Abstract:

Retail banks around the world are moving rapidly towards increasing their Internet service provision. This trend has been given momentum by the prospect for retail banks to dramatically reduce transaction costs. Although short term transaction costs will be lower with the Internet other strategic issues revealed by the research demonstrate that the long term costs to retail banks could be the loss of their institutional status. Interviews with industry experts were supplemented by e-mailed dialogues with thirty web masters from fifty-five web sites. The comparative analysis of retail bank web sites in the United States and Europe reveals that American banks are more skilful in enticing customers to use sites than European banks. However what European bank web sites lose in innovation access they gain in functionality. Both American and European retail banks tend to create unnecessary confusion for customers by describing similar access technologies in different and conflicting ways. The paper concludes by specifying general recommendations and guidelines for the design and functionality for future web sites which are applicable to both Internet retailing in general as well as for retail banks in particular.