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The impact of the Internet upon bank marketing

Article  in  Journal of Financial Services Marketing · September 2010

DOI: 10.1057/fsm.2010.12 · Source: OAI

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João F. Proença Marta Martins Silva

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 Original Article

The impact of the Internet upon

bank marketing
Received (in revised form): 10th June 2010

João F. Proença
is Professor of Marketing, Faculty of Economics, at the University of Porto, Portugal. He is responsible for the PhD program in Business
and Management Studies and for the Masters program in Services Management, both at the University of Porto. He has a PhD in
Business from University of Porto and a Master of Science in Marketing from Instituto de Empresa, Madrid, Spain. His main research
focus is on business relationships, particularly business-to-business service marketing. He has published in a number of journals
including the Journal of Marketing Management, the Information Systems and e-Business Management, the Journal of Macromarketing,
the International Journal of Bank Marketing, the Journal of Customer Behaviour, the Service Business – An International Journal,
the International Review on Public and Non Profit Marketing, the International Journal on WWW/Internet, the International Journal of
Engineering and Industrial Management, and the Portuguese Journal of Management Studies, among others.

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Marta Martins Silva
is analyst of candidacies to financial funds from EC in the North Regional Direction of Agriculture and Fisheries. She has a Master in
Management Sciences and Marketing, University of Porto. Her main research focuses on business relationships and new technologies,
both particularly applied to services. She has published in the International Journal on WWW/Internet and in the Portuguese and

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Brazilian Management Review.

Teresa Fernandes
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is Lecturer of Marketing, Faculty of Economics, University of Porto, Portugal. She has a PhD in Business and Management Studies,
University of Porto, Portugal and has a Master of Science in Business Administration, University of Porto Business School, Portugal.
Her main research focus is on relationship marketing and consumer relationships and she has published in the Journal of Marketing
R
Management.
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ABSTRACT Information and communication are critical to developing customer relationships.

Thus, new information and communication technologies (NICTs) became a key knowledge
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tool for the organisation within a relationship marketing strategy. Retail banking is a good
example of a sector in which the virtualisation of relationships is increasing. However,
there is no consensus as to whether banking relationships are strengthened or weakened
by the use of technology. This article discusses the virtualisation of the interaction
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processes between banks and their customers and analyses the influence of the Internet
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on these relationships. A questionnaire was distributed by mail to 340 Internet banking

services’ users. A principal components analysis and a multiple regression analysis were
conducted in order to discuss the relationship between the identified dimensions of Internet
banking and relationship marketing. The research finds three factors related to the use of
Internet banking which strengthen the relationships between banks and their customers:
the intensity of Internet use, the diversity of access locations and the diversity of Internet
applications. From a managerial point of view, these findings have implications for the
development of new relationship approaches based on technology.
Journal of Financial Services Marketing (2010) 15, 160–175. doi:10.1057/fsm.2010.12
Keywords: internet banking; relationship marketing; internet marketing

INTRODUCTION
Correspondence: João F. Proença Financial services and banking in particular
Faculty of Economics, University of Porto
Rua Dr Roberto Frias, Porto 4200-464, Portugal are businesses in which the relationships
E-mail: jproenca@fep.up.pt between institutions and their customers are

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
www.palgrave-journals.com/fsm/
 The impact of the Internet upon bank marketing

critical.1–3 There is a great deal of interaction Portuguese Internet banking. We then

between the customer and the bank, and propose dimensions of both variables in
technology plays a major role in that interaction. order to examine relationships between
For example, the self-service technologies them and discuss the methodology used in
such as ATMs introduced into the banking the research. The empirical examination is
sector have become both well known and done through factor and multiple regression
popular, since they were readily accepted by analysis. We end up concluding that new
customers, who recognise their advantages in relationship approaches can be developed
terms of efficiency, convenience and cost by banks based on technology.
reduction.4–6 However, there is some doubt
as to whether self-service technologies NICTS AND INTERNET USE
con-tribute favourably towards establishing IN BANKING
lasting relationships between banks and their At present, the market offers a large number
customers. Several studies have suggested that of new information and communication
technological advances and the tools of technologies (NICTs) that allow customers
communication enable close and long-term to satisfy many needs with minimum human

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relations to be created and developed intervention. By technology we mean all the
with customers.7–15 However, there is no tools, techniques and procedures used to
consensus as to whether these relationships perform a specific function.17–18 Technologies
are strengthened or, rather, weakened by the which are individually managed by users are
use of technology.14,16 If, on one hand, the
potential exists for technology to improve
O known as self-service technologies14 and are
named as Self-service Banking Technologies
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communi-cation and customisation, on the (SSBTs)19 or Electronic Banking – E-Banking 20
other hand, increasing virtualisation may when they use the Internet and are applied
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translate into no direct personal interaction, in the banking sector. The development of
diluting links between company and e-banking is a manifestation of the use of new
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customers. This is why it is appropriate to technologies in financial services and

look further into this topic. represents a variety of services of four
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This study seeks to understand in what way types14,20: Credit cards, ATMs, Points of Sale,
this new practice of using the Internet as an and Home banking (HB) or Internet banking
example of a self-service technology affects (IB). These new technologies have opened
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relationships that are established between banks very promising opportunities for financial
and their customers. The research studies the service companies to add alternative distribution
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relationships between the concepts of the use channels, constituting a key means of
of Internet banking and of relationship differentiation, complex but also critical.21.
marketing, which, since these are two concepts Early studies suggested that the Internet
defined by more than one dimension, means would have a significant impact on retail
studying the relationships between the various banking.22 One consequence of the Internet
dimensions of the two concepts. Ultimately, is the growing virtualisation movement.23,22–25
the research aims to obtain an answer to the By ‘virtualisation’, we understand the removal
question How does the use of the Internet by of all constraints of time, place and method,
bank customers’ relate to relational approaches enabled by the convergence of computing,
developed by banks? by examining the relationship telecommunications and visual media.24
between the dimensions of Internet banking Although the relationship with the customer
and relationship marketing. is maintained, it is carried out at a distance
The article begins with a brief literature with little or no direct personal interaction.26
review about Internet banking and relationship For Barnatt 27 it is an ‘intangible social
marketing and the state-of-the-art of relationship’. Dannenberg and Kellner10

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175 161
 Proença et al

consider it unlikely that the ‘person-to- marketing activities carried out by a company
person’ financial counselling done via the in order to establish, develop and, above all,
Internet will be materially different from that maintain customer relationships.35–36 There
traditionally done ‘face-to-face’ in the various is no consensus as to the definition of
bank front-offices. However, Harden26 argues relationship marketing.37–39 The underlying
that the disappearance of the time, place and principle of relationship marketing involves
method factors deprive the traditional maximising the long-term benefits for both
relationship of the characteristics that define parties involved – customer and suppliers,
it, since in virtual relationships, the resulting from a series of transactions (with a
connection between the company and its single transaction not being a determinant in
customers is diluted, with (social and itself), which allow a long-term relationship
commercial) exchanges mediated by to be maintained. The duration of a
computer. Also Walsh25 suggests that relationship is, therefore, the first and a
traditional branch banking will eventually fundamental dimension in a true relationship
cease to exist, affecting opportunities for approach.40–41 A second dimension –
personal interaction and relationship building.6 adaptability/personalisation – comes from

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The fact that technology has come into the fact that exchanges are a critical factor
common use in the banking sector has played in the relationship approach.42–43 These
an important role. Banks aim to reduce costs, imply considerable effort and volume of
enhance efficiencies and guarantee customer resources,40,44 as a result of the required
retention with Internet banking.28–30 Financial
institutions obtain considerable cost reductions
O adaptation and personalisation of the
relationship in order to meet the needs of
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at the same time as they reach new customer the parties involved.41,45 The strengthening
segments,5,31–32 identify potential customers of the relationship arising from exchanges
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and cover a global geographic field of action is therefore fundamental.13 This second
that no other distribution medium allows dimension can also incorporate three
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affordably. There is no limit on advertising more latent dimensions: customer retention,

space; information access and retrieval are fast; customer loyalty and database marketing. Two
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the site can be visited by anyone at anyplace; further dimensions are considered highly
and the process is private and one-to-one.28 important: commitment to the relationship40–41
The self-service technologies and e-banking also and equity of the relationship.46 Over time, a
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allow users to customise the service in a degree of interdependence between customer

tailor-made fashion, which is often assessed and supplier will be developed, initially based
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by the customer as a ‘gratifying experience’.33 on mutual trust, communication, mutual

Rayport and Sviokla23 propose that the use of goals and commitment.40
new technologies is understood as a chain of Discussion has arisen on the strategic
virtual value used for the greater benefit of benefits of adopting the relationship approach
customers and banks. Despite these positive in the banking sector, centred round the
aspects, new technologies can also be negative customer and round high levels of quality in
for the customer and create problems related the service provided.47 Previous studies
to the reliability and security of transactions, indicate that a surprising number of financial
accessibility to the service and customer product managers consider price to be a
support.6,34 fundamental factor in obtaining competitive
advantage.48 Only in the case of more
RELATIONSHIP MARKETING IN complex products are the characteristics and
BANKING quality of the service provided (the added
The relationship approach concept was first value) considered more relevant.49–50 The
introduced by Berry 35 and refers to all bank must therefore develop a sustained

162 © 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
 The impact of the Internet upon bank marketing

competitive advantage that can only be built on the customer. Technology enables
on attributes that the customer himself values relationship marketing to bring about a
in a relationship48–52 like how convenient the resurgence of the human aspect in marketing
bank is for their lifestyle and its ability to concerns, with consumers’ individual
fulfil their needs and expectations.3,53 In this information being provided in real time,
process it is essential that the bank recognises especially if the channel of communication is
these attributes and it is therefore essential cyberspace. On the other hand, the use of
for the financial firm to know its customers technology increases the efficiency of the
well, building a strong, trusting relationship marketers’ creativity and intuition simply
with them21 – which is particularly important because more real information is provided,
in the banking sector because of the which is rapidly processed.65 Data on
complexity of many of its products54–55 – in transactions are held automatically in the
order to favour an honest and engaged customer database and this is overlaid with
cooperation between the institution and demographic, geodemographic and lifestyle
its customers,56–57 as well as customer data and a range of other data sources,
satisfaction.19 becoming a key knowledge tool for the

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Relationship banking allows greater organisation within a relationship marketing
proximity between customers and their strategy.66 The use of technology makes
bank, which can also involve other financial marketing more efficient, offering a better
companies associated with the bank.58 On response to the consumer’s expectations and
the other hand, banking services marketing,
particularly in the business segment, involves
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customer.67 At the same time, the consumer
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allocating time and resources to the management is brought closer and dialogue and the
of bank-customer relationships59–60 and reciprocal relationship between suppliers and
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understanding the process of interactive customers are improved. This is possible
communication between the seller and the when technology is used at the customer
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buyer, in which the buyer is seen as an interface to secure real-time interaction and
active member of the relationship.61 to make this information available for
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subsequent interactions.68 Moreover, a

RELATIONSHIP MARKETING, better-informed customer may be more
BANKING RELATIONSHIPS AND willing to reveal more personal information.
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THE INTERNET Consumers and firms are senders as well as

receivers and thus one-to-one
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Relationship marketing and the communication is inevitable and parties

internet become closer.6 Finally, the fact that
Some authors have argued that the Internet information on the consumer is obtained on
would be the effective tool for relationship a mass basis but communication is made on
marketing, constituting a revolution in the an individual basis,65 allows a company to
way relationships could be managed.23,32,62–63 present a series of tailor-made products.69–70
The Internet enables interaction between Information technologies allow customers to
buyer and seller, which facilitates co-creation be identified and information about their
of value and offers a unique opportunity to preferences to be recalled. This information
apply one-to-one marketing. In this way, the is then used to tailor the offering, thus
Internet can benefit the building of more adding value for the customer and helping to
loyal and longer-lasting relationships and the create satisfaction and loyalty. Coupled with
creation of a wider network of contacts.64 flexible delivery, costs of information recall
Sisodia and Wolfe65 argue that the use of and use are marginal and allow customisation
information technology leads to a focus to be profitable on a mass scale.71 As such, in

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175 163
 Proença et al

the particular case of financial services, the one-to-one marketing,76 associated with better
Internet can contribute favourably towards knowledge of customers’ needs,77 in the
establishing lasting relationships between provision of products tailored to individual
banks and their customers. The Internet may customers and in pro-active selling.78 Each
become a new forum for the customer to relationship becomes unique and each
communicate with his bank and to add value individual customer constitutes a true market
to the personalised, tailor-made service, segment.77,79 The second argument is related
enabling the customer to benefit from greater to the reduction in the differences of access
convenience and flexibility as well as from to information between customers and banks,
lower transaction costs.31 The customer which allows greater customer power and
assumes an active role in the search for trust in the development of the relationship.8
information by means of dialogue with the Nevertheless, the same arguments are at
institution. The need for consumers to the basis of an alternative view that considers
interact with their banks anytime, anywhere that the introduction of Internet tools has a
and in any way is met with Internet banking, harmful effect on customer-bank relationship.
which enables economies of time and costs. The improved customer access to information

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Thus, the Internet may facilitate the introduces greater vulnerability in the relationship
building and maintaining of relationships since the control of this relationship is
with customers and could form a strategy transferred to the customer,75 who now feels
marked by great interactivity in which the more confident and secure enough to risk
customer is given a relevant role.72 As such,
the introduction of online banking poses
O changing banks in search of better returns.
Another argument is also proposed: the
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considerable strategic and tactical challenges existence of close social relationships develops
for financial service managers, challenging a ‘psychological loyalty’, which is conveyed
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institutions to adapt to continuous technological in the decisions the customer makes.
change and to re-evaluate their relationship Burnham et al80 call it ‘relational switching
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marketing strategies. costs’, a type of switching cost that involves

psychological or emotional discomfort
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Banking relationships and the because of the breaking of bonds. The

internet assessment of the customer’s physical
This article now examines the impact of encounter with his bank (human contact) is
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Internet on banks’ activities, particularly in defined by social and personal forces,81–82

the relationships between banks and their which superimpose any econo-mically more
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customers. There are various schools of rational alternative (since they grant, namely,
thought on the type of influence that the greater comfort and/or savings of costs). The
Internet can have on the bank-customer lack of human contact may lead to loss of
relationship. A first line of thought defends trust,82–84 affecting loyalty and customer
a positive effect of the Internet on the retention.85–86
consolidation of relationships between banks Clearly, the use of technology in the
and their customers, due essentially to the context of customer relationship management
increase in the efficiency of communication in banking can be a double-edged sword.71,87
that enables a reciprocal flow of There is evidence that technologies such as
information.73–74 The new means of contact the Internet can help build relationships,
favours interactivity between the parties and but may also contribute to their erosion.
reduces possible asymmetries of information.8 In light of this, this article aims to
The first argument is related to the increase examine bank-customer relationships in a
in collaborative production between the technology-based context. The research was
customer and his or other bank75 and enables conducted in the Portuguese banking sector.

164 © 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
 The impact of the Internet upon bank marketing

THE PORTUGUESE BANKING along with Spain, Italy and Poland. Meanwhile,
SECTOR Internet access rose from 35 per cent in 2006
In Portuguese banking, deregulation and to 46 per cent (60 per cent in EU27) in
technological advances generated new 2008 and the use of broadband grew from
competitive pressures and turbulence. The 24 to 39 per cent (48 per cent in EU27)
new legislative environment lowered entry over the same period. The number of home
barriers, blurred business boundaries and banking users grew seven times between
created strong competition between 2000 and 2007 and the service is offered
institutions.88 Propelled by technological by all Portuguese banks either through an
change, one of the key challenges facing online bank or in addition to their high
Portuguese financial services was to review street banking networks.90 However, the
and re-establish their competitive strategies.89 impact of the Internet upon Portuguese bank
Namely, new entrants, new delivery marketing and relationship building remains
channels, new services and packages resulted largely under-researched.
in the automation of bank branches, in the
depersonalisation of relationships and in the METHODOLOGY AND RESULTS

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de-skilling of bank manager tasks. This study seeks to examine the impact
Although Portugal traditionally had a of the use of Internet banking on the
preference for face-to-face channels and relationship approach used in retail banking.
personal interaction, this is clearly changing.90 In short, we seek to discuss the correlations
For example, between 2000 and 2004, a
decrease from 85 to 76 per cent, related
O between Internet banking behaviour and
customer perceptions of their banking
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to the use of the personal channel was relationship. The dimensions of the concepts
verified.90 In a remote electronic service under study are presented in Figure 1. The
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setting/marketplace, consumers have modified study explores the way in which the various
their behaviour to accommodate it and dimensions of the use of Internet banking
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learned to use a combination of IT channels and the relationship approach affect each
to interact with their financial service other, seeking to understand, ultimately, the
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providers. According to the Government relationship between the two basic concepts.
Portuguese Agency for Information and The information was gathered by a
Communication Technology (UMIC),91 questionnaire addressed to a convenience
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Portugal has the highest ATM penetration sample of users of Internet banking aged
rate in EU27, with over 1500 ATMs per over 18 recruited from a database of
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million inhabitants, which is double the post-graduate students of the University

European average, and where 63 million of Porto. Table 1 shows the assignment of
operations are carried out on average per the measures used in the questionnaire for
month.92 After ATMs, the main channels are assessment of the various variables to each of
bank branches and the Internet. According the dimensions. The questionnaire included
to a study released in 2008 by the Statistical 36 questions and was distributed to 340
Office of the European Communities individuals by email during one week. A
(Eurostat),93 the proportion of Internet total of 153 questionnaires were collected
users who used Internet banking grew from and 114 validated. For data analysis, SPSS
38 per cent in 2006 to 44 per cent in 2007 17.0 (www.spss.com) and SYSTAT 13.0
in the EU27, with a highest percentage in (www.systat.com) were used.
Finland (84 per cent) and lowest in Bulgaria In contrast to the internet banking use
(5 per cent). As far as Portugal is concerned, dimensions, the banking relationship
Eurostat’s numbers show that 30 per cent of dimensions were measured with multiple
Internet users have used online banking, items. A factorial analysis was performed

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175 165
 Proença et al

INTERNET BANKING BANKING RELATIONSHIP

Frequency of use
Duration/ Continuity
Intensity and degree of use Adaptability
Diversity of use (place of access or Equity
type of product) Importance of the quality/commissions
Duration of use Commitment

Figure 1: The research framework.

(see Table 1). The KMO measure of The research aims to obtain an answer to
sampling adequacy (0.64) suggests a high the question How does the use of Internet by
degree of correlation between the variables bank customers’ relate to relational approaches
of the identified groups. Three types of developed by banks? by examining the
factorial analysis were applied: Principal relationship between the dimensions of
Components Analysis, Maximum Likelihood Internet banking and relationship marketing.
and ‘Principal Axis Factoring’. The first was To discuss the relationships between the two

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performed to determine the number of variables, ‘Use of Internet Banking’ and
characteristics in which the concept differs,94 ‘Relationship marketing approach in banking
while the rest allowed testing the adjustment sector’, a Canonical Correlation Analysis95–96
of information to the definition of the was used. A Redundancy Analysis was also

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hypotheses. For each of these methods, two developed with a view to identifying the
rotations were made (Varimax and Oblimin) functions that justified being interpreted. In
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and the analysis was performed twice, the this phase, canonical loadings and cross-loadings
first considering no constraint to the number were used as a method of interpreting the
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of factors and the second limiting the canonical function. In an attempt to explore
number of factors. The answers obtained in in full the relationships between the two
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the scales of assessments were treated concepts, a Multiple Regression Analysis was
individually, as autonomous variables. ‘The developed. The regressions were developed
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reliability of the variables to be integrated using stepwise procedures that enabled

into each dimension was tested and validated identification of the independent variables
by means of the analysis of the Alpha while they reduced the effects of
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coefficient (or Cronbach´s ). Of the seven multicollinearity.

dimensions resulting from the factorial The variables used in the Canonical
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analysis, three presented values for Correlations Analysis were obtained using a
Cronbach’s  under 0.6: ‘Commitment’, composition of the factorial scores of each of
‘Customer adaptability’ and ‘Duration/ the factors taken from SPSS, using the
Continuity of the relationship’. However, Regression Method that is substantiated in
only the first dimension was eliminated the sum, for each factor, of the result of the
(‘Commitment’), given that in the literature multiplication of each variable that is part of
it is considered redundant in as much as it is it, standardised (the respective average is
reflected in the other dimensions.13 The subtracted from the value observed and the
other dimensions are sustained by theory13 total divided by the respective standard
and, that is why they were kept in the deviation), by the respective factorial score.
model despite the values obtained, which The set of dimensions in the relationship
imply that some care was needed when approach concept were defined as dependent
interpreting the results. This analysis allowed variables and the set of dimensions that
identifying which dimensions would better constitute the use of Internet banking
define each variable. concept were defined as independent

166 © 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
 Table 1: Dimensions and variables measured in the questionnaire

Dimensions Measures

A: Dimensions selected for the relationship marketing approach in banking

Dimension 1: DURATION
Duration of the relationship Number of years that the customer has interacted with the bank
Continuity of the relationship Probability of the customer not working with his bank in the space of 2 years (−)
Customer loyalty: Has the customer tried to change bank during the last year? (−)
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Dimension 2: ADAPTABILITY U
Customer adaptability The customer makes every effort to maintain a good relationship with his bank
The customer is willing to adjust to bank requirements
Bank adaptability The bank makes every effort to meet its customer’s needs
The bank is always willing to resolve customer problems
The bank values its relationship with the customer
The bank invests as much in the relationship as the customer
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The bank devotes as much effort to the relationship as the customer

Dimension 3: EQUITY
Equity of the relationship
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The relationship is more beneficial for the bank
The relationship is more beneficial to the customer

Dimension 4: IMPORTANCE OF THE

QUALITY/COMMISSIONS
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Quality of the relationship Importance of the quality of the relationship with the bank
Importance of a personalised service
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Importance of a lasting relationship
The account manager has a special relationship with the customer
Importance of the commissions Importance of the quality of the service
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Sensitivity to the conditions of credit and interest rates
Importance of commissions

Dimension 5: COMMITMENT
Commitment The customer requests new services from the bank
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Automatic renewal of products and services when they expire
Customer seeks information on conditions in other banking institutions before renewing his services with the bank ( − )

B: Dimensions selected for the use of Internet banking

Dimension 1: FREQUENCY OF USE
Frequency of the use of IB Number of uses per month

Dimension 2: INTENSITY OF USE

Intensity of the use of IB Percentage of banking operations performed via IB

Dimension 3: DIVERSITY OF USE

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
Diversity of places of access Places of access to IB
Diversity of the use of IB Type of banking operations performed via IB
The impact of the Internet upon bank marketing

Dimension 4: DURATION OF USE

Duration of the use of IB Number of years as user

167
Note: The ( − ) sign indicates the statements where scales were semantically inverted.
 Proença et al

Table 2: Analysis of the canonical correlation

Function Canonical Canonical Statistic F Level of trust

correlation correlation squared

1 0.44 0.02 2.45 0.03

2 0.29 0.09 0.56 0.94
3 0.09 0.00 0.11 1.00
4 0.06 0.04 0.08 0.99
5 0.03 0.00 0.05 0.95

Statistics Value Statistics Level of trust

Multivariate test statistics

Wilk’s Lambda 0.87 2.45 0.03
Pillai’s trace 0.13 2.45 0.03
Hotelings 0.14 2.45 0.03
Roys 0.12 — —

variables, since the objective of the research func-tions are not worthy of interpretation.

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is to examine the impact of the use of This conclusion is sustained by the weak
Internet banking on banking relationships. variance of the set of variables included in
The results obtained are shown in Table 2. the dimensions of the relationship approach
The determination of the number of explained by each of the canonical functions

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functions followed three criteria sustained (see Table 3). Since these results would
by the literature13: contradict the conclusions of the two former
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criteria, it was decided to proceed with the
• Criterion 1: Level of the function’s analysis maintaining only function 1, which
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statistical significance; combined favourable results from criterion 1
• Criterion 2: Magnitude of the canonical and criterion 2. This implies that only one
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correlations; function can explain securely the relationship

• Criterion 3: Measure of the redundancy between the two variables of this research.
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of the percentage of the variance common To interpret the retained canonical

to the two sets of variables. function in a substantive way, three
methods were used: (1) Canonical weights
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The first criterion determines that, for a (or standardised coefficients – see Table 4),
degree of trust of 95 per cent, only function (2) Canonical loadings (or structural correlations –
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1 is retained. The performance of see Table 5) and (3) Canonical Cross-Loadings

multivariate tests on the five functions (see Table 6). It was concluded that the
simultaneously, particularly Wilks’ Lambda dimension of the variable ‘Use of Internet
(0.029), indicates that the canonical functions, Banking’ that contributed most to the
considered collectively, are statistically significant canonical function under analysis is ‘Intensity
at a 5 per cent level of significance. Although of use’ (0.48), followed by the ‘Diversity of
the second criterion confirms the first, operations’ (0.46) and by the ‘Duration of
the second function determines a frontier use’ (0.28). In all cases the correlation
that separates the values of the canonical established is positive. On the contrary, the
correl-ations from the subsequent functions, variables ‘Diversity of places of access’ (0.07)
so that retaining it would depend on and ‘Frequency of use’ ( − 0.02) make a
criterion 3, for which the Stewart-Love residual contribution, with the latter being
redundancy coefficient was used. The global negatively correlated with the function. As
value obtained for this indicator is rather for the function of the relationship approach,
low (0.05), indicating that the canonical this is explained, in essence, by the variable

168 © 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
 The impact of the Internet upon bank marketing

Table 3: Redundancy analysis

Function Canonical eigenvalue variables Canonical R 2 Canonical opposed variables
Proportion Accumulated Proportion Accumulated
proportion proportion

Standardised variance of the variables of the relational approach explained by the set of variables of the use of Internet banking
1 0.16 0.16 0.19 0.03 0.03
2 0.16 0.33 0.08 0.01 0.04
3 0.16 0.50 0.00 0.00 0.04
4 0.16 0.66 0.04 0.00 0.05
5 0.16 0.83 0.00 0.00 0.05

Standardised variance of the variables of the use of Internet banking explained by the set of variables of the relational approach
1 0.46 0.46 0.19 0.09 0.09
2 0.12 0.58 0.08 0.11 0.20
3 0.16 0.75 0.00 0.00 0.20
4 0.13 0.87 0.04 0.00 0.20
5 0.12 1.00 0.00 0.00 0.20

Table 4: Canonical weights

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with a bank for a long period of time places
Canonical coefficients standardised for independent greater emphasis on the relationship approach
variables meaning that he feels safe with that
Function 1 relationship and is determined to keep it that

O
Duration of use 0.28
way. The same logic can be used relative to
the customer’s willingness to adapt to the
Frequency of use
C
− 0.02
Diversity of places of access 0.07 bank. On the other hand, the data indicate
Diversity of operations 0.45
Intensity of use 0.48 that a customer who is more concerned with
R
the quality of his relationship considers the
Bank adaptability 0.08
relationship approach less important ( − 0.53).
O

Importance of quality of relationship − 0.53

Importance of commissions and rates 0.03 The same logic can be used for the equity of
Duration/continuity 0.58
the relationship ( − 0.23).
TH

Equity of the relationship − 0.22

Customer adaptability 0.56 Finally, it is important to analyse the
canonical cross-loadings (see Table 6). The
results show that the diversity of operations
U

‘Duration/continuity of the relationship’ performed via Internet banking and the

(0.59), ‘Customer adaptability’ (0.56) and intensity of their use are related to the
A

‘Importance of the quality of the relationship’ relationship approach (0.37), duration (0.31)
( − 0.53), the first two with positive and frequency of use (0.24). The variance
correlations and the latter negative. explained is less than 14 per cent. The results
Table 5 shows that the function of the use show that the correlation between the
of Internet banking is predominant and is dimensions of the relationship approach and
positively associated with the intensity of its its canonical variables are all rather low, with
use (0.84) and with the diversity of the variance explained under 7 per cent.
operations performed using it (0.84) and that Even so, the most expressive correlations are
there are no negative associations of the recorded between the duration/continuity of
independent variable with the function. the relationship and the linear combination
The relationship approach function is of the use of Internet banking (0.26), customer
broadly explained by the duration/continuity adaptability and the importance of the quality
of the relationship that the customer of the relationship, the latter being negative.
maintains with his bank (0.56), indicating The multiple regression analysis was aimed
that a customer that maintains a relationship at testing the relationship between the two

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175 169
 Proença et al

Table 5: Correlations between the dimensions of the use of Internet banking and the relational approach and its
respective linear combinations

Variables Use of internet banking

Function 1

Correlations between the dimensions of the use of internet banking and its canonical variables (Canonical Loadings)
Duration of use 0.70
Frequency of use 0.54
Diversity of places of access 0.36
Diversity of operations 0.84
Intensity of use 0.839

Variables Relational approach

Function 1
Correlations between the dimensions of the relational approach and its canonical variables (Canonical Loadings)
Bank adaptability 0.08
Importance of quality of relationship − 0.53
Importance of commissions and rates 0.03
Duration/continuity 0.59
Equity of the relationship − 0.23

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Customer adaptability 0.56

O
Table 6: Correlations between the dimensions of the use of internet banking and the relational approach and the
linear combination of the set of opposed variables C
Variables Relational approach
Function 1
R
Correlations between the dimensions of the use of internet banking and its canonical variables
Duration of use 0.31
O

Frequency of use 0.24

Diversity of places of access 0.16
Diversity of operations 0.37
TH

Intensity of use 0.37

Variables Use of internet banking

Function 1
U

Correlations between the dimensions of the relationship approach and its canonical variables
Bank adaptability 0.03
A

Importance of the quality of relationship − 0.23

Importance of commissions and rates 0.01
Duration/continuity 0.26
Equity of the relationship − 0.10
Customer adaptability 0.25

concepts (relationship approach and use of power of explanation (R2 < 0,13). Even so,
Internet banking). A stepwise procedure was the strongest correlation is between the
chosen so as to identify independent variables duration/continuity of the relationship
minimising the effects of multicollinearity. between the customer and his bank and the
Table 7 shows that, in accordance with diversity of places of access, concluding that
Cohen’s table,97 the correlations between the the greater the diversity of places from which
dimensions of the relationship approach and the customer accesses Internet banking, the
the dimensions of the use of Internet greater the probability that the customer has
banking all have, between them, a weak had a relationship with his bank for several

170 © 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175
 The impact of the Internet upon bank marketing

Table 7: Multiple regression analysis results

R2 F Variáveis B (a) (b)

Bank adaptability 0.007 0.150 Frequency of use 0.033

Diversity of places of access 0.029
Intensity of use 0.018
Importance of the quality 0.057 1.310 Frequency of use − 0.002
of the relationship
Diversity of places of access − 0.022
Importance of commissions 0.045 1.029 Diversity of operations 0.049
and rates
Duration/continuity 0.068 1.577 Frequency of use − 0.013
Diversity of places of access 0.016
Equity of the relationship 0.055 1.246 Diversity of places of access − 0.036
Diversity of operations − 0.020
Customer adaptability 0.066 1.515 Duration of use 0.040
Frequency of use 0.050
Diversity of places of access 0.007

years. From this analysis we can see that only customers who are more likely to maintain

PY
one dimension of the use of Internet banking a lasting and stable relationship with the
has a statistically significant impact on a supplier. The fact that there is a strong
unique dimension of the relationship association between the duration and
approach: ‘Intensity of use’ versus ‘Bank maintenance of the relationship and the

O
adaptability’. This means that the greater diversity of places of access provided may
the intensity of Internet banking use by mean that, by adapting to the customer’s
C
the customer, the greater the consumer characteristics and needs, the bank manages to
perceptions of quality. On the other hand, it stimulate his confidence in Internet banking.
R
seems clear that a customer that uses Internet In this way, the customer intensifies the use of
banking more intensely is more exposed to technology and a virtuous circle is developed.
O

bank activity and, as such, is a customer with On the contrary, the diversity of places of
growth potential, who is more likely to get access can also reflect a customer preference
TH

involved with greater dependency on the for convenience and accessibility, with the
institution. customer being motivated to develop and
The results show that the relationship maintain a relationship with the institution
U

marketing approach is related to the intensity that best guarantees these conditions. This fact
of use of Internet banking as well as to the determines the banks’ need to be more attentive
A

diversity of operations performed there. The to the customer if it wishes to keep him.
use of Internet banking is influenced by the
duration and maintenance of the relationship CONCLUSIONS, IMPLICATIONS
established between the customer and the AND FUTURE RESEARCH
bank. It is, however, important to mention The role technology plays in relationship
that the intensity of use is the only dimension marketing has been increasingly debated
of the use of Internet banking that has since the advent of the internet. The
relevant impact on some of the dimensions of financial services industry, one of the
the relationship marketing approach, and, even most information intensive industries, is
so, only on the bank’s adaptability. This particularly affected by these technological
means that the financial institution has greater developments, which are challenging the
concerns in adapting to customers that use structure of business and banking relational
Internet banking intensively, which may mean strategies. Given the academic debate about
that customers’ needs are better met and, virtualisation of relationships, the article
therefore, that there are more satisfied discusses the impact of the use of Internet in

© 2010 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 15, 2, 160–175 171
 Proença et al

banking relationships, where there is a lack research should include the perfecting of the
of empirical research. Considering the modelling used. This problem should be
potential of Internet to be a double-edged studied in the light of other perspectives,
sword in building (or weakening) relationships, namely that of the study of consumer
the article seeks to add further insight into behaviour so that the new model of analysis
the debate. As such, the correlations between could include external factors that influence
the dimensions that constitute the concepts the relationship between the use of Internet
under study were researched: the use of banking and the relationship approach,
Internet banking and the relationship namely attitudes concerning technology
marketing approach in banking sector. adoption and level of confidence in NICTs.
The research found three factors related In pursuing this objective, it would be
to the use of Internet banking which interesting to explore the relationship on an
strengthen the relationships between banks historical basis, through the analysis of
and their customers: the intensity of Internet changes recorded in relationships since
use, the diversity of access locations and the Internet banking was introduced through
diversity of Internet applications. a longitudinal comparative research.

PY
As customers interact with their banks By identifying the intensity of the use
through channels sustained by remote of Internet banking, the diversity of places
technologies, the implications resulting from of access and the diversity of operations
this type of interaction in the supplier- performed via Internet banking as factors of
customer relationship are increasingly
important. From the management point of
O the use of Internet banking that individually
intensify the relationship between the parties,
C
view, this evolution has immediate effects at the results of this study demonstrate how
the level of determining investment policies banks can have some control over the
R
in technology, but also has indirect effects on relationship, allowing, through the manipulation
the seller’s positioning: a focus on remote of these factors, the relationship to be intensified
O

relationships means a focus on specific or ‘altered’ in accordance with the institution’s

customer segments and an opportunity to interests.
TH

redesign structures, relegating the front-office

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