The impact of scale effects on the prevailing internet-based banking model in the US

Alexandre Momparler (), Francisco Climent and Jose Ballester

Service Business, 2012, vol. 6, issue 2, 177-195

Abstract: Internet-based banks use a technology-intensive production process that may benefit from scale effects as they grow larger. This article analyzes whether the predominant Internet-primary bank in the USA generates technology-based economies of scale in the period 2002–2010. There is evidence of both favorable and adverse technology-based scale effects. As the leading Internet-primary bank gets larger, the financial performance gap with traditional banks shrinks while some of its critical competitive advantages wear down. The results suggest that unless the prevailing Internet-primary bank preserves the distinctive advantages of the Internet-based business model as it improves financial performance, it might end up converging with its branching competitors. Copyright Springer-Verlag 2012

Keywords: IT; Banking; Financial services; Internet (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11628-011-0126-6

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