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Lars Ostergaard

DBA Graduate - 2011

Thesis title

optimizing retail banking channels: developing and sustaining end-user channel concepts on the basis of competitive forces and customer requirements in Denmark,


Mohamed Bah
The thesis deals with the optimization of retail banks’ branch and Internet banking channels resulting from 1) the use of Porter’s competitive strategy model that is suitable for the outside in research approach adopted, 2) the potential for realizing improved efficiency and effectiveness, and 3) customers’ requirements and satisfaction with products and services. Six research questions are posed: 1) Is M. Porter’s competitive strategy appropriate for use among retail banks?, 2) Is it correct that large banks are more cost efficient than are small – medium-sized banks?, 3) Are mass market retail bank customers generally satisfied with the products and services received?, 4) Are there points of differentiation banks may use to remain competitive?, 5) Does gender, age, place of residence, or occupation imply different banking requirements and satisfaction levels?, and 6) Are there customer segments in the marketplace with requirements not fulfilled by traditional retail banks? Banks are encouraged to balance inside-out and outside-in strategic approaches. Banks shall optimize learning, innovation, and leadership capabilities as suggested by the resource based view to enhance customer experience and reduce inefficiency. Porter’s competitive strategy has been extensively used in previous research and therefore here as a starting point for the research. The findings indicate that the differentiation options suggested by Porter are only partly suitable to banks. There are non-sustainable differentiation options banks may focus on: lower prices, enhanced competences and interpersonal skills of the advisor, branch logistics, and Internet banking features. Large banks are not more cost efficient than are medium-sized banks. This is because scale and scope inefficiencies in banking are small and the inability of management to facilitate progress and execute on operational obligations explains almost all the combined 20% X inefficiency. The analysis results in four customer segments with different requirements particularly for channels. Customers are overall satisfied with products and services. There are significant differences between male and female customers’ requirements and satisfaction. The primary data collection was undertaken prior to the financial crisis. A post-crisis investigation is likely to modify importance and satisfaction levels and emphasize the significance of banks offering sufficient lending facilities.