The Importance of Channel Structure and Environment Scanning

This week's lecture touched on the importance of Place/Distribution strategies for financial services organisations. The key lesson learnt is the extent of planning that is required prior to choosing a particular distribution channel. The discussion on the irony of banks opening at times not convenient for its customers lead to the invention of ATMs, internet and mobile banking. However, one wonders whether both internet and mobile banking are suitable for certain developing markets such as China.


In a country like China with high internet and mobile penetration, it is only natural for a financial services organisation wanting to establish an online presence. Nevertheless, the organisation must be aware of regulation and internet security in the host country, as well as the targeted segment's preferred method of service utilisation. China's online activity is well known for being heavily regulated, thus the organisation must be cautious when setting up an online presence (ie. ensure that it does not brush on things that may appear to be political). Moreover the Chinese actually prefers to transact in person instead of through internet or mobile banking, due to "the net in China being a notorious hackers’ playground". In addition, targeted segment(s) in the urban and rural areas differ in their service channel preference. Hence, in addition to utilising models such as the channel structure and buyer behaviour model, the financial services organisation should scan the environment for any potential opportunities or threats arising from the market condition.