Reinforcing Fruitful Web Banking Behavior

In the wake of the initial feature-building frenzy, a number of the largest banks are developing divergent offerings. Some are overhauling bill pay functionality; others are focused on document imaging. Some are rolling out bill presentment, a service others won't touch until next year at the earliest. Several banks are abandoning account aggregation, while others are incorporating it into the account management interface. In the face of such conflicting currents, how are banks to best chart their course?

In our latest research report, Web Banking: Elevating Customer Usage and Business Results, Gomez responds to these challenges by analyzing the attitudes and behaviors of over 3,500 online users with a range of online banking and other online financial experiences.

We studied how to motivate customers to use Web banking more extensively and on a sustained basis, and stepped back and examined how Web banking can improve per-customer business metrics such as share of wallet and remote channel usage.

What did we discover? Not surprisingly, Web banking has become a mass-market phenomenon. Once a way to reward, and retain, active customers, it is increasingly picking up more mainstream customers, who are less likely to use bill pay functionality, or to use it as often. The impact of Web banking on achieving customer-oriented business objectives, such as number of accounts held, is therefore shifting.

Ideally, the online channel should encourage enrollment of desirable potential users, as well as online usage, decrease attrition and grow and retain banking relationships. Here are a few ways to make that happen.

Promoting Web Banking Enrollment
Customers who learn about Web banking through mailings are more likely to enroll than customers who learn about it through third-party sites. At the same time, a number of customers who go on to enroll simply guess the bank offers Web banking and then show up at the site looking for it. Meanwhile, those who try Web banking because they want to make transfers are more likely to keep using it.

Therefore, we encourage banks to promote enrollment with backsprays, statement stuffers and the bank's own Web site--not through online marketing campaigns. Moreover, marketing copy should highlight account transfer functionality.

Overcoming Resistance of Attractive Offline Bankers
Among desirable customers who have not tried Web banking, primary resistance points include privacy and security, but also a particularly acute sense that it is not useful. Meanwhile, these customers are especially interested in viewing accounts held at other financial institutions through their Web banking interface.

Thus, it is important to emphasize the security and privacy of Web banking with clear-cut statements that include guarantees. Banks should drive home the usefulness of Web banking to customers who make transfers between accounts, playing off the tendency of those who enroll to make transfers to stay with Web banking. Banks should also actively promote the inclusion of aggregation within the account management interface.

Overcoming Resistance to Core Functionality
Most Online Bankers have never used Web banking to pay bills, nor do many choose it for contacting customer service. In the case of bill pay, Online Bankers cite different issues than do Offline Bankers: few Online Bankers cite perceived unreliability. In the case of resolving customer service issues online, Online Bankers refrain from using Web banking because they question whether Web customer service is supported, reliable, timely or easy enough to use.

To encourage adoption, banks should consider making bill pay free. More importantly, they should work to make it more seamless with other core Web banking functionality. Banks can make customer care more relevant and usable by integrating customer care into the Web offering in a way that emphasizes setting expectations upfront and placing care options within the task flow.

What Online Bankers Want
Asking Online Bankers to prioritize nine features that have not gained industrywide adoption and one that has not gained large customer adoption (pay-anyone bill pay), we find document imaging is a runaway success. This builds on our finding last year that most Online Bankers would happily suppress paper to receive documents online.

Banks should speed rollout of both statement and check imaging. Though increased bill pay should be an objective given its role in improving customer behavior, banks will not achieve that objective via their current tactic -- rolling out and promoting presentment.

Web Banking's Impact on Customer Attractiveness
As it goes mainstream, Web banking contributes more to business improvements on a customer-by-customer basis. While Web banking might have helped banks hold onto early adopters, the incremental improvement it could make to banks' relationships with these already loyal, attractive customers was modest. More and more, Web banking is taking mediocre customers and making them better customers.

Banks should be aggressive in growing bill pay usage as a key driver to improved customer behavior. But even though newer enrollees are less interested in bill pay, banks should work hard to increase enrollment.

Chris Musto is the Vice President of Research at Gomez, Inc., an Internet quality research and advisory services firm in Waltham, MA. He can be reached at [email protected]. For more information about Gomez's latest research report, Web Banking: Elevating Customer Usage and Business Results, contact Scott Fay at [email protected].