Online Banking vs. Bricks & Mortar – or a hybrid model? A preliminary investigation of Australian and Indian banks

The banking services sector has been rapidly transformed worldwide as a result of the impact of competitive forces, technological innovation and deregulation. Media convergence, rapidly evolving mobile and wireless technologies and the rapid diffusion of the Internet have opened up strategic business opportunities in the financial sector. With deregulation removing barriers to entry, an increasing number of online banks are threatening the market share of ‘bricks and mortar’ banks. To survive this competition, and to leverage the new opportunities of online and mobile banking facilitated by the Internet, many traditional banks have adapted a hybrid, ‘clicks and mortar’ mode, expected to help banks increase their profitability while reducing transaction costs. In this paper, we consider the driving forces for banks in Australia and India to adopt such a ‘clicks and mortar’ model. A closer look at these two very diverse economies provides some interesting insights into the reasoning behind this decision.