The changing environment, the massive increase in competition and performance pressures force banks to find new ways to differentiate from competitors. At the same time the utilization of smartphones and mobile internet increased in the last few years. Would a bank get a competitive advantage, if it would offer applications (apps) for its services and products?
Since the launch of the iPhone in 2007 the mobile phone market has been undergoing a change and a new market segment of smartphones has been created. The market share of smartphones e.g. has increased up to 37.6% in Spain. The numbers of mobile internet users has been strongly rising at the same time. The growth rate reminds of the growth rates in the early days of the internet. Compared to the ‘for free’ culture in the internet, smartphone users are willing more likely to pay a fee for content or service.
Smartphones not only provide traditional telecommunication services, but also short message services, browser and application based services and near-field communication.
In order to survive in the competition, banks either have to focus on a strong differentiation or cost leadership. Established banks are unlikely to compete against low-cost banks, so they need to be clearly different from their competitors. They have to consider that their services are oriented on the customer needs. Therefore all banking services have to be aligned with the customer processes. A customer process is characterized as the entire end-to-end process a customer passes through to meet a desired need or to solve a problem until satisfaction is met. During each step of this process, the customer needs support from different suppliers to fulfil all needs of this process. A single process owner does not exist. Instead of this the customer has to get in touch with many different suppliers. Here the bank can act as service integrator to bundle the different interactions. The bank can demonstrate itself as primary contact to the customer via its multiple distribution channels. An app would act as primary communication channel as it becomes the constant companion of the client.
Table of Contents
1. Introduction
2. Market development
3. Technical opportunities of smartphones
4. Customer process integration
4.1. Private clients
4.2. Corporate clients
5. Challenges to overcome
6. Conclusion
Objectives and Topics
This paper examines whether banks can secure a competitive advantage by offering mobile applications (apps) to their private and corporate clients. The research investigates how these tools can support customer-centric banking processes and evaluates the strategic potential and obstacles associated with mobile banking integration.
- Market evolution of smartphones and mobile internet
- Technical capabilities (SMS, browser-based functions, NFC)
- Integration of banking services into customer processes
- Specific application areas for private and corporate banking
- Security challenges and strategic implementation barriers
Excerpt from the Book
4. Customer process integration
Changing environment and increased competition forces banks to find new ways to differentiate from their competitors and to be able to compete in future. Therefore banks need either focus on cost leadership or on a strong differentiation. Established banks are unlikely to compete against low-cost financial service providers, such as direct-banks. Therefore they must offer value adding products and services, which clearly differ from their competitors (Dohmen et al., 2009). The main strategic considerations which need to be taken into account are (Engstler, 2006):
• The scope of services has to be oriented on the needs of the customer
• The design of customer contacts has to create functional and also emotional added value to the customer
• The appearing has be adjusted in such a way, that
o Trust is created by presence, strengthening brand leverage in all relevant distribution channels
o Integration of distribution channels and control over channel-wide sales process is ensured
o Cooperation with service providers who can generate added value for the customer increases the frequency of interaction between the bank and its customer
To fulfil the customer needs and expectations all banking services have to align with the customer processes (Schmid et al., 2000). A customer process is characterised as the entire end-to-end process the customer passes through to meet a desired need or to solve a problem until satisfaction is met (Behara et al., 2002). During each step of this process, the customer needs support in terms of information, services and products from different kind of suppliers in order to fulfil the needs which release the customer produce.
Summary of Chapters
1. Introduction: This chapter outlines the research motivation regarding the utilization of smartphones by banks to create competitive advantages for various client segments.
2. Market development: The section details the rapid growth of the smartphone market and the increasing trend of mobile internet usage as a foundation for new distribution channels.
3. Technical opportunities of smartphones: It explores specific technical interaction methods, including SMS, browser-based functions, and Near-Field Communication (NFC).
4. Customer process integration: This chapter defines the strategic necessity of aligning banking services with customer-centric end-to-end processes.
4.1. Private clients: This sub-chapter focuses on how apps can support private individuals in tasks like buying a house, providing information, evaluation, and after-sale support.
4.2. Corporate clients: The section examines the treasury department’s processes, specifically liquidity planning, risk hedging, and payment execution through mobile access.
5. Challenges to overcome: This chapter discusses critical barriers, primarily data security, user identification, and the willingness of clients to rely on a single banking service provider.
6. Conclusion: The final chapter summarizes that while apps provide a significant competitive advantage as a broker or service integrator, success depends on quick implementation and addressing security concerns.
Keywords
Banking, Smartphones, Mobile Applications, Competitive Advantage, Customer Process Integration, Digital Transformation, Private Clients, Corporate Treasury, Mobile Internet, Data Security, NFC, Service Integrator, Financial Services, Market Development, User Identification
Frequently Asked Questions
What is the fundamental focus of this research?
The paper evaluates whether banks can achieve a competitive advantage by offering mobile applications to support their clients' banking needs.
What are the primary thematic fields covered in the work?
The work covers market development trends, technical capabilities of smartphones, banking process integration, and the specific strategic challenges banks face in the digital age.
What is the central research question?
The research asks if a bank can generate a competitive advantage by offering apps for its products or services to both private and corporate clients.
Which scientific methodology is utilized?
The author uses a literature-based assessment and a conceptual analysis of customer-centric process integration to evaluate the strategic viability of mobile banking.
What is discussed in the main part of the work?
The main part analyzes the shift in mobile consumer behavior, the technical opportunities of smartphones, and how banks can act as service integrators within the customer buying cycle.
Which keywords best characterize this work?
Key terms include Mobile Banking, Competitive Advantage, Customer Process Integration, Financial Technology, and Digital Distribution Channels.
How do banks benefit by acting as a "broker" in a mobile environment?
By acting as a broker, the bank bundles external services and products into its own app, allowing the customer to interact with one primary contact, which increases the bank's utility and brand leverage.
What are the main security hurdles for banking apps?
The main hurdles are data security during transmission, protection against device loss, and the current lack of widespread secure, biometric user identification methods for high-value transactions.
Why might corporate clients hesitate to adopt these integration services?
Corporate clients often maintain multiple banking relationships to stay independent; therefore, they may be reluctant to accept an integration service that ties them to a single bank's system.
- Quote paper
- Sebastian Hindelang (Author), 2011, Future Trends, Munich, GRIN Verlag, https://www.grin.com/document/208487
