By: Manigandan G
E-commerce has changed the way the companies do business and keep up with customer expectations. The world is changing, so is the banking industry. A most visible footprint of the e-commerce in banking is people can now pay for goods and services from another country without having to work around the ‘banking bureaucracy.’ HSBC has achieved this and more. Continue reading……….
HSBC was founded in 1865 as a bank in Hong Kong and Shanghai for the support of local and international trade. Now HSBC is one of the largest MNC banks globally. The bank expanded and diversified keeping in momentum with the modern technology. HSBC made major acquisitions in the Americas and Europe, and combined its worldwide operations under the Hexagon brand. Today’s HSBC has grown far beyond the vision of its founders. However, the strategy remains firmly rooted in its heritage – identifying the growth potential and opening up opportunities for the customers. E-commerce emerged critical in HSBC’s international business expansion.
Threats and Opportunities
- Improved Efficiency
- Better Asset Utilization
- Faster Marketing
- Reduction in Total Order Times
- Extended Customer Service.
E-commerce ecosystem has threats and opportunities. The Internet and e-commerce are transforming the way firms operate, by redefining operations such as product design and development, production, inventory, distribution, after-sales service support etc. In this process, they alter the roles and relationships of various parties, fostering new networks, services and business models. The results are far reaching like:
Banks’ E-Commerce Imprints
With internet and e-commerce emerging popular, some pertinent questions arise on their role and relevance for banking:
- Is the role of banks in e-commerce going to resemble their role in traditional commerce?
- Will banks introduce new products that alter the banking industry’s nature as e-commerce expands?
- What are the potential risks that may arise with such a shift from banks’ conventional business?
Going by the HSBC example we understand that e-commerce can be adapted to expanded international trade markets, thus creating opportunities for foreign trade enterprises to reshape international competitive advantage. Several banks have implemented a cost-effective electronic access channel for conventional banking products. Moreover, several banks are strategizing to provide newly developed products wholly suited for e-commerce.
Should these initiatives gain widespread acceptance across the industry, it would bring a shift in the banks’ business activities. Banks may act more as e-commerce enablers, while their established business lines may lose significance. Such change is likely to have twin impacts. The banks might either reduce the size or modify the extent of their branch networks and thereby allocate more resources towards the advancement and upkeep of computer networks and software. However, the precise role of the banks in e-commerce would depend largely on managing the strategic and operational risks for business in the digital marketplace.
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Digital disruption in banks invites cyber risks as well. Yes or No? Why?
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Wenninger (2000).The Emerging Role of Banks in E-Commerce. CURRENT ISSUES IN ECONOMICS AND FINANCE, 6(3)
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