The advancement of technology in banking and elsewhere is measured by the rate of diffusion. The rate of diffusion of an innovation depends on consumers' perceptions of the innovation with regard to five characteristics: relative advantage, compatibility, communicability, divisibility, and complexity (Rogers, 1983). A product which has a
relative advantage over existing or competing products, that is compatible with existing norms, values, and behaviours, that is communicable, and that is divisible (ie can be tried or tested on a limited basis) is thought to diffuse more quickly than others. A product which is complex, ie, difficult to understand or use, diffuses more slowly than others.
Considered as a group, services are probably less communicable, less divisible, more complex, and probably less compatible than goods. They are less communicable because they are intangible (eg their features cannot be displayed, illustrated, or compared), and because they are often unique to each buyer (as in a medical diagnosis or dental care). Services are less divisible because they are usually more difficult to sample. Services are frequently more complex than goods because they are composed of a bundle of different attributes, not all of which can be offered to every buyer on each purchase. Finally, services may be incompatible with existing values and behaviours.
According to Rogers ( 1962) when an innovation has been rejected after it has been adopted, it is called a 'discontinuance'. Supersedence discontinuance occurs when consumers cease using an idea in order to adopt a better idea which supersedes it. This has been found in many studies.
Disenchantment discontinuance is a decision to cease an idea as a result of growing dissatisfaction with its performance. A literature search found that no study had set out with the objective of measuring the existence, or non-existence, of this phenomenon.
1 . 5 THE NEW ZEALAND FlNANCIAL SECTOR
The New Zealand financial sector is an ideal location for a study of this nature because:
New Zealand is small and therefore it is possible to obtain the views of the industry as a whole.
There is a degree of co-operation between the main banks, making the sharing of technological investments feasible.
The self-reliant nature of the New Zealand population means that they are thought to be more receptive to new technology and, in particular,
self-service technology .
Deregulation has produced a competitive environment which stimulates technological innovation. As a result ... .
Many international bankers have suggested that New Zealand is at the "state of the art" in terms of self-service technology.
The New Zealand financial sector is considered by commentators to be in turmoil. Rapid deregulation of all parts of the finance, foreign exchange and capital markets, the addition of new banking institutions, major changes in technology and basic economic restructuring, have driven banks and other financial institutions into a re assessment of their roles and market positioning.
Despite deregulation, banking still tends to be dominated by the four main trading banks: Bank of New Zealand, the Australian owned Westpac and ANZ Banks (the latter having recently acquired PostBank) and National Bank of New Zealand, associated with Lloyds. Prior to deregulation, they were the only organisations which were entitled under legislation to operate a full retail, wholesale, commercial and corporate banking service, including the right to issue cheques.
At the next level are regional non-profit trustee savings banks. Each of the trading banks also runs a savings bank subsidiary. Beyond that, finance companies and merchant banks have operated mostly at the w�olesale level. In addition, there are several building societies, although their numbers are gradually reducing as some of them change to being registered banks.
As a result of this increased competition, the whole area of banking technology is coming to the fore. Electronic Funds Transfer at the Point of Sale (EFTPOS) is reasonably well established, despite an uncertain beginning. ATM networks have been well established by the trading banks. Two trading banks are providing Videotex terminals in offices and homes.
of Retail in New Zealand
Before looking at banking technology in general and service delivery in particular, it is first necessary to consider it in the wider context of the bank marketing mix. Changes in service delivery can have quite a profound impact on the marketing mix. For example the type of service delivery:
impacts upon cost structures and ultimately pricing strategies.
has obvious implications on distribution and the branch network (as in the instance of ATMs making human tellers, and in some cases bank branches, redundant).
may determine the bank's overall image in the market place.
determines the form and mix of products to be delivered and to whom. if technology frees up human tellers, human tellers may concentrate on the selling function.
Marketing is 'an integrated business activity directed at identifying, creating, and servicing demand' (Arndt, 1 967). There are several aspects of this definition which merit closer examination. First, marketing is an integrated business activity. All sections of a bank should practice marketing and marketing activities must be integrated throughout the entire planning process, and should permeate every facet of a bank's activities, from receiving deposits to corporate planning. Marketing focuses on the customer. This means that all banking activities (accounting, research and development, finance etc) are undertaken with the customer's wants and needs in mind.
The second aspect of the definition relates to identifying and creating a demand. The demand is in response to a need. Identifying the opportunity to satisfy a customer need is the first step in successfully marketing a product or service. Identifying a
potential demand presents the strategic marketing planner with the opportunity to develop and successfully market a need-satisfying product or service.
In so doing, he/she must understand the nature of the need. Once the need is understood the strategic marketing planner can then develop a mix of price, product, promotion and distribution that will create a demand-satisfying product or service offering.
A final aspect of the definition by Arndt ( 1 967) involves the servicing of the demand. This is an important aspect of marketing that many marketers of consumer goods have failed to grasp. Once the demand has been identified and a market developed, that market must be served. This service may mean different things to different markets. In this rather long-winded definition of marketing in banking, no distinction has been drawn between the retail side of banking and the wholesale side. Wholesale banking is exactly what the name implies - large corporations deposit and borrow money in large volumes and are thereby given special interest rates by the banks.
The personal sector of banking is the retail arm of banking, and the same pressures which impact upon other consumer product markets can be seen to be having an effect. Retail banking is thus concerned with marketing to the individual, and meeting his/her needs and wants.
The literature review in Chapter IV examines i� detail studies relating to the future of banking. However it is worthwhile at this stage to summarise the opinions of Vittas, Frazer and Metaxas - Vittas ( 1 988) , who have been well documented in futuristic literature on banking. Their views are summarised in the next few paragraphs:
What is clear from their comments is that the risks of bank marketing have been increased by service delivery technology. The cost of failure is high - giving large banks an advantage over smaller ones. The last few years have proven tha t established bank marketing organisations have enormous advantages over competitors attempting
to break into their markets. They have branch networks, systems, credibility, and the irreplaceable bond of trust with their customers that is an essential part of all banking. Apart from foreign banks, other challenges in New Zealand's bank market may come from domestic non-banks with the resources and patience to make a long
term commitment to entering the market. Ins urance companies, stockbrokers, major retail chains, oil companies, public utilities, and computer manufacturers and telecommunication� companies, all have skills which would give them certain advantages in the retail area of banking.
Banks in New Zealand tend to offer much the same products as each other. Differences, where they exist, tend to be mostly in the nature of image, service level, and philosophy. Some banks have already started to court the high-net- worth customer with higher levels of service. In contrast to self-service technology, some overseas banks offer these customers special branches. This development will reinforce a trend which is beginning to appear in New Zealand: As the barriers between different categories of institutions break down, greater differences are beginning to appear between institutions in the same category.
Although technology can be harnessed to give fresh life to apparently out-of-date procedures, it does· not necessarily provide by itself the driving force in banking developments. It is a mistake to assume tha t what is technologically feasible will necessarily be successfully implemented. One has only to look at the misplaced early enthusiasm for the concept of the cashless society to realise that considerations of cost and social acceptability are far more . important than mere technological feasibility. In the future, customers will still need to make payments to a spectrum of different payees, ranging from individual persons to companies and Government. To make a payment it is necessary to transfer wealth from the payer to the payee. The payment systems of the future are those which can achieve this transfer of wealth in the most efficient way. For simple transactions it will still be difficult to improve on the physical hand-to-hand transfer of portable wealth - payment by token money, such as notes and coins.
Almost all other transactions, however, could feasibly be electronic. just as the telephone is today unrivalled for its speed and convenience in sending voice messages, so electronic networks will in future be unrivalled for sending funds transfer messages. just as people can use telephones in their home or in public places, so in future people will have access to the electronic payment network a t home or through machines in public places and at their banks.