Page 162 - Electronic Commerce

Selling on the Web

Online Banking and Financial Services
Because financial services do not involve a physical product, they are easy to offer on the
Web. Online banking was slow to take off on the Web, because many customers were
concerned about the safety of their banking transaction data as it traveled the Internet. 137
Since 2010, however, the general level of trust in online services has increased and about
84 percent of all U.S. households use online banking services today. That number is
expected to reach 89 percent (a point that many financial services experts believe to be
near saturation) by 2018. In Chapter 11, you will learn more about how online payments
and other financial transactions are processed.
Most banks that entered the online banking business did so by offering some of their
services on the Web. They generally began with sites that offered account balances and
statements, then added bill pay, account transfers, loan applications, and other services.
Some firms started completely new online banks that were not affiliated with any existing
bank (such as the First Internet Bank of Indiana). Banks benefit from serving their
customers online because it costs the bank less to provide services online than to provide
those same services through personal interactions with bank employees in a branch office.
Although online banks let customers pay their bills electronically, many customers
still receive their bills in the mail. Those who do receive their bills online must often visit
a different Web site to view each online bill. A bill presentment service provides an
electronic version of an invoice or billing statement (such as a credit card bill or a mobile
phone services statement) with all of the details that would appear in the printed
document. As online banks add bill presentment services that allow their customers to
view all of their bills on the bank’s Web site (and pay each of them with a single click),
they are finding that more of their customers are willing to do their banking on the Web.
Another important feature that an increasing number of online banks now offer is
account aggregation, which is the ability to obtain bank, investment, loan, and other
financial account information from multiple Web sites and display it all in one location at
the bank’s Web site. Many of a bank’s best customers have credit card, loan, investment,
and brokerage accounts with several different financial institutions. Having all of this
information collected in one place is very helpful to these customers. Some banks have
created their own account aggregation and bill presentment software, but companies such
as Yodlee sell these services to banks and other financial institutions.

Travel
In the past, travel agents earned substantial commissions on each airplane ticket, hotel
reservation, auto rental, or vacation that they booked. These commissions were paid to
the travel agent by the transportation or lodging provider. Thus, the traditional revenue
model in the travel agency business was a fee-for-transaction, similar to the model of
stock brokerage firms.
When the Internet became available to commercial users, a number of online travel
agencies began doing business on the Web. Existing travel agencies did not, in general,
rush to the new medium. They believed that the key value they added, personal customer
service, could not be replaced with a Web site.

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