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The Internet's Place in the Banking Industry

"The Internet's Place in the Banking Industry" compares the Internet, as a new delivery channel for bank products, with existing alternatives such as branches and ATMs and argues that the Internet's most important impact on banking will be as part of a click and mortar strategy for delivering banks' products.

  1. DeYoung considers the Internet mainly as a delivery channel rather than a new product.

    1. What other delivery channels do banks use and what have been the trends in their usage over the 1990s?
    2. What has happened to the typical bank's geographic reach? Why?

  2. What examples of new products does the Internet enable banks to offer?

  3. What does DeYoung mean by a bank's distribution strategy? What tradeoffs are involved in switching from one distribution channel to another?

  4. Which distribution strategy does DeYoung believe ultimately will prove most profitable for banks? Why?
Source: "The Internet's Place in the Banking Industry." Robert DeYoung, Federal Reserve Bank of Chicago Fed Letter, No. 163, March 2001, pp. 1-4.


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