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VIRTUAL BANKING.
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Definition, advantages, features, examples (Net.B@nk & Salem Five Bank), digital money, smart cards, future.... More...
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Paper Abstract:
Definition, advantages, features, examples (Net.B@nk & Salem Five Bank), digital money, smart cards, future.

Paper Introduction:
VIRTUAL BANKING: THE WAVE OF THE FUTURE? What Is A Virtual Bank? The purpose of this research is to develop an argument that “virtual banks” will replace the more traditional banks as the principal institutions providing a full range of financial services to consumers. The term “virtual,” when used in conjunction with such concepts as corporation or banking, means different things to different people and means different things depending upon the context of the use of the term. Generally, the virtual corporation is based on the concept of the virtual product or virtual service that is produced instantly in response to customer demand. Davidow and Malone (9) described the virtual corporation as an organization that will have a continually changing interface within the firm and externally i

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The multi-function, combined-technology card features a standard integrated circuit(IC) chip on one side of the card and more than one megabyte of read/writeoptical data storage on the other side-all within the standard credit cardsize. Should Internet banking prove tobe profitable for these traditional banks who are testing the waters, theexisting virtual banks will find that they will be required to continuetheir evolution to remain competitive. The major "smart card" technology is the Mondex card. htmSalem Five Bank. H. "Try E-Banking." Forbes 159 (13 January 1997): 68-69.Davidow, W., and Malone, M. When the term "virtual" is applied to the concept of banking, theconcept of the virtual corporation tends to assume an extended meaning.All of the above factors describing the virtual corporation apply, however,additional implications also are applicable. Is A Virtual Bank Really Different? The so-called smart cards-the fourth and fifth generation credit cards-may be the wave of the future. These two factors tend to drive virtual corporations (Dell72). Davidow and Malone (9) described the virtualcorporation as an organization that will have a continually changinginterface within the firm and externally in relation to suppliers andcustomers. A small wireless device Mondex callsa wallet can transfer money from one card to another, either from a shopperto a merchant or between individuals. "Banking on Convenience: The Plus Side of Workplace ATMs." HR Magazine (September 1998): 11-14. Among these factors, convenience stands outas a major motivator for people to adopt the virtual banking concept. The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st Century. "Banking Online!" 1-3. Touse a smart card, a consumer merely slides the card into a slot in a smallunit and the virtual cash moves from the card to the retailer's merchantcard in a chip-to-chip transfer. NationsBank now offers virtual banking services toall of its customers who have Internet access (Woodward 12). The interface between thebank and customers, as an example, ceases to be brick and mortar andbecomes instead a computer monitor, an e-link cellular telephone, or asmart card (Coates and Bonorris 5; Woodward 11). (Net.B@nk 2-5; Salem Five Bank 1-3). Each of these virtual banks touts the convenience ofinteracting with the bank for all sorts of financial services from a widevariety of settings that simply cannot be offered by traditional banks.Further, each of these virtual banks emphasize that "one-stop banking" ismore than a slogan with them-it is in fact a reality, if the term "reality"may be used in the same breath with the term "virtual bank." Net.B@nk andSalem Five Bank also contend that Internet banking is more economicallyefficient than is traditional banking. "Digital Money: Electronic Cash May Make Sense." Futurist 32 (August 1998): 4-9.Darlin, D. What Is A Virtual Bank? Within this context, corporations are saidto be "evolving from manufacturers to orchestrators that harmonize theirsuppliers' work" (Bonk, 1996, p. "Virtual Banking on the Cards for Old Mutual." (29 November 1998): 1. The chipscontain real money as a form of data-money that is created by one of thesechips and that cannot live beyond one of these chips. The virtualcharacter of the virtual corporation typically is supported by aninformation network that gathers data on markets, customer needs, thelatest product designs, and contemporary production methods, among otherthings (Davidow & Malone 12). Virtual Banking: The Wave of the Future? "Cashless Society Becomes Reality." Fortune 131 (12 June 1995), 24.Woodward, N. Customers withactual money in their bank accounts can get the digital money into theircards via the Internet or telephone. http://www.headcount.com/count/dat....icev%5B%5D=The+World&submit=Submi tNash, L. When placed in a tracker, a thin piece ofequipment carried in a wallet and not much bigger than the card itself, thecard becomes a computer. An increasing number of traditional banks are adopting elements of thevirtual banking concept. New York: Harper Business, 1992.Dell, M. Dr.Greenspan was referring to the long list of predictions about how specifictechnologies would change the world. T. Will Virtual Banking Be the Wave of the Future? A second device about the size of a hand-held calculatortransfers cash between cards (Darlin 69; "The End of Money" 57; Serwer 18-19). "The Virtual Job." Wilson Quarterly 18 (September 1994): 72-81.Net.B@nk. Balances can be called up and previous purchasesreviewed. By including the inexpensive read/write opticalmemory stripe, it is possible to add a number of functions demanded bymarket needs. "The Information Revolution and Its Impact on SME Strategy: The Asia Pacific Economic Cooperative Forum as Model." Journal of Small Business Management 34 (January 1996): 71-77.Coates, V., and Bonorris, S. These cards have computer chips thatcontain a vast array of information about the cardholder and her or hisfinances. For security, thetracker can also lock the card so that it cannot be used without entering aspecific code. So what's the big deal? http://www.btimes.co.za/98/1129/btmoney /money12.htmGesner, S. A perusal of the Web sites of these two virtual banks reveals thateach institution, for the most part, provides the same services that onealways has associated with a commercial bank, as well as such services asbrokerage and other investment services which have been re-authorizedthrough relatively recent federal legislation for commercial banks in theUnited States. A great number of factors indicate that virtual banking will becomedominant in consumer banking. Each of the Net.B@nk accounts requires an initialdeposit of $1 and the maintenance of a positive balance however small,while the SuperValue Checking account also imposes a $4.5 fee perstatement cycle. L. Even different currencies can be added. I don't believewe will be any better at this in the future" (Telecast on C-Span). com/splash1.htmSerwer, A. To back up these claims, bothNet.B@nk and Salem Five Bank offer interest earnings for depositors thatexceed the norm paid by more traditional commercial banks in thecontemporary period. "The World." (March 1999): 1-3. Works CitedBonk, E. "The Power of Virtual Integration: An Interview with Dell Computer's Michael Dell." Harvard Business Review 76 (March 1998): 72- 83."The End of Money." Industry Week 244 (3 July 1995): 57.Fild, L. Salem Five Bank offers a "Premium Money Market" accountpaying 4.25 percent interest and a certificate of deposit account paying5.75 percent, compared with national average rates of 2.9 percent and 3.5percent respectively (Net.B@nk 4; Salem Five Bank 2). Stephen Gesner, Vice-President ofInteractive Services at Toronto-Dominion Bank, speaking on the delivery offinancial services over the Internet, stated that: "The future is now"(Quoted in Solomon 4). And Now, A Brief Return to Earth Speaking before the International Conference on Banking in Chicago on6 May 1999, Federal Reserve Chairman Alan Greenspan stated that "history isstrewn with technology promotion that missed the mark ... 73). While many technologies have changedthe world, most have accomplished such change through ambush, while leavingmost of the pontificated changes crumbling in the dust. The big deal, according to both Net.B@nk and Salem Five is thecombination of convenience, economic efficiency, and at least one servicethat is not available from the typical brick and mortar bankinginstitution. Two widely publicized virtual banks are Net.B@nk and Salem Five Bank.Net.B@nk portrays itself as the "world's largest Internet bank" and as"your one stop financial source for all your banking and investment needs"(Net.B@nk 1). The Royal Bank of Canada and the Canadian Imperial Bank of Commercewere the first to bring the use of the cards to North America. Usingcomputer chip technology, the Mondex cards are actually microcomputers witha memory that allows them to store and retrieve information on purchasesand even store data such as frequent flyer miles awarded for the purchaseof airline tickets (Woods 24). Net.B@nk, as an example and as of 7 May 1999, ispaying three-percent interest on their "NetValue Checking" account and 3.93percent interest on their "SuperValue Checking" account, as compared withthe national average for interest-earning checking accounts in the UnitedStates of .94 percent. "The World Wide Web is the Future of Banking." Computing Canada 24 (15 June 1998): 4.International Communications. While these traditional banks maintain theirbrick and mortar approach to the delivery of financial services, they aresimultaneously actively seeking to serve customers who prefer theconvenience of virtual banking (Fild 1). "Internet Banking." 1-5. Within the context of geography, the virtual corporation is limitedonly by the "reach of a telecommunications satellite" (Nash, 1994, p. http://www.netbank.com.main. In theUnited States, Chase Manhattan and Citicorp among the traditionalcommercial banks, have initiated a small joint test of the Mondex card. Quoted in Solomon, H. The purpose of this research is to develop an argument that "virtualbanks" will replace the more traditional banks as the principalinstitutions providing a full range of financial services to consumers.The term "virtual," when used in conjunction with such concepts ascorporation or banking, means different things to different people andmeans different things depending upon the context of the use of the term. When a consumer transaction card system is planned for many yearsof operation, it should be designed to adapt to changing consumer needs andmarketing objectives. Salem Five Bank proclaims "Around the corner, around theworld, this may be the last bank you'll ever need!" (Salem Five Bank 1). Generally, the virtual corporation is based on the concept of thevirtual product or virtual service that is produced instantly in responseto customer demand. http://www.salemfive. The chip/optical smart card provides the data memory capacity,versatility, and upgradability that transaction-function IC chip cards havelacked. E. Each Mondex customer also gets asmall plastic reader that displays balances (a transaction log). Within the virtual corporation, traditional offices,departments, and operating divisions will be continually reforming to meetthe demands of a continually changing external environment. "The Competition Heats Up In Online Banking." Fortune 131 (26 June 1995): 18-19.Woods, W. Many kinds of digital money have been developed or proposed, includingicons (electronic tokens) stored on a computer's hard drive and transmittedover the Internet using a modem and special software, monetary value loadedonto "smart cards" with embedded microprocessors for recording transactionsand calculating changes in value, and "hybrid versions that allow digitalmoney to be uploaded from smart cards to a personal computer or downloadedfrom the computer to a smart card for greater portability" (Coates andBonorris 6). Theargument that virtual banking will succeed because a new generation with abackground in the use of computers is entering adulthood is much lesscompelling, as the current growth in virtual banking is being fueled by theover-the-hill gang because it is this gang that has most of the money.Virtual banking may well be on the verge of explosive growth, however, notbecause young persons are familiar with computer technology, but ratherbecause computer use is becoming ever more pervasive among people in thesegment of the population who already are classified as adults(International Communications 1). Mondex cards, which look like familiar ATM (automatic tellermachine) cards but carry sophisticated computer chips inside. 75).Two important advantages of the virtual corporation concept are focus andspecialization. Net.B@nk, Salem Five Bank, and other virtual banks also offer aproduct that is not available from the vast majority of traditional banks.This product is "digital money" (Coates and Bonorris 6).

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