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Internet Banking : Market Developments and Regulatory Issues May 2001 ( Revised )
| Content Provider | Semantic Scholar |
|---|---|
| Author | Carlson, John B. Furst, K. Lang, William W. Nolle, Daniel E. |
| Copyright Year | 2001 |
| Abstract | *The opinions expressed in this article are those of the authors alone, and do not necessarily represent those of the Office of the Comptroller of the Currency or the United States Treasury Department. Abstract Internet banking is a subject receiving great attention in the banking industry and the regulatory community. As with other areas of e-commerce, discussions about Internet banking often proceed without reference to the actual state of market developments. This paper describes the current state of Internet banking and discusses its implications for the banking industry and regulatory policy. At the end of 2000, a minority of banks offered Internet banking, but analysis of data collected by Office of the Comptroller of the Currency bank examiners shows that over half of all banks will offer Internet banking by year-end 2001. As a group, large banks are more likely to offer Internet banking, although a growing number of small banks offer it, or plan to. Nevertheless, large banks appear to have an advantage over small banks in the range of services they offer over the Internet. An empirical examination of bank profitability indicates that, at this point in time, Internet banking is not having an independent impact on bank profitability. This result may of course change as the use of Internet banking grows. Use of Internet banking, while forecast to grow significantly, is still relatively modest. We argue that the modest use of Internet banking by consumer customers of banks is due in large part to a lack of a compelling value-added proposition. This problem is less severe for Internet banking customers and may explain why some banks are targeting their Internet strategies toward business customers. Nevertheless, since most consumers have accounts at banks that offer Internet banking, consumer usage patterns could change suddenly. Internet banking's impact on consolidation in the banking industry is uncertain. The economics of Internet banking may favor large institutions, either because of economies of scale and scope, or because of the need to advertise heavily to be successful. Alternatively, Internet banking could offer entry and expansion opportunities that small banks traditionally lacked. Internet banking presents policy makers and regulatory authorities with a set of significant challenges. Changes to the structure and functioning of financial institutions are challenging a regulatory structure that was developed based on increasingly outdated lines of demarcation among types of financial institutions. In addition, existing regulatory policies have to be adapted … |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.occ.treas.gov/netbank/SGEC2000.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
