Technology and Minimum Differentiation in the Delivery of Retail Banking Services

摘要

In the age of electronic commerce, technology has become vitally important to the provision of retail banking services. This study develops a linear location model where bank customers can identify a bank's relative emphasis of technology versus human resources in the delivery of retail banking services only by establishing a customer relationship. The value of a particular distribution mix to a bank is related to its ability to retain consumers who sample its services.When consumers are non-complacent, differentiation may occur given certain conditions on the number of firms, the duration of the market, and the discount rate. If the conditions for differentiation are met, the extent of differentiation is a non-monotonic function of the level of consumer complacency with respect to departures from the consumer's preferred distribution mix. The equilibrium configuration of distribution mixes may or may not reflect underlying consumer preferences.