Aspects of Strategic Forces Affecting Online Banking

Abstract

Strategically, the use of the Internet is lowering entry costs and removing barriers to entry for many businesses. The lowering of barriers has led to a flood of banks entering the industry, ultimately increasing competition and providing increased value to potential customers. However, most of the traditional banking industry has been slow to join the Internet bandwagon. It is therefore imperative that the roles of information technology in new product/service innovation and development be explored, especially within the online financial industries to verify the concepts of innovation and informational connectivity. Due to both the emergent nature of Webenabled processes within the banking industry, urgency in the business literature to address this type of industry is apparent as well. Once firms have defined their unique activities and choose their position in the market and make their tradeoffs, they are ready to choose the fit that drives both their competitive advantage and sustainability. This is the true final test to completing a corporate strategy. After the completion of this stage, firms are able to become leaders in their businesses. Competitive forces addressed by Porter (1996, 1999, 2001) in the rediscovering strategy within the online banking industry suggest that despite a potential shortfall, competition for market share remains fierce within the online banking industry. The future is certain to contain some dynamic times for the online banking industry. Only time will reveal the appearance of the life cycle of the online banking industry.

Key Words:

• e-banking
• online banking industry
• Porter's Five-Forces Model