The latest Watchfire GomezPro Internet Banker Scorecard reveals that banks are building out the online channel at a rapid rate, further differentiating their online presence according to their particular business goals, while at the same time addressing industry-wide security and regulatory trends. With this edition of the semi-annual Scorecard, Citibank repeats as overall winner, while M&I Bank climbs back into the list of top 30 banks that make up the Scorecard, placing 18th overall.
While there are definitely some enhancements every bank can agree on, the Scorecard also reveals that banks are going in different directions according to their own goals. Citibank provides a classic case in point. The bank, which focuses heavily on online new-to-bank checking account acquisition, has lowered the hurdles to opening a Citibank checking account online by not only offering instant approval, but by also allowing approved customers to use the account before Citibank receives the physical signature card. The paperless account opening has been tried before in isolated circumstances and so is not strictly new, but Citibank found that its particular goals, combined with developments in verification technology, funding technology and the regulatory environment, make offering this feature desirable.
For which other banks does this feature make sense? Many banks, even some of the largest, still greatly favor customers who open their first account in the branch rather than online, so near-term adoption of the account opening approach that Citibank has taken will be limited. By contrast, cross-selling online excites most Scorecard banks. Accordingly, most Scorecard banks make it easier for an existing customer to open an additional account online with time-saving touches, such as pre-filling customer information and allowing existing customers to use a new account before the bank has received the signature card.
Despite banks' tendency to go in different directions with their online offerings according to their individual goals, there has been a lot of shared concern in the industry over the effect of security issues such as spoofing and phishing on every bank's online channel. One result has been an increase in security-minded information and functionality online. For instance, with this latest edition of the Scorecard, most Scorecard banks now offer customers the ability to change their online banking username online.
But our analysis also revealed that security concerns are also blunting other initiatives. One casualty has been account-based e-mail alerting, which market research shows consumers would value and which more and more banks have implemented over time. Banks are reporting that some customers don't know whether to trust e-mails purporting to come from their bank. E-mail alerting is a win for banks and consumers alike, and banks must confront this issue with education and technology rather than abandon e-mail as a customer channel.
Among regulatory trends confronting the entire industry, Check 21 legislation -- and the related replacement in the enterprise of microfiche by digital check imaging -- has had a widespread impact on online banking. In particular, online check imaging has become pervasive and is the most visible example of the substantial work that banks are putting into their consumer online offerings. With National City, Key Bank and others launching online check imaging, just over three in every four Scorecard banks now offer this service, and those that don't offer it are planning to. Check images can be hard to read, and a number of banks exhibit best practices in online check delivery, enabling customers to magnify the image and displaying summary information next to the image. When banks offer online checking statements, the other key component of online document delivery, the Scorecard shows the trend is toward using PDF, due to the ability to reproduce the look of the printed statement and the ability to save and print the document.
Focusing on individual Scorecard results, there's a trend behind M&I Bank's impressive 18th place and its return to the Scorecard. Many banks have taken an approach to site design that involved a major reworking of the site every three years or so, followed by incremental improvements within the site architecture. The result is that the competitiveness of a given bank's online offering slowly falls off over several years before the bank then implements a host of design and functionality improvements and once again becomes an industry leader in serving consumers online.
M&I Bank is perfect example. Several years ago, M&I offered what was at the time a relatively strong offering given consumer needs and preferences. But other banks, one by one, passed it by as they re-engineered their sites to take advantage of old lessons learned and new technology to create more valuable online offerings for their consumer customers. Over the last year, however, M&I has learned from others' mistakes and from the evolution in what consumers want and what is possible to provide them. By rolling out check imaging and account-based e-mail alerts in an offering redesigned to better reflect what customers are trying to accomplish online, M&I has leapfrogged a number of banks.
The next Scorecard will likely find that another bank or two has overhauled its offering, taking advantage of all the lessons learned by other banks. In the meantime, banks are learning together how to combat security issues in order to encourage further adoption of their valuable online channel, even as they find they want different things from this channel.
Chris Musto is vice president of research for Watchfire GomezPro, in Waltham, Mass. He can be reached at [email protected].