One of the most challenges of e-banking is to create value for business. Successful e-banking investment creates value for present and potential customers and business as well. A base of potential customers is a key to the generation of e-banking transactions.
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Transactions, in turn, generate business value in a number of ways by increasing revenue, decreasing costs and improving market share. In most e-banking startups that fail to create business value, the typical problems are: e-banking plan is not aligned with business strategy, poorly defined requirements inadequate business cases and ineffective management of return on investment In the struggle with economic turmoil and large cost burden, financial institutions such as bankers are focusing on improving the profitability of their customer relationships, reducing distribution costs and enabling more self-service e-banking. Therefore, an important problem confronting e-banking managers is how to control the cost of e-banking. E-bank products and services are a lot more complex than the products of a manufacturing company. The start-up costs of e-banking are expensive, especially in ICT infrastructure. Launching a trusted e-bank is very costly because it requires advertising expense. Moreover, expenditure on e-banking technology is increasing and considered to be out of control despite of the lower costs of hardware. Typically, the reasons for higher expenditures are: Most organization does not understand the costs associated with ICT asset such as R&D expenses, human resources investment. Annual operational budgets increase as a result of complex licensing, maintenance and outsourcing contracts. Failed project result in large financial losses. Using e-banking as a fully integrated part of their business strategy enables banks to increase the attractiveness of their products and services. Strategic alignment is an important driving force to achieve business value through investments in e-banking. Therefore, understanding the strategic risks associated with e-banking adoption is very important. Poor e-banking planning and investment decisions can increase a bankers’ strategic risk. Indeed, e-banking investment has sufficient potential to allow banks to become even more profitable in an increasingly hostile and competitive environment. Technical issues appear to be the major challenge in the successful adoption of e-banking initiatives such as scope, scale and complexity of equipment, systems, products and services. E-banking systems are complex large-scale system with requirement for high performance, reliability and availability. And even the most technologically sophisticated organization is struggling to manage them. E-banking raises bankers’ dependence on IT hence raises the technical complexity. Typical problems arising due to these complexities are:
The Basle Committee on Banking Supervision has recognized the important role of bank supervisors and regulators in ensuring that the risks associated with the use of technological developments in e-banking are well managed.
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