Bank Strategies and the Internet: An Interpretation of the Banking Industry Based on the Italian Retail Market

Abstract

The introduction of innovative information and communication technologies (ICT) in conjunction with economic and legislative changes has substantially intensified competition in the banking industry. Consequently, Online Financial Services have developed greatly in terms of both quality and quantity. The banking industry scenario is characterized by a high level of uncertainty: a number of strategies seem to differentiate the financial institutions and it is debatable what variables banks should use to make their Internet-based activities more effective.This study aims to provide an interpretation of the Internet-based development of the banking industry starting from the identification of clusters of banks with similar strategies. The literature analysis has suggested the methodology of strategic grouping and has led to the identification of three main strategic variables: the amount of bank charges, the number of bank services available online and the number of distribution channels used.Data were collected through an extensive empirical study on a selection of 95 banks within the Italian retail market. The research outcomes provided support to the classification of the surveyed banks into five strategic groups that present specific characteristics and strategies.