The impact of scale effects on the prevailing internet-based banking model in the US
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2012
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Abstract
Internet-based banks use a technology-intensive production process that may benefit from scale effects as they grow larger. This paper analyzes whether the predominant Internet-primary bank in the USA generates technology-based economies of scale. 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.
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Momparler Pechuan, Alexandre Climent Diranzo, Francisco José Ballester Andreu, José María 2012 The impact of scale effects on the prevailing internet-based banking model in the US Service Business 6 2 177 195