Virtual Society?

the social science of electronic technologies


The virtual market place?: Implicationsfrom the financial services sector

Principal Researcher

Professor David Knights
Department of Management
University of Keele
Staffordshire ST5 5BG
+44 (0)1782 583603


Dr Faith Noble
University of Nottingham

Mr Theo Vurdubakis

Professor Hugh Willmott

Research Period
1 January 1998 to
31 December 1999
Aims and Objectives
Project Design


Over recent years, the trend toward remote trading in banking and insurance has intensified. If this continues, it may prove to be one of the more prevalent innovations driven by the use and development of new information technology. This research examines the development of remote channels of distribution in retail financial services.

The financial services are in many respects leading the way in experimenting with electronic distribution and associated forms of virtual organization, partly because economic deregulation has opened up the market for several new entrants from other industries. Many of the new entrants, for example the supermarkets and other retailers, have found competitive advantage because of their preparedness to experiment with forms of electronic distribution and/or virtual organization. They are able to compete because they identify and promise to solve many of the problems that have led to poor performance on customer service in the established organizations. As not a few critics have commented, however, the rhetoric of the virtual organization and remote trading may promise more than it can deliver.

Aims and Objectives

The project will serve both practical and social science objectives by investigating the causes and consequences of the development of electronic and/or virtual forms of distribution and organization in financial services. This includes the impact upon firms, the structure of the industry, inter-organizational networks, customers and employees. The aims and objectives of the project are to provide an understanding of the social factors influencing the adoption, transformation and impact of particular electronic technologies as distribution media in the context of the financial services industry.

Project Design

The aspects of distribution and types of channels to be investigated include:

  • ATMs and kiosks
  • smart cards/electronic purse
  • retailers, including supermarkets
  • telephone and PC/Internet banking and other financial services
  • interactive TV

At the organisational level, the research will focus on:

  • the rationale for companies entering into remote distribution

  • the technological and organisational aspects of setting up and operating remote channels

  • particular competencies required and how they can be developed

  • problems of integrating existing and new channels

  • possible links between virtual distribution and virtual organisation.


From the considerable ground work already done, it is evident that the 'virtualisation' of financial services distribution is a strategic issue for individual companies, and is likely to have major impacts on the industry as a whole. The success of the research will depend to no small extent on the co-operation of financial services organisations themselves, especially those which are at the leading edge of these developments.



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Contents current at 12th December 2000