The relationship between tradional bank and e-banking:

Morocco

Abstract

The rise of Information and Communication Technologies (ICT) impose banks

to broaden and develop a new channel distribution, such as the e-banking. This
paper reflects about the relationship which binds electronic banking to tradional
bank in the Moroccan bank sector. In reality, if ICTs leds banks to develop the
quality of their on-line services, the number of bank branches, which grows
continuously, make that the tradional banks always keep their importance in the
banking landscape, as a place of major customer attendance. We can affirm that
the tradional bank and e-banking are complementary. E-banking is a
distribution mode which is part multichannel strategy which is implemented by
the Moroccan banks to serve their customers.

Keywords:

- Traditional bank, e-banking, Morocco.

Introduction

The banking sector is the engine of any economy, including our own. It is an
industry with enormous impacts on the development of the country, via its
significant contribution to the financing of the economy, to the support of public
and sectoral policies carried out by the government or to the creation of jobs.

The technological revolution is heavily affecting this sector, which continues to

have its effects at all levels (financial, human, etc.). A new commercial era is
developing. It is based on the enormous potential of Information and
Communication Technologies (ICT), which is becoming the “nervous system of
organizations” (Nafzaoui, et al., 2018) and for which the Internet is the most
important tool. and the most publicized. As a result, banks invest heavily in
technologies, which are becoming essential means for the development of
banking activity, and even changing the nature of banking and financial
services. Various studies have shown at this level that the introduction of ICT is
accompanied by a modification of the value creation process, a reduction in the
constraint of spatial location, a transformation of relations with customers and
the establishment of various activities through automatic information transfers
(Roux & Soulié, 1997).

This being the case, the banking sector has seen itself completely redesigned and
is increasingly experiencing a multiplication and expansion of distribution
channels, the effects of which are considered indisputable. Indeed, if before, the
bank branch was the only means of distribution and customer contact; today a
range of tools is made available to customers who are faced with an expanded
distribution portfolio. The bank therefore finds itself obliged to retain all its
customers with all its categories (internet users and others). In this context,
electronic banking, as a facet of the multi-channel strategy, is gaining ground in
the Moroccan banking sector. This is a new mode of distribution in which banks
are already investing. These innovations let us think about certain questions,
among others: What are the contributions of e-banking to banking activity,
specifically and to economic activity in general? What strategies to adopt to
build customer loyalty? Does e-banking complement or replace traditional
banking?

This article, focusing on the Moroccan case, tends to provide answers regarding
the relationship between the two distribution channels, traditional banking and
e-banking: a relationship of complementarity or substitution? Let us stop in the
first point on the transition from traditional banquet to e-banking, through the
definition of key concepts as well as the context of evolution of e-banking. The
second point begins the relationship between the two distribution channels,
while returning to the multi-channel model undertaken by the banks and the
central place of the agency in the banking activity in Morocco.

1.Literature review: From traditional banking to e-banking

Before devoting ourselves to the study of the relationship between traditional

banking and e-banking on the basis of the Moroccan case, it is important to
dwell on the definition of the concepts of banking and e-banking, as well as
context of evolution of the latter.

1.1. Banking and e-banking: Definitions

We mean by bank, a financial company that collects deposits and grants credits
or loans and offers financial services. Indeed, according to article 11 of the 2006
banking law, banks are authorized to:

 To receive funds from the public on demand or for a term of two years or
less. The article specifies that they are the only ones entitled to do so;
 Distribute credits;
 Manage and make available to their customers, all means of payment.
  Carry out operations related to their activity (foreign exchange, securities
operations, advice, presentation of insurance operations, intermediation in
fund transfers,.), and;
 Take stakes in existing or new companies, subject to compliance with the
regulatory limits set by Bank Al Maghrib "(Berrada, 2007).

Credit institutions approved as banks are shown in the table below:

Table n°1: List of credit institutions and their agencies, until the end of March 2017.

Establishment Credit institution Number of

Code agencies
002 Arab Bank 5
003 CAIXA (Caja de harros y pensiones de Barcelona) 2
005 UMB (Moroccan Union of Banks) 6
007 AttijariWafa Banque (AWB) 1173
011 BMCE (Moroccan Bank of Foreign Trade) 736
013 BMCI (Moroccan Bank of Commerce and Industry) 380
021 Credit of Morocco (CM) 324
022 SGMB (Moroccan General Bank of Banks) 408
028 Citibank 2
040 CPM (Credit Populaire du Maroc) 1438
045 Bank Al Amal 1
048 Médiafinance 1
050 CFG (Casablanca Fiance Group) 6
052 FEC (Municipal Equipment Fund) 1
054 CDG Capital 1
070 Sabadel 1
225 CAM (Crédit Agricole du Maroc) 530
230 CIH (Real Estate and Hotel Credit) 261
350 Al Barid Bank 1021
TOTAL 19 6297
Source: Directorate of Banking Supervision, Bank Al-Maghrib.

The bank branch is considered a physical or traditional channel. By physical

channels, we mean all means of communication with customers using physical
infrastructure. The production and offer of services through this channel is made
possible by the interaction between the client and the staff in contact, either face
to face, as in the case of the agency, or remotely as in the case of phone, for
example. The previous development of ICT, accompanied by the growth of e-
commerce, which includes several business activities, such as online buying and
selling. These changes have resulted in the emergence of new distribution
methods, including e-banking. To fully understand this concept, we will come
back to the following two definitions:

- "E-banking is a service provided by several banks. It allows customers to

conduct banking transactions over the Internet, using a PC, mobile phones,
Minitel, etc. The customer will thus be able to:
o Have access to accounts, every day, even during the weekend;
o View balance sheets directly and know the position of checks, credit
cards, investment accounts in the money market;
o Transfer funds between accounts;
o Download information directly through statements, reports and also by
email or a toll-free number;
o Receive and pay invoices online (without checks, envelopes, stamps, ...)
o Have access to the database of banks; -Have stock market advice,
comparison of banking services, and;
o Visualize the scanned image of cashed checks "(Diniz, 1997).
- Electronic banking can also be defined as "any banking activity intended for
a customer or a prospect, taking place from an electronic service point
(telephone, microcomputer, DAB, GAB, television), and using a
telecommunications system, such as the telephone network, satellite
television, minitel or the Internet ”(Villates, 1997).

From these definitions, we retain that e-banking consists in using technologies

to provide online services to customers. This is a virtual or electronic channel.
The latter includes "all the means of communication using advanced
information and communication technologies, multimedia technologies" (Sec,
2008). The customer is thus faced with the use of the Internet and interactive
terminals. With these channels, he interacts with remote banking (internet) and /
or nearby (automatic terminals) without the intervention of the staff in contact.
The service rendered is then possible through an interaction between man and
machine.

The rise of e-banking leads us to wonder about the context of its evolution.

1.2. E-banking: Context of development

The world experienced, years ago, a shift from a traditional economy (material
flows characterized by the exchange of goods and services) to a so-called
intangible economy (characterized by the exchange of digital information and
knowledge) thanks to transformations ICT. The knowledge economy arises from
the awareness of the role of technologies in the growth of the economy. As
Foray writes: "Science and technology play an important role in the growth
economy" (Foray, 2000).

In this context, the advent of the information society is profoundly transforming

our economies. It is about a society, where the TIC constitutes determining
elements, characterized by “the emergence of space of flow and of timeless
time” (Sylla, 2009), as framework of the social practices of individuals and
communities. These digital technologies have made the access, processing,
storage and transmission of information increasingly easy and less expensive.
Consequently, broad prospects for the development of new financial products
and services are opened up. Morocco, like all countries, is no exception to this
reality. It is making considerable efforts to integrate itself into the digital
economy, based on largely on ICT. The use of technology continues to evolve
from year to year and society is becoming increasingly digital. Indeed, if we
stop at the computer equipment, we note that 60% of households were equipped
with computers / tablets in 2017, an increase of 6% compared to 2016; while
over the period 2010-2017 an increase of 72% (from 34% in 2010 to 58.4% in
2017) was recorded at this level. For internet access, seven (7) out of ten (10)
households, or 70.2% of households are equipped with internet access. Mobile
internet is the main means of internet access among Moroccan households
(66.5%) (www.anrt.ma/).

In terms of Internet users, Morocco is above the world average by nearly eight
(8) points (54% of the world population is connected). In addition, three (3) out
of ten (10) Internet users access the Internet at least once a week. Regarding
mobile telephony (of which 99.78% of households are equipped with this
technology), it is generalized for almost all households in both urban and rural
areas, with an average number of individuals equipped with mobile telephony.
in the household of 3.9.

Specifically, Moroccan banks, the subject of our study, embarked decades ago in
an irrevocable process of digitization and consider ICT as a strategic sector, for
many reasons:

 ICT is considered a competitive factor in the market, characterized by

strong interbank competition;
 The ICT are a factor of profitability, since they allow to reduce costs;
 ICT is a crucial means of developing and improving the services provided
to customers, who are becoming more and more demanding;
 ICT is a factor in improving the internal functioning of the bank (Berdi,
2018).

On the ICT equipment side (internet, groupware, Customer Relationship

Management (CRM), ...)), these banks massively use technologies and
experience a very high degree of automation of operations (Berdi, 2018). These
changes brought about by ICT, along with the resulting virutalisation process,
have facilitated the emergence of a new distribution method, namely e-banking.
It is important, in what is to come, to analyze the relationship between the latter
and the traditional bank in the Moroccan banking sector.

2. Traditional banking and e-banking: Complementary channels

The growing development of ICT requires banks to undertake innovation in

distribution channels. A multi-channel strategy (including e-banking) has thus
been put in place. However, the banking agency still defends its position as a
major hangout for customers.

2.1 The multi-channel model: An evolution of distribution channels

The transition from traditional banking to e-banking is part of the multi-channel

strategy implemented by banks, which is clearly an evolution in distribution
channels. Many years ago, banks had a close personal relationship with their
customers. The latter regularly visited the agency to carry out operations
(deposit checks, receive advice, etc.). Today, with the development of the
Internet and therefore e-banking, some of these customers are being pushed out
of branches. The bank-customer relationship changes accordingly and becomes
a virtual relationship. As a result, the bank has become a supplier of commodity
products: services are becoming “self-service” (Skinner, 2007). The challenge
that arises at this level is to keep pace, or even anticipate demand. consumers in
terms of access and services (Skinner, 2007).

In addition, via the Internet, banking transactions on the Internet are developing
and customers are in permanent and constant contact with their banks (mobile
banking allows banks to offer financial services (consultation of accounts,
transfer of money from on account, ...) to customers with mobile phones. The
latter can benefit from a significant reduction in the costs of services and new
services can emerge, without it being possible to find them at the level of the
traditional bank. These distribution channels have been developed to become
real intelligent IT supports that interact with customers and facilitate all types of
banking transactions. At this level, the Internet is seen as a vector of economic
and social innovation (Vieira & Pinède, 2005).

In response to these changes, banks remain obliged to meet the demands of this
new category of clientele. The objective is to add more elements of satisfaction
possible in order to retain a significant share of customers, who find their apathy
in the innovations acquired at the level of the banking system, especially when
the competition is fierce on the market. we are interested in the evaluation of the
contributions of the different types of physical and virtual channels, we
distinguish the following:

Table 2: Assessment of the different types of distribution channels

Virtual channels Physical channels

Advantages -Accessibility, autonomy, time saving, -Personalization, professional
ease of use, information capacity skills of staff, empathy and
courtesy.
Disadvantage - Concerns related to security, -Last time, accessibility problem,
s unavailability of operations, lack of lack of convenience.
qualitative information, lack of
customization.
Source: Collard.D, Lejeune.C, "Multi-channel: growth and profitability", Les
Echos, the art of management, April 2001.

Either way, the establishment of a multi-channel model aims to achieve a

number of objectives, including:

o creation of relational contact: this involves establishing permanent and

lasting relationships with customers;
o segmentation: each customer constitutes a segment and for which an
appropriate commercial offer must be implemented;
o reduced costs: banks distribute their products and services through
several channels, which makes it possible to obtain synergies and
 consequently to make investments profitable. Transactions are now
conducted at better efficiency and cost conditions.

To summarize, the multi-channel strategy undertaken by Moroccan banks

allows a certain complementarity between the different distribution methods
used for the offer of different services, although the bank agency still maintains
its place, as a central player in the sector. banking activity in Morocco.

2.2. The banking agency: Central player in the banking activity

The technological revolution, despite its multiple effects on the rise of virtual
channels, physical structures, such as branches, continue to evolve in time and
space. Indeed, if the TIC allow a flexible circulation of information at the level
of the banks, through the hierarchy and at all the levels (horizontal and vertical)
and the collaborative tools (workflow, groupware, ...) allow, in a wide measure,
a reduction in the passage through the hierarchy, these technologies do not lead
to a reduction in hierarchical levels (we are talking about a physical reduction in
hierarchical levels, such as agencies, the number of which is constantly
increasing). New positions, new cells or structures continue to be created (Berdi,
2018).

The table below provides information on the evolution of the number of

branches in the Moroccan banking sector:

Table n ° 3: Evolution of the number of bank branches in the Moroccan banking

sector

Year 2009 2017

Number of agencies 3583 6297
Source: Directorate of Statistical Supervision, Bank Al Maghrib.
We note that the number of agencies created is steadily increasing. It went from
3,583 in 2009 to 6,095 at the end of October 2015 to reach 6,297 branches in
March 2017. This situation is due to several factors, among others:

-The managerial factor: the creation of new structures, such as agencies can be
explained by the directive style of supervision oriented towards monitoring,
control, submission and respect for central power.

-The institutional factor: the weak communication of banks with their clients
about the advantages brought by the use of ICT pushes them to choose the
agency. The customer needs support, communication and training actions (by
exploiting the opportunities offered by social networks, such as Facebook and
Twitter, the price offer for Internet users who use online services the most, for
example, etc.).

-Sociological factor: Men are by nature communicating beings. The Moroccan

consumer considers a visit to an agency as an outing. He prefers to
communicate, take advice, contact the staff and seek information. Add to this
the place of money in the representation of the client, which has a certain
sacredness and which requires great vigilance and conservation.

-The continued employment policy, aimed at absorbing the additional demand

for labor to reduce unemployment, by creating new agencies.

-The significant weight of illiteracy, suggests that customers do not have the
technological skills necessary to use ICT and beyond, to benefit from online
services, offered by these new tools.

-The existing digital divide weighs heavily on the level of ICT use. Indeed, in
addition to the territorial divide (urban-rural, for example), the social divide in
the field of ICT use persists. Indeed, rural populations use technologies less than
urbanized populations. The wealthiest and well-educated social strata use them
better than the less educated categories whose standard of living is also low. In
addition, technical innovation creates new gaps: high speeds are always higher
in the centers. cities, new tools that are ever more powerful, but still as costly,
complex and ill-conceived for users with disabilities.

-Internet use and cultural practices can be interrelated. As Donnat shows: "The
use of the Internet can be the consequence of a prior interest in culture while
being the source of its strengthening" (Donnat, 2007). In fact, user profiles vary:
juveniles with intense practices, users of music games etc. A more mature public
with traditional and digital cultural practices, or even a population equipped, but
little engaged in digital culture and low user of the Internet, in terms of time and
diversity of uses.

-Sensitivity to the risks associated with technological innovation: the consumer

may remain reluctant to use technologies and therefore to online transactions
and, on the contrary, prefers to frequent his agency.

All in all, bank branches are growing considerably. This means that online and
traditional banking will go hand in hand. The introduction of e-banking was not
intended to replace physical banking. It is simply a new mode of distribution
that is part of the multi-channel strategy implemented by Moroccan banks to
satisfy their customers.

Conclusion

Entitled "the relationship between traditional banking and e-banking: an

attempt to analyze from the Moroccan case", this research, focusing on the
Moroccan banking sector, aimed to examine the relationship that unites two
distribution channels: traditional banking and e-banking.

Indeed, while it is true that ICTs have driven banks to a strong digitalization and
beyond to the development of new distribution channels, including e-banking;
the traditional bank still defends its position as a major place of frequentation by
customers. In addition, e-banking is part of the multi-channel strategy developed
by banks, which seek to best satisfy their internet customers, in their offering
services of appreciable quality. It follows then that, the two channels can only be
complementary, knowing that the establishment of a "bank without teller", or
purely online bank still remains far to be achieved in our country. However, the
challenge facing banks is to preserve the right mix for each customer segment
between a physical relationship and an automated relationship.

Regardless of the relationship between traditional banking and online banking,

one thing is certain: e-banking is the way of the future. Banks are called upon to
invest in this new project, because, as Balantzian asserts, “ICTs are the engine of
tomorrow's business” (Balantzian, 2002) and what distinguishes one banking
establishment from another is quality. and the efficiency that it is able to
promote through its supply system, by determining additional added value for
the customer (Bettaib, 2001).

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