Skip to main content

Advertisement

SpringerLink
Log in

The rise of customer-oriented banking - electronic markets are paving the way for change in the financial industry

  • Position Paper
  • Published:
Electronic Markets Aims and scope Submit manuscript

Abstract

The banking industry has been a pioneer in adopting electronic markets with exchanges, clearinghouses, and multilateral trading facilities having become the backbone of today’s globally integrated financial transactions. While most banks use the services of these electronic markets to handle interbank processes, they still strive for bilateral relations in the field of customer-facing processes. This position paper argues that the financial crises, the changing behavior of customers, upcoming innovations based on information technology (IT) and financial services offered by non-banks are strong drivers towards more customer-orientation in the financial industry. A large variety of banking IT innovations has emerged and illustrates that traditional banks are expected to have less power to impede competition at the customer interface and in consequence need to re-position themselves. Building on these developments on the one hand and existing electronic market infrastructures in the banking industry on the other, the concept of a customer-oriented financial market infrastructure is proposed as a possible future solution. The impact is illustrated using a competitive analysis of the banking industry and analogies to the media industry where new entrants from the computing industry have caused disruptive changes. Besides describing the threat to existing banks, the position paper also discusses the perspectives for banks.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Explore related subjects

Discover the latest articles, news and stories from top researchers in related subjects.

Notes

  1. A business ecosystem can be defined as an “economic community supported by a foundation of interacting organizations and individuals - the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they co-evolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of the ecosystem leader is valued by the community as it enables members to move toward shared visions of aligning their investments, and finding mutually supportive roles.” (Moore 1993).

  2. These sources comprised ABI/INFORM, ACM Portal: Digital Library, EBCSO, Emerald, blogs (electrouncle.wordpress.com, der-bank-blog.de, blog.volksbank-buehl.de, thefinancialbrand.com, f-i-ts.de, lochmaier.wordpress.com, bankingreview.com.au, netbanker.com, Delicious/Banker2.0, timschaefermedia.com, ambajorat.wordpress.com, gft-blog.de), tweets (#HLeichsenring, #Yavalu, #LotharLochmaier, #FIDOR, #workforcetrends, #pascaldurrch), Google Alerts (Bank Innovation, bank*, neuheit*, finanz*, innovati*, financ*, innovat*), events (Finovate USA and Europe, TechCrunch USA) and various online searches.

  3. This development is less prevalent if banks are shareholders of the FMI providers. For example, this applies to SIX in Switzerland.

References

  • Alexa. (2012). The Web Information Company. http://www.alexa.com. Retrieved 31.08.2012.

  • Allon, G., & Gurvich, I. (2007). Competition in Large-Scale Service Systems: Do Waiting Time Standards Matter?, Working Report, Evanston (IL), http://www.kellogg.northwestern.edu/faculty/allon/htm/Research/AllonGurvich.pdf. Retrieved 31.08.2012.

  • Alt, R., & Klein, S. (2011). Twenty years of electronic markets research - looking backwards towards the future. Electronic Markets, 21(1), 41–51.

    Google Scholar 

  • Anand, S. (2011). Key imperatives for cutting-edge cross-channel banking. Boston: Aberdeen Group.

    Google Scholar 

  • Bakos, J. Y. (1991). A strategic analysis of electronic marketplaces. MIS Quarterly, 15(3), 295–310.

    Article  Google Scholar 

  • Baskerville, R. L., Cavallari, M., Hjort-Madsen, K., Pries-Heje, J., Sorrentino, M., & Virili, F. (2010). The strategic value of SOA: a comparative case study in the banking sector. International Journal of Information Technology and Management, 9(1), 30–53.

    Article  Google Scholar 

  • Basole, R. C., & Karla, J. (2011). On the evolution of mobile platform ecosystems structure and strategy. Business & Information Systems Engineering, 3(5), 313–322.

    Article  Google Scholar 

  • Benjamin, R. I., & Wigand, R. T. (1995). Electronic markets and virtual value chains on the information superhighway. Sloan Management Review, 36(2), 62–72.

    Google Scholar 

  • Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: catching the wave. Harvard Business Review, 73(1), 43–53.

    Google Scholar 

  • Chan, C. K. (2005). Successful strategies in supply chain management. Hershey: Idea Group Publishing.

    Google Scholar 

  • Chene, D., Gold, J., & Gramlich, J. (2010). The scope and practice of comprehensive financial planning. Journal of Financial Service Professionals, 2(1), 47–60.

    Google Scholar 

  • Chesbrough, H. W. (2003). The era of open innovation. MIT Sloan Management Review, 44(3), 35–41.

    Google Scholar 

  • Cortiñas, M., Chocarro, R., & Villanueva, M. L. (2010). Understanding multi-channel banking customers. Journal of Business Research, 63(11), 1215–1221.

    Article  Google Scholar 

  • Davenport, T. (1998). Putting the enterprise into the enterprise system. Harvard Business Review, 76(4), 121–131.

    Google Scholar 

  • Evans, P. B., & Wurster, T. S. (1999). Strategy and the new economics of information. Harvard Business Review, 75(5), 13–34.

    Google Scholar 

  • Fischer, M. (2010). IPI survey finds ultra wealthy quickly adopt online media advisor one. WealthManagerWeb, June 2010, Erlanger (KY).

  • Gates, B. (1995). The road ahead. New York: Penguin.

    Google Scholar 

  • Giaglis, G. M., Klein, S., & O’Keefe, R. M. (2002). The role of intermediaries in electronic marketplaces: developing a contingency model. Information Systems Journal, 12(3), 231–246.

    Article  Google Scholar 

  • Gisiger, M., & Weber, W. (2005). Switzerland’s financial infrastructure: today and tomorrow. Vierteljahrshefte zur Wirtschaftsforschung, 74(4), 51–62.

    Article  Google Scholar 

  • Glassberg, B. C., & Merhout, J. W. (2007). Electronic markets hypothesis redux: where are we now? Communications of the ACM, 50(2), 51–56.

    Article  Google Scholar 

  • Godwin-Jones, R. (2006). Tag clouds in the blogosphere: electronic literacy and social networking. Language, Learning and Technology, 10(2), 8–15.

    Google Scholar 

  • Hedley, K., White, J., Cormac, P., dit de la Roche, C. P., & Banerjea, S. (2006). Banking 2015: a classic strategy battle of scale vs focus. Strategy & Leadership, 34(3), 51–58.

    Article  Google Scholar 

  • Hoppermann, J. (2011). Best practices: Multichannel strategies in financial services. Cambridge: Forrester Research.

    Google Scholar 

  • Kagermann, H., Österle, H., & Jordan, J. M. (2011). IT-driven business models - global case studies in transformation. Hoboken: Wiley.

    Google Scholar 

  • Karhu, K., & Botero, A. (2011). A digital ecosystem for co-creating business with people. Journal of Emerging Technologies in Web Intelligence, 3(3), 197–205.

    Article  Google Scholar 

  • Koch, H., & Schultze, U. (2011). Stuck in the conflicted middle: a role-theoretic perspective on B2B E-marketplaces. MIS Quarterly, 35(1), 123–146.

    Google Scholar 

  • Kohlmann, F., Börner, R., & Alt, R. (2010). A Framework for the Design of Service Maps. AMCIS 2010 Proceedings. Paper 39. http://aisel.aisnet.org/amcis2010/39.

  • Malone, T. W., Yates, J., & Benjamin, R. I. (1987). Electronic markets and electronic hierarchies. Communications of the ACM, 30(6), 484–497.

    Article  Google Scholar 

  • Matuszak, G. (2007). Enterprise 2.0: Fad or Future? The Business Role for Social Software Platforms. Research Report. Amstelveen, Netherlands: KPMG.

  • McAfee, A. P. (2006). Enterprise 2.0: the dawn of emergent collaboration. MIT Sloan Management Review, 47(3), 21–28.

    Google Scholar 

  • McKinsey & Company. (2010). Banking on multichannel. Research Report. Chicago: McKinsey & Company.

  • Moore, J. F. (1993). Predators and prey: a new ecology of competition. Harvard Business Review, 71(3), 75–86.

    Google Scholar 

  • Osterwalder, A., & Pigneur, Y. (2011). Business model generation. Hoboken: Wiley.

    Google Scholar 

  • O’Reilly, T. (2007). What is web 2.0: design patterns and business models for the next generation of software. Communications Strategies, 65(65), 17–37.

    Google Scholar 

  • Porter, M. E. (1980). Competitive strategy. New York: Free Press.

    Google Scholar 

  • Porter, M. E. (2001). Strategy and the internet. Harvard Business Review, 79(3), 62–78.

    Google Scholar 

  • Prasad, A. (2011). The impact of non-market forces on competitive positioning - understanding global industry attractiveness through the eyes of M.E. Porter. Journal of Management Research, 11(3), 131–137.

    Google Scholar 

  • Redcommerce (2011). SAP’s App Store Gets Previewed. redcommerce, http://www.redcommerce.com/news/sap-s-app-store-gets-previewed-news-800449127. Retrieved: 31.08.2012.

  • Salvador, F., Holan, P. M. D., & Piller, F. (2009). Cracking the code of mass customization. MIT Sloan Management Review, 50(3), 71–78.

    Google Scholar 

  • Schubert, P., & Legner, C. (2011). B2B integration in global supply chains: an identification of technical integration scenarios. Journal of Strategic Information Systems, 20(3), 250–267.

    Article  Google Scholar 

  • Sen, R., & King, R. C. (2003). Revisit the debate on intermediation, disintermediation and reintermediation due to E-Commerce. Electronic Markets, 13(2), 153–162.

    Article  Google Scholar 

  • Seo, D., & Rietsema, A. (2010). A way to become enterprise 2.0: beyond web 2.0 tools. ICIS 2010 Proceedings. Paper 140. http://aisel.aisnet.org/icis2010_submissions/140.

  • Stone, M. (2009). Staying customer-focused and trusted: Web 2.0 and Customer 2.0 in financial services. Journal of Database Marketing & Customer Strategy Management, 16(2), 101–131.

    Article  Google Scholar 

  • Tallon, P. P. (2010). A service science perspective on strategic choice, IT, and performance in U.S. Banking. Journal of Management Information Systems, 26(4), 219–252.

    Article  Google Scholar 

  • Vandermerwe, S. (2000). How increasing value to customers improves business results. Sloan Management Review, 42(1), 27–37.

    Google Scholar 

  • van Zyl, A. S. (2009). The impact of social networking 2.0 on organisations. The Electronic Library, 27(6), 906–918.

    Article  Google Scholar 

  • Wallace, V., & Herrick, A. (2009). What banking needs to become. Strategy & Business, 57(1), 1–12.

    Google Scholar 

  • White, R. E. (1998). Generic business strategies, organizational context and performance: an empirical investigation. Strategic Management Journal, 7(3), 217–231.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Leipzig, Grimmaische Str. 12, 04109, Leipzig, Germany

    Rainer Alt

  2. Business Engineering Institute St. Gallen, Holzstr. 39, 9001, St. Gallen, Switzerland

    Thomas Puschmann

Authors
  1. Rainer Alt
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Thomas Puschmann
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rainer Alt.

Additional information

Responsible Editor: Petra Schubert

Rights and permissions

Reprints and permissions

About this article

Cite this article

Alt, R., Puschmann, T. The rise of customer-oriented banking - electronic markets are paving the way for change in the financial industry. Electron Markets 22, 203–215 (2012). https://doi.org/10.1007/s12525-012-0106-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12525-012-0106-2

Keywords

JEL classification

Search

Navigation