Surprising, but true: Internet-based activity is not exclusive to the young generation of “digital natives.” A 2008 survey says that Generation X (those born between 1965 and 1976) use Internet banking significantly more than any other demographic, with two-thirds of Internet users in this age group banking online.
Generation X users have also expressed a preference for applications like Facebook, to share, connect and be part of a larger community.
There is some irony in this, as online banking as we know it today offers minimal interactivity. Unlike a branch, where the convenience of two-way interaction makes it easy to consume a variety of transactions, the one-way path of electronic banking has only succeeded in enabling the most routine tasks, such as checking a balance or transferring funds.
It is not difficult to add two and two. There is a clear opportunity for banks that can transform today’s passive internet banking offering into one that provides a broader and more interactive customer experience.
Therefore, it is imperative that banks transform their online offerings to match new customer expectations. In addition, Internet banking must travel to popular online customer hangouts, rather than waiting for customers to come.
There are clear indications that the shift to a “next generation” online banking environment is already underway. It is only a matter of time before these trends become the norm.
Leveraging Social Networks
Forward-thinking banks are leveraging existing social networks on external sites to increase their visibility among stakeholders. They are also implementing social software technology on their own sites to engage the same communities in two-way discussions. Thus, its Internet banking has taken on a more pervasive persona: customers interact with the bank, along with its products and services, even when they’re not actually transacting online.
In addition to increased visibility, banks can gain great customer insight from such informal and unstructured interactions. For example, a discussion about the uncertain financial future among a group of 18-25 year olds could be a signal for banks to offer long-term investment products to a segment that was previously not considered a target. Going one step further, a positive buzz around a newly launched service can create valuable word of mouth for the business.
Collaborating through Web 2.0
The collaborative aspect of Web 2.0 applications has enabled banks to bring customers into their fold more than ever. Traditional methods, such as focus group discussions or market research, have the disadvantages of high cost, limited scope, and potential for bias. The comment forms simply serve as an autopsy. In contrast, Web 2.0 has the ability to attract a large audience early on and continue to do so perpetually. Thus, an interested community of prospects and customers participate in the co-creation of products and services that can meet their expectations.
The pervasiveness of Web 2.0 enables the delivery of electronic banking services across multiple online locations and web-based devices such as Yahoo! Widgets, Windows Live or the iPhone. This means next generation online banking customers will enjoy greater access and convenience.
A New York-based analyst firm found that 15% of the 70 banks they tracked had adopted Web 2.0, with several of them doing so in the past 12 months.
Standard Chartered Bank employees connect with their colleagues through Facebook and use the platform to share knowledge, answer questions and engage in discussions about the company’s ongoing activities.
Bank of America, Wachovia Bank and Commonwealth Credit Union have built a presence within interactive media to raise awareness and maintain dialogue with interested communities. They have employed a variety of methods, ranging from creating YouTube communities to launching campaigns on Current TV, a channel where viewers determine the content.
Online Banking Personalization
Vanilla e-banking divides customers into very large and heterogeneous groups, usually corporate, retail or SME, with a type of Internet banking page for each. That is in clear contradiction to the way banking organizations would like to see their clientele. Banks are moving towards customer specificity, almost seeing each customer as a “segment of one”, through other channels, and online banking is poised to do the same. For example, a specific landing page for mortgage loan clients and another for private banking clients could well be a possibility in the future.
Interestingly, the National Bank of Kuwait had the foresight to do this several years ago: They allowed customers to determine which products they would view and access, and were rewarded with a dramatic increase in online transactions.
Yes Bank Money Monitor allows customers to choose their home page; for example, they can set “all transactions”, “net worth” or “portfolio” as their default view. Other features include the ability to categorize transactions based on customer convenience and custom report printing.
online empowerment
Internet banking has undoubtedly created a class of more informed and empowered customers. This is set to go to the next level once customers are allowed to proactively participate in many more transaction-related processes. The Internet has already made it possible for customers to compare loan product offerings, simulate financial scenarios, and design personalized retirement portfolios. In the future, they could consume related transactions, meaning that after comparing interest rates, they could originate a loan online, and once secured, they could start paying it back online as well.
portalization
The emergence of Web 2.0 technology, coupled with banks’ desire to make their online banking as personal as possible, is likely to result in a “portalization” of Internet banking. The idea that bank customers can create their own online spaces, filled with everything that is relevant to them, is not so far-fetched. Customers can customize their online banking page to reflect multiple account positions at different banks; they could include your credit card information, subscribe to your favorite financial news, consolidate your physical asset position, share your experiences with a group, and do more, all from one “place.”
Money Monitor allows customers to add multiple “accounts” (from a selection of 9,000) to their page. Accounts can be savings or loan accounts with major Indian banks, or those with utility providers, credit card companies, brokerage firms, and even frequent flyer programs. Users can customize their pages as described above.
As banks seek to develop their vision of Internet banking for the future, in parallel, they will also need to address the key issues of security and “due defence”. While it is every marketer’s dream to have clients serve as ambassadors, proper precautions must be taken to prevent the proliferation of malicious or spurious advertising. Therefore, before a person is allowed to participate in a networking forum, he must have built up a favorable track record with the bank. The individual must be a recognized customer of the bank, having used a minimum number of products over a reasonable period of time. Qualitative information about the person’s interaction with the bank’s support staff (for example, the frequency and type of calls made to their call center, the outcome of that interaction, etc.) can be invaluable in profiling the type of “right” client that can be recruited as a potential attorney.
Collaborative Web 2.0 applications may require opening bank websites to external technology and sharing information with third-party sites, raising the specter of infrastructure and data security. A strong mechanism of checks and balances should be built to ensure that third party sites are secure, properly certified and do not pose a threat to local bank sites. Similarly, before a third-party widget is allowed onto a site, it must have passed through a strict security check.
Due diligence should be exercised before allowing users to link to another site to protect against the possibility of inadvertent downloads of malicious software, which could, in the worst case, even result in phishing originating from the sites of the banks.
It is equally important for a bank to protect its customers against invasion of privacy, data theft or misuse. The concept of portalization contemplates the deployment of technology to bring information from the websites of other banks or financial service providers to the site of the originating bank. The originating bank must ensure that its customers’ personal or transaction-related information, which may be shared with other providers, is not susceptible to leakage or misuse.
Banks would do well to partner with an Internet banking solutions provider that not only has the expertise to translate their vision into a state-of-the-art e-banking user experience, but also the foresight to define the boundaries of security. With security concerns properly addressed, next-generation Internet banking is full of exciting possibilities. Banks that seize the opportunity may find that Internet banking can become a means of differentiating themselves from the competition, rather than merely a cost-cutting tool. Clearly, providing a more powerful and interactive online banking experience is the way forward.