Operations, Information and Decisions Papers

Document Type

Journal Article

Date of this Version

6-2002

Publication Source

Management Science

Volume

48

Issue

6

Start Page

732

Last Page

748

DOI

10.1287/mnsc.48.6.732.188

Abstract

Many service firms are pursuing electronic distribution strategies to augment existing physical infrastructure for product and service delivery. But little systematic study has been made for whether and how characteristics or behaviors might differ between customers who use electronic delivery systems and those who use traditional channels. We explore these differences by comparing customers who utilize personal-computer-based home banking (PC banking) to other bank customers. Case studies and detailed customer data from four institutions suggest that PC banking customers are apparently more profitable, principally due to unobservable characteristics extant before the adoption of PC banking. Demographic characteristics and changes in customer behavior following adoption of PC banking account for only a small fraction of overall differences. It also appears that retention is marginally higher for customers of the online channel.

Keywords

online banking, financial services, electronic commerce, customer profitability

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Date Posted: 27 November 2017

This document has been peer reviewed.