The Effect of Internet Technology on the Retail Banking Sector Assignment

The Effect of Internet Technology on the Retail Banking Sector - Assignment Example Money too has moved from plastic cards to a form called "e-cash", "e-money" that is highly portable and tradable over the Internet with its attendant risks and advantages. Transaction costs-the hitherto hidden but significant costs of doing business in the past, have come crashing in the Internet Age. In this paper, we examine Williamson's Transaction Cost Economics (TCE) and use it to analyze the impact of Internet Technology on the retail banking sector. Built into Internet technology are features that accelerate information availability, make information "Always Available" to the consumer and almost always secure and private. In this essay, we define "Internet Technology" broadly and "Retail Banking" and its services. We then proceed to explore further in depth the developments in Internet Technology in the last 10 -15 years that have led to the development we call "Internet banking". We then focus our attention on the "retail banking" sector of Internet banking. We use transaction cost economics (TCE) to analyze the "effect" of Internet technology on the retail banking sector. In this analysis, we highlight the benefits, threats and challenges and take a futuristic tour of the direction of Internet banking in the next ten years and its sociological effect on a new meaning of transaction costs. In this section, we define the Internet, Internet technologies and retail banking and take a survey of developments in the past ten years in Internet technology as it relates to banking in general and retail banking transactions in particular. 2.1 Internet Technology The Internet is defined by Webopedia (2006) as "a global network connecting millions of computers" The University of California at Berkeley (UCBerkeley, 2006) provides this definition: "The Internet is a network of networks, linking computers