Answer to Question #166694 in Management for prabhdeep

Question

Subject: Bank Management

1.Explain the importance of electronic delivery channels in the modern digital business environment ? (please give at least 8 points for importance)

2.Discuss various E-banking challenges in the modern digital world ?(please give at least 8 points for challenges)

Answer 1

1.     Importance of electronic delivery channels in the modern digital business environment: 

·        They offer quick delivery of business services. Electronic channels of delivery are fast and efficient, thus saving time for both customers and the business service provider.

·        They have low error rates. Electronic channels rely heavily on information technology for service delivery thus reducing probability of an error occurring.

·        They allow for consistent delivery of standardized services. Electronic channels ensure uniformity in service delivery, which would otherwise be altered in the case of human interaction.

·        They cost less. Electronic channels are more cost-efficient in delivery in the business environment because they cut out the exorbitant cost of conventional media.

·        They provide customer convenience. With digital trends in the business environment like ecommerce, electronic channels enable customers to access business services anywhere at any time.

·        They provide a large customer base for businesses. By use of electronic channels, business service providers can reach a larger number of intermediaries and end users.

·        They are tailored to the customer’s choice. Electronic channels have the ability to customize customer services thus facilitate a wide variety of business services to customers.

·        They enable rapid customer feedback. Businesses can quickly find out what customers think of their services, which enables them to address any problems quickly.

 

2.     Various E-banking challenges in the modern digital world: 

·        Operational risk – E-banking heavily relies on new technology for service provision, making system and security availability the major operational risk in e-banking. Technical issues in the system may cause the bank heavy monetary losses. Banks therefore have the challenge of heavily investing in reliable technology developments and hiring staff with great expertise.

·        Security risk – Banking systems are exposed to a risk of security threats. E-banking therefore demands appropriate practices to maintain data confidentiality as well as regular testing and review to analyze network vulnerability and recovery preparedness.

·        Legal risk – E-banking allows expansion of banks through geographical borders more than traditional banking therefore making the scope of jurisdiction of local laws wide. Banks may experience difficulty abiding by all these changes and may unknowingly violate customer protection laws.

·        Regulatory issues – E-banking facilitates provision of banking services anywhere in the world, making regulators place strict regulatory measures. Banks may face some gray areas in obtaining licensing for some jurisdictions of service.

·        Traditional structures that are unable to respond to the agility required for e-banking – A large number of people still rely on traditional banking methods. Banks may face challenges in integrating traditional banking systems with e-banking.

·        Money laundering – E-banking greatly facilitates money-laundering activities because of its anonymous nature. Banks may sometimes experience challenges in establishing the authenticity of nominal account holders.

·        Reputational risk - The more a bank relies on e-banking, the greater the potential for reputational risk. A security breach or disruption in a system’s availability may damage a bank’s reputation by eroding customer confidence and trust.

·        Organizational structure and resistance – Banks may face an unfavorable organizational structure or acceptance issues from staff due to the ever changing nature of technology development.