Banks Get Their Bearings Online

Written by Evan Schuman
September 28th, 2005

Several indications?from reduced ATM interest, increased use of online bill payments and sharply improved consumer bank perceptions?show that banks are starting to understand their customers.

Given that it’s a business where almost everything comes down to moving numbers from one column to another, one might think that online banking should have been one of the first e-Commerce segments to mature. From that perspective, it’s an Internet natural.

But the methodical, organized and structured world of banking didn’t adjust to the customer-focused world of the Web easily. Online banking was one of the first e-commerce segments to launch, but it lagged in site performance and intuitive layout design.

Keynote Systems suggests that some bankers may have finally tossed their green eyeshades in favor of a pair of Birkenstock sandals and ponytails.

Bank of America and Wachovia, in particular, showed strong gains, with Washington Mutual identified in the report as the “current industry leader in online service levels, a measure of overall site responsiveness and reliability.”

Bank of America’s improvements from prior Keynote studies was noteworthy and was mostly brought about through small site design changes, said Bonny Brown, Keynote’s director of research.

Many banks redesigned their sites and changed various headers and groupings as they better understood their customers’ expectations. With Bank of America, for example, they redid their Frequently Asked Questions area and replaced an area called “account services”?which could mean almost anything?with one that said “checking and savings.”

“That is how their customers are thinking about their services. It’s now written from a customer’s point of view,” Brown said. “Their first way was from the company’s point of view.”

Another key report conclusion is that customers are hungrier for related banking services and that they want to be sold to more than banks had assumed.

Part of that bank reluctance is based on an unwritten rule that people shouldn’t have ads and otherwise try to sell stuff on an intranet or an extranet because it’s silly to try and sell things to employees, suppliers or distribution partners.

The banks were treating secured log-on-only customer areas as though they were conduct-business-only areas. Not only was that leaving potential money on the table, Brown said, but it wasn’t even making the customers happy.

Among the verbatim comments bank customers told her team was “This bank knows so much about me that I wish they could tailor their offerings to me,” Brown said.

Brown cited Wachovia as an example of a bank that boosted sales by “putting a link to their credit card services in a much more prominent place than before. It was a fairly simple change.”

The reluctance to market new services?especially related services?was especially apparent once customers logged in and were able to execute various transactions.

“Banks had been forgetting that these are still prospects even in these authenticated spaces,” Brown said. “All of these banks are improving with that, but there is less of that sense in the authenticated space. You could just tell that marketing hadn’t been involved in the log-in site.”

Intuit is a company that has pushed related links in both its software and its site. An area within QuickBooks, for example, that discusses aging invoices has a direct link to its bill-collector services, which is presumably an appealing idea as a business owner is looking at a list of overdue bills.

Brown cited links to related services that?when clicked?would immediately launch those applications, as opposed to going to a page that explained the application. Many customers were expecting explanatory information while the bank assumed they wanted immediate access.

The Keynote survey also found a significant continuing decrease in how important people found ATM locations. In 2003, 55 percent said ATM locations were important, a figure that dropped to 52 percent last year and to 47 percent this year.

Those figures could lead to two contradictory conclusions. It might suggest that online banking is becoming so important that people care about ATMs less and therefore care less about how close they might be. But it also might suggest that ATMs are sufficiently saturated that customers have as many as they’d like and that they are less concerned because they are content.

The report showed overall increases in online banking activity (47 percent this year compared with 40 percent in 2003) with a decrease in the printing of monthly statements and cleared checks. Those hardcopy decreases might reflect consumers’ growing comfort with examining the documents on-screen only.

A related Keynote study reported that banking industry Web sites “as a whole performing poorly, lagging behind the performance of other financial services sites such as credit card and stock trading sites. On average, bank sites are unavailable to customers more than 15 hours per week because of technical issues.”

Banks analyzed by Keynote for the reports were: Bank of America; Bank One; Chase; Citibank, National City; PNC Bank; SunTrust; US Bank; Wachovia; Washington Mutual; and Wells Fargo.

An unrelated recent study by a research firm called The Customer Respect Group found a sharp increase?from 44 percent last year to 65 percent this year?in the number of banks that extensively share customer data with outside companies, including telemarketing firms.

At CitiBank, for example, a customer wanting to see a detailed privacy policy and ask that his/her name be excluded from the marketing agreement must download a PDF, print it out, sign in and then snail-mail it back, said Terry Golesworthy, president of the The Customer Respect Group.

“It’s just making it very hard to do. It’s excessive,” Golesworthy said. “The banks are collecting more information and making it more difficult to get off their lists.”

But Golesworthy’s research finds no evidence that consumers are objecting to the policy or even that they care about it very much.

“There doesn’t seem to be any backlash from consumers on this stuff. When people see a link to a privacy policy, they make the mistaken assumption that they are protected,” Golesworthy said. “Indeed, it generally means how very much they are unprotected.”


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