eCommerce for Financial Institutions in Germany and the USA

1. Executive Summary

Online banks dig for continued quantitative growth in account number, transaction, and value of transaction since these factors are essential for valuation of the company at the stock exchange.

The market for online financial services, or “eFinance”, is growing in Europe and the US. The German market is the biggest but not the fastest growing market within Europe. Financial institutions have to consider trends in the market in order to survive and prosper in this very dynamic and competitive environment. Simple products like current account, saving accounts and brokerage, incl. mutual funds, as well as personal loans will be sold more on the Internet. However, customers are using the Internet as an information tool but close the contact often at physical branches. In order to avoid this miss match, online financial institutions will be forced to obtain core competence in:

• Customer relationship management
The ability to capture, manipulate, and utilise customer data will be one of the principal keys in the competition for market share.
• Multi-channel banking
Customers increasingly demand being served any time, any place, anywhere. Meanwhile, employees and suppliers alike are more likely to be connected to the financial institution’s architecture. This addi-tional complexity will require innovative solutions by financial institu-tions, and most likely, a real-time online platform.
• Customer satisfaction
Technology problems such as poor system performances or poor execution of orders are a source of much frustration for customers. A dissatisfied customer with a greater number of options in the Internet is less likely to remain loyal for long.
• Competitive differentiation
Technology supports new product and feature development, as well as customisation, which allows online financial institutions to differentiate their offer from their competitors. Branding requires a sophisticated differentiation strategy.

The online financial institution faces a number of challenges: a heavy transaction load, fast moving shifts in channel usage and a requirement to sew all the channels together. There are many requirements for the success of this business environment: security, data management, degree of customisation, and range of products and features.
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