediation). Cybermediation uses intelligent agents while hypermediation uses extensive human and electronic intermediation at all stages of the value chain.
26 3.9: Issues in E-Tailing Channel Conflict Determining the right price Occurs when an upstream member of the value chain begins to sell directly to customers.Can also occur when the online division of an existing company begins to compete with its off-line division or existing third party distribution channels.Determining the right pricePrices need to be competitive, while still providing an adequate margin.EC can allow companies to segment users into different price groups and test pricing more than was possible with only brick-and-mortar operations.
27 3.9: Issues in E-Tailing Personalisation Fraud and illegal activities Personalisation is the ability to use technology to create goods that meet the exact specifications of the consumer.For example, an e-tailer can use cookie files and other technologies to track the specific browsing and buying behavior of each consumer. Next, produce a marketing plan tailored to that consumer’s patternMass customisation is the ability to create personalised goods for a large number of customer goods based on their exact specifications. Highly risky for pure-play e-tailing.Fraud and illegal activitiesA major problem in B2C is the increasing rate of online fraudHow to make customers happyMerchants can find out what customers want through market, the topic of of our next lesson.
28 Managerial Issues 1. What should our strategic position be? 2. List the B2C distribution channel models.3. How will intermediaries act in cyberspace?4. Should we set up alliances?5. Describe channel and other conflicts that may appear in e-tailing.6. Why are virtual e-tailers usually not profitable?