Innovating through the Web: 
 The Banking Industry Case

In recent years, the financial services industry has been witness to considerable consolidation (Berger & Udell, 2006; De Nicolò, Bartholomew, Zaman, & Zephirin, 2004; Figueira, Neills, & Schoenberg, 2007) and organizational progress in order to sustain two main objectives: efficiency and commercial effectiveness (Epsten, 2005; Sherman & Rupert, 2005). In order to sustain customer-oriented and efficiency strategies, banks have started to explore new ways of conducting their business, introducing areas of innovation in their services, practices, and structures to offer the most complete array of services possible (Quinn et al., 2000). On the other hand, new services and products drive retail banks to explore new ways of producing or delivering these novelties. This is true especially for Internet banking services that offer services to customers 24/7, and it becomes clear that adding new services, that is, trading online or bill payments, is easily and quickly geared towards improving commercial effectiveness. The following chapter aims at describing to what extent the Internet has developed new services and businesses, and what are the main figures of the phenomenon in Europe. Moreover, the Internet has introduced new coordination processes within each financial institution. Let us think about Intranet portal, content management tools, and business process management suites, which are now quite spread in banks due mainly to their technological ease-of-use. Thus, Internet is representing an innovation wave extremely relevant for the financial industry as a whole, and the effects on banks’ performance is emerging. What do we expect in the near future? In all probability, the usage of Web-based application will be bigger and bigger also in other contexts of the bank processes, even if some risks could occur when clear strategies and change management practices do not direct the innovation. INtrODUctION: INNOVAtION AND WEb bANKING The banking system is undergoing remarkable strategic and organizational change processes, which will consolidate and spread even in the future. Such changes are not to be considered as a contingent change in the design and development criteria of the business, but they point out an innovation character which extends far beyond those boundaries. The application fields of innovation criteria are numerous (e.g., technological, organizational, commercial) even though two main critical issues often hinder DOI: 10.4018/978-1-60566-024-0.ch012