Perhaps not the sexiest of offerings, online bill payment, online bank statements, customer surveys and account aggregation are doing for online banking growth what all the lofty forecasts and expectations of the dot-com era could not. It turns out that simply responding to customer needs and expectations is the key to greater loyalty and broader acceptance of the online channel.
"We really are seeing amazing adoption of online banking," says Sanjay Gupta, e-commerce executive, Bank of America (Charlotte, N.C., assets of $660 billion). "Customers are not only adapting to online banking in a big way, but they are also enjoying the convenience of online banking." Bank of America has had a 50 percent growth in online banking customers in the past year, Gupta reports, adding that the bank's Web site now has 60 million hits per month.
One of the biggest reasons customers go onto their bank's Web site is to view transactions, according to Gupta. "If you go shopping or make a purchase with an ATM card or debit card or you make an ATM withdrawal that morning, if you log onto your online banking, you can see that as a pending transaction," he says. "Customers are really informed to what their latest balance is."
KEEP 'EM COMING BACK
Another factor in the growth of online banking at Bank of America has been the availability of free online bill payment. This is an offering, along with online statements, that can keep customers coming back to their bankss Web sites, according to Keith Lokey, director of e-business, Aurum Technology (Plano, Texas), a technology solutions provider for financial institutions. Banks also are conducting surveys and are improving cross-selling techniques to keep customers interested in and informed about new financial products, Lokey reports.
"The reason why you see [an institution such as] Bank of America give bill pay away is that it's a great retention tool," he explains. "The reason is once somebody goes through the time and the effort to set it up, they just don't tend to migrate around. It's true some people are just doing transfers or looking at history and checks online. But you [entice them to] do bill pay and that really locks them in tightly."
Getting customers to visit the Web site on a regular basis may ultimately attract them to other products and services that the bank offers, Lokey adds. "When you look at both of those tools-account access and bill pay-the bottom line is that they are traffic generators. People come very regularly, maybe daily, to look at their balances, to see if a check has cleared or to pay a bill," he says. "And that is what gets them to the site so that you can cross-sell them other products and services."
Recognition of this opportunity has inspired some banks that may have been underwhelmed by e-banking's performance so far to undertake some much-needed updating of their existing Web sites, in order to offer appealing services to new online banking customers. For example, Michigan Heritage Bank (Farmington Hills, Mich.), with assets of about $146 million, has recently updated its Web site and now provides an online banking link to customers who want more convenient access to their accounts.
Michigan Heritage Bank customers can now access information about their loans, CDs and checking accounts. They can also download this information to personal financial software, such as Quicken or Microsoft Money, and automatically balance their checkbooks, says the bank's vice president, Gary Schlinkert.
Schlinkert acknowledges the bank was inspired to update its Web site after examining other financial institutions' online banking offerings, noting the Michigan Heritage site had been unchanged for more than five years. "It was a very static Web site," says Schlinkert. "It was what we brought in 1997, and basically what we still had now. We wanted something more attractive, like what other banks and other business Web sites have. We felt that we could look at what they did and modify theirs to work for us. We've come a long way in terms of graphics and how you can drive business through the Web site."
But the effort has gone far beyond mere graphics improvements. What began to be a source for information for current and potential Michigan Heritage customers has transformed into a channel for customers' transactions. Banks' customers will now be able to check account balances, monitor transactions, transfer funds between accounts and make loan payments.
BROADER CUSTOMER MIX
At the same time that banks are offering enhanced functionality on their Web sites they also are starting to attract a wider variety of customers, who are using the sites for different purposes. Lokey of Aurum Technology says the best way to draw attention from all banking customers is to single them out and offer products that best suit their needs.
"When you look at who is using Internet banking, the younger crowd is already adapted to transactional-oriented stuff like bill pay, and the older folks tend to bounce around looking for that financial planning advice," says Lokey. "So banks can really tap into the 'close-to-retirement' crowd by providing that content."
Because responsiveness means not just targeted products, but also flexibility in interactions, a growing number of banks are including the capability to deal with a live representative as part of their online offerings. Accordingly, a number of vendors are providing technology that help customers who want to buy products online, but still feel the need for assistance from a customer service representative. For example, Bank of America recently started using ProficientSales Server, from Atlanta-based Proficient Systems Inc., to aid customers in applying for loans online. Coming to the rescue, a Bank of America online account executive sends an online invitation to the customer with an offer of assistance. The applicant can choose whether or not they need help and can receive help through a secure chat and collaborative browser, where the bank representative can assist the customer with completing the application.
Use of this kind of system not only helps an institution such as Bank of America be more responsive to customer needs, notes Proficient's chairman and CEO, Gregg Freishtat, it also enables them to identify their "important" (e.g., most profitable or those who offer the potential for up-selling) customers and help those customers with specific needs. "They should be figuring out how to find the most important customers-not the customers that can make them the most money, but customers that may be in stress," he says.
Ultimately, to keep online banking on the upward growth track, financial institutions must find ways to constantly update their Web sites and keep up to date with technology. The strategy of "if you build it, they will come" doesn't always happen, says Aurum's Lokey. "You have to spur a little interest. The Web site has to have some kind of transaction capability or people just don't use it. If you offer bill pay or account access, people come more often to the site and generate traffic with those day-to-day-type activities."