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- Herausgeber: GRIN Verlag
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2001
Master's Thesis from the year 2001 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,3 (A), Reutlingen University (Southeatern Louisiana University), language: English, abstract: 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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Page 1
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
Table of Tables
Title Page
Page 4
Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
Table of Graphics
Title Page
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
Acknowledge
Mr. X and Mr. Y, both employed by the XXL Internet AG, have always
given me a helping hand at any time during my research in Germany, and
the USA. I enjoyed the discussions with both people and t heir profound
interest for my master thesis. Both supported me and gave me meaningful
advice. The interaction enlightened me and gave me a better understanding
of the business environment in this particular sector.
In addition, Dr. Teri Shaffer (Director MBA Program) was also very
helpful to me in supporting my ideas concerning the master thesis. She
helped me balance the requirements of XXL Internet AG, Southeastern
Louisiana University as well as the Fachhochschule Reutlingen, Germany.
I also thank reviewers of this paper at early versions of the research
for many valuable comments and suggestions.
Klaus Schmidt Page -5- 20.08.2001
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
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 additional complexity will require innovative solutions by financial institutions, 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.
Klaus Schmidt Page -6- 20.08.2001
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
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.
The web presentation should include dynamic tools. The speed of data transfer increases and makes further development in Customer Relationship and Content Management advisable. Product adaptation will be necessary by the financial institutions to satisfy the Internet users needs, which are often the most profitable customers. These are ingredients of success. Personalization, and traditional channels of contact through the call center or to the common physical branch, enhance the acceptance of online financial service. Since XXL Internet AG consults financial institutions, it is important to be aware of these future requirements.
Financial institutions do not have the necessary manpower to manage and develop the online presentation by themselves. Their personnel often do not accept the challenge from the Internet and change management requires high investment. XXL Internet AG has the opportunity to enter alliances with these financial institutions and implement the Internet presentation, and further develop new ideas for sales and service.
Standards and security play an important role and change quickly. Mobile phones, Personal Digital Assistants (PDA) are starting to become connected to the Internet via Wireless Application Protocol (WAP), whichKlaus Schmidt Page -7- 20.08.2001
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
opens tremendous new ways to reach new customers. iTV is the latest media to reach customers, but it was not successful in the US and has not fulfilled the prognoses. For iTV a separate receiver is necessary and customers in the US rejected spending extra money for the service. The future will tell whether German customers will accept iTV.
2. Company Overview
XXL Internet AG is a full service company and developed web solutions for a number of companies. Some references are Siemens AG, Quelle, RWE, Entrium, Sparda-Banken-Gruppe, Nordsee, Deutsche Shell, E-Plus, and Yves Rocher. XXL is the market leader and innovator for economically successful sustainable web solutions and efficient business models on the Internet.
Since July 1, 2000 XXL Internet AG satisfies the function as a holding. XXL is diversified in three strategic business units (SBU) that allow different market activities: XXL vision2market, XXL vision2product, a nd XXL vision2capital. Therefore, XXL is more flexible in adapting to changing market conditions.
XXL vision2market combines the core business competence from xxl interactive and xxl network. Synergy effects of both operative units guarantee successful e Commerce, financial, and business solutions. XXL vision2market also develops strategies for its clients and advices towards optimizing the internal workflow (SCM) and enhancing the marketing activities. XXL vision2market is linked by cooperation that add t o the performance with market leaders like Internshop, Cisco, Sun Microsystem and Gauss.
XXL vision2product develops and sells innovative products based on the Internet. In addition, stakes in companies operating on the Internet in
Klaus Schmidt Page -8- 20.08.2001
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
Germany and abroad enhance the potential given on the Internet by exploring synergy effects.
XXL vision2capital financially participates in other Internet companies only. As financial arranger XXL vision2capital brings prosperous companies or needs from its own companies together with investors.
XXL Internet AG has its head office in Nürnberg, Germany, and has subsidiaries in Hamburg, Köln, München and Berlin. XXL Internet AG has acquired additional agencies in Stuttgart, Bremen and Prag. Currently, XXL has a workforce of about 310 employees1and its shares are traded at the German “Neue Markt”iin Frankfurt, Germany.
3. Problem Definition
XXL Internet AG recently developed Internet presentations for a number of German financial institutions (for example Entrium Direct Bankers AG and Sparda-Banken). Mr. Y, responsible Sales Manager at XXL’s SBU vision2market asked me to evaluate the current advancement in Germany and the United States in the financial market with respect to eCommerce and the Internet agency XXL Internet AG.
Banking is an information intensive business and financial institutions must be able to delight its customers with offerings that are convenient, broad in range, secure, cheep, efficient, and, crucially, accessible from multiple access points.2How many consumers are actively conducting online banking with an institution, and what exactly are the customer demands? In addition, future evolution in the German market should be estimated in the master thesis. Differences in development and practice between Germany
i The “Neue Markt” is the stock market for innovative German companies under the umbrella
of the “Deutsche Börse AG”.Klaus Schmidt Page -9- 20.08.2001
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Electronic Commerce for Financial Institutions in Germany and the
United States of America with respect to XXL Internet AG
and the United States should be discovered. What are requirements for successful online financial service in Germany?
XXL Internet AG not only implements web-solutions but also strategically advices its customers in this segment and requires further details about the market trend in this innovative market segment.
Technical standards are the basis for online financial service. The different standards in Germany and the US have to be analyzed and compared in order to give a better overview of the different opportunities in Germany and the US as well as to use the information for a possible cooperation with an US company operating in the same business and planning to expand to Germany.
4. History of Retail Banking
Financial institutions perform a number of functions that did change only very little over time or across countries However, the way in which these functions are performed and the form of the institutions performing these functions can vary significantly due to differences in or changes in technological innovation, the regulatory environment, or competition.3
The six core functions are:4
1) The pooling of economic resources to fund large scale
2) The transfer of economic resources across distance, over
3) The management of risk, through hedging (though swap
