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Internet banking in the U.K.: From new distribution channel to new business models


  • Li, Feng

    () (University of Newcastle upon Tyne)


The Internet is shaking the foundation of the banking industry. Simply deploying the Internet as a more efficient distribution channel will not bring sustainable strategic advantages. To compete effectively, banks will need to embrace a new set of strategic thinking, based on the ‘unbundling’ of banking services and processes and the ‘deconstruction’ of the integrated banking model. Based on my research of Internet banking in the personal banking area in the U.K. since the late 1990's, this paper explores a series of emerging issues, such as the adoption of various strategies and business models, channel development and coordination, and product and service offering through the Internet. As a new distribution channel for financial services, the Internet has lowered barriers to entry, allowing new players, often equipped with new technologies and business models, to enter the market. These new players are posing a serious threat to existing banks by changing the rules of competition and raising the general expectation of customers for services from all financial companies. Established banks and building societies must radically overhaul their business strategies to maintain their competitive position, and indeed, to survive in the long-term.

Suggested Citation

  • Li, Feng, 2002. "Internet banking in the U.K.: From new distribution channel to new business models," Journal of Financial Transformation, Capco Institute, vol. 6, pages 53-65.
  • Handle: RePEc:ris:jofitr:1309

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    Cited by:

    1. Lambert, Susan C. & Davidson, Robyn A., 2013. "Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010," European Management Journal, Elsevier, vol. 31(6), pages 668-681.
    2. Cornelius, Kalenzi & Kwon, Youngsun, 2018. "Digital Finance Revolution in E. Africa: Retail Bank's Adaption to a changing Marketplace," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190340, International Telecommunications Society (ITS).

    More about this item


    Internet; banking industry; efinance;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes


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