Carol O'Reilly is the Executive Vice President of a regional bank in the New York metro area. She is evaluating an investment in online banking as an extension of bank services. Her bank, East Side Bank, is one of the most productive in the U.S. In fact, it was named America's most efficient bank in 1998. This became a cornerstone of their marketing strategy and they fiercely protected their efficiency ratio. She received a visiting contingent of bankers from Finland. Their use of technology and online banking was far more developed than most U.S. banks. Yet they were not nearly as efficient as the top U.S. banks. They discovered on their visit, that their cross selling had suffered as their online capability advanced. The U.S. bank customer was more profitable because they used multiple bank services and were willing to pay higher fees for the personal contact. This case centers on the implications of this revelation to East Side Bank.
The primary subject matter of this case concerns the potential impact of the adoption of online banking to a commercial bank. Secondary issues include strategic decision making in the banking industry and a comparison of the impact of technology on banks in Finland and the U.S.
The case has a difficulty level of three, which makes it appropriate for a junior level course. The case is designed to be taught in ½ hours and requires about 3 hours of preparation. It is designed for use in Strategy, Marketing, Money and Banking, or International Business courses.
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