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FleetBoston Financial Online Banking Case Solution

Solution Id Length Case Author Case Publisher
701 369 Words (3 Pages) Frances X. Frei, Hanna Rodriguez-Farrar Harvard Business School : 601042
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Retail banking, as opposed to commercial, investment and wholesale banking deals directly with consumers rather than corporations and banks. Retail banks mostly deal with deposits, mortgages, loans and CDs. Retail banks, therefore, have only two modes of money generation. Firstly, the deposits of consumers are extended as loans.

Following questions are answered in this case study solution:

  1. What are the economics of retail banking?

  2. What are the key investments made by retail banks in technology for new/expanded delivery channels? Have these investments paid off?

  3. What new opportunities for retail banking does the Internet offer? What threats does the Internet pose? What should FleetBoston concentrate on going forward?

FleetBoston Financial Online Banking Case Analysis

The interest earned on the loans is the income of the banks. Secondly, for different types of deposit accounts, retail banks charge fees to the consumers. This transaction based fee is the second source of income for banks.

What are the key investments made by retail banks in technology for new/expanded delivery channels?  Have these investments paid off?

The first and foremost investment corresponds to the formulation of online banking channels. These channels incorporate online personal account transactions, e-bill payments, ATM services and branchless banking, etc. All these delivery channels offered swift transactions to consumers. Similarly, mobile banking service is the latest of the delivery channels initiated by retail banks. All these portals and websites demanded extensive initial investments. The use of technology has certainly cut down the costs of expensive human resource and extensive branch networking. However, apart from the cost cutting, the initial investment on the technological advancements was large in magnitude. Moreover, the cost of maintenance is also a crucial factor that undermines the profitability of these channels.

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