Business models

 

1.         Who are the customers?

 

Bank Industry in General

• Individuals, Businesses and Government

Bricks and clicks

• Individuals, Businesses

Internet-only

• Only Online Banking subscriber from the customer of "Bricks and clicks" 

  

2.         Why will they buy from this company?

 

Bank Industry in General

• Have in many varieties (community, regional, money center banks, holding companies, savings institutions, trust companies, and savings banks).
• Individual use bank to deposit, and / or get consumer loans to finance major purchases, such homes, education, cars and many other major appliances
• Businesses use bank for facilitate many financial transaction, and get loan to finance for growth and prosperity.
• Government use bank for as source of finance for Treasury bill and many other agency debt securities, so the government can fund a variety of public improvements (schools, roads, water and sewer and public health facilities).

 

Bricks and clicks

• The main advantage of using an ATM is the fact that you can have access to the cash in your bank account whenever you need it. If, for instance, you are at a store that does not take checks or credit cards but it has an ATM, you can withdraw the money for your purchase. This also means you can travel anywhere without cash. If the location has an ATM and you have your ATM card, you can access your money instantly. (Advantage using ATM)
• Face to face communication

 

Internet-only

• The greatest advantage of providing internet-only banking services compared to a traditional brick and mortar bank is that this type of bank has very low costs.(What are the advantages and disadvantages to dealing with internet-only banks?)

 

 

3.         How does the business make a profit ?

 

Bank Industry in General

• Banks collect deposit for individual and pay small interest, then use those deposit to make loan and charge higher interest        
• Charge fee for financial transaction
• Internet use will attract more customers

 

Bricks and clicks

• Brick and clicks gives  the ability to keep in touch with your store, your employees, your customers, and your inventory is paramount to sustaining growth. You want to analyze trends and keep a close eye on profits. , and the power to manage growth(Have advantage of Manager's control)

 

Internet-only

• Can an "internet-only bank" work?

 

4.         What are its costs?

• Interest paid for deposit
• Human resource cost
• Real estate cost (branch)

 

 

5.         On what assumptions do its profits depend?

• There are individual who would like to make deposit
• There are people, business or government which need loan from the bank
• There are people, business or government which use the bank for financial transaction needs

 

 

6.    Virtual Bank(Internet-Only Bank) - popular new trend

• One platform
• Built for online business
• Higher interest rate (no brick and mortar building and fewer human resorces)
• Low cost on everyday banking and lending 

 

7.    Why people use online banking?

• Convenient 24/7
• Easy to use
• Protective Security
• Improved techonology has rescued the costs of processing transactions
• Making bill payment and account management easier

 

Qustions:

 

·         When the Internet became widely used some people predicted that bank branches would practically disappear, replaced by ATMs. Has that happened? Why or why not?

I don’t think Internet banking will completely replace traditional banking anytime soon.  There is presumption in Internet banking.  People need to be familiar with computer (internet), at least.  Computer adaptation rate is increasing, but it is 100%.  The other reason that traditional banking will stay is there are people who prefer face-to-face communication, and sometime it may be necessary.  For example, if I move to a new town, and want to open an account with local bank with $500 cash, I may just want to go to the bank and do what is need to be done.

 

·         How has the internet affected competition in the banking industry?

Internet provides certain conveniences.  It is 24/7 and accessible from anywhere.  There are banking functions that can be better serviced through Internet, such as balance checking, bill payment, and money transfer.  So it is important for the banking industry to realize which area the Internet can help them to compete and grow.

 

·         How do internet-only banks compete with traditional full-service banks?

There are certain areas that internet-only banks do better job than traditional full-service banks.  There are no doubt that internet-only bank provide a extended banking functionalities with minimum operating cost.  But the success of internet-only banks depends on how many and how much people willingness to do banking through Internet.

 

·         How has the recent banking industry near-collapse affected internet banking?

It is hard to tell the recent poor performance of many Internet banks in the current near-collapse of banking industry is due to its business model or its poor asset portfolio.  Anyway, people start to be skeptical about banking industry.  As result, internet-only banks may be less desirable in the current environment due it its lack of face-to-face communication and hard to gain trust from potential customers.