Effective distribution is one of the key factors determining a bank's competitive ability. Effective distribution comprises, on the one hand, an appropriate model of service delivery and proper management the distribution channels on the other. The manner in which distribution is organised by banks tends to follow one of the three basic models:

• branch-based distribution model (bricks and mortar)
• multi-channel distribution model (bricks and clicks)
• exclusively electronic distribution (clicks only).

All the three models are under continual modification, in step with the ever evolving banking environment and customer preferences. As to the branch-based distribution model, two trends can be distinguished: Firstly, there is the quantitative change expressed in the shrinking number of branches (due to closures). Secondly, we perceive a qualitative change, involving a considerably modified function of the branches.

The introduction of electronic operations means adopting either the "bricks and clicks" or the "clicks only" model. In Europe, the most effective combinations of branch-based and electronic distribution have been created by Scandinavian banks such as Nordea or SEB or German banks with strong brands (Deutsche Bank, Midland Bank, HVB Group).

A new phenomenon in the electronic banking market is the advent of fully virtual banks which provide services exclusively over the Internet and do not have any traditional branches. The biggest enterprises of this kind include Egg, First-e and Cahoot.

Each of the distribution models listed above can contribute significantly to developing a bank's competitive advantage. At the same time, none of them guarantees market success. Success additionally requires an efficient management of the respective distribution channels and adjustment of their operation to the needs of a precisely defined market segment.