Every year it’s a battle to win approval for your business plans. This process, though far from perfect, is a necessary evil to ensure that only the most promising plans are funded.

Online banking, which in the U.S. generates little direct revenue, often requires creative spreadsheeting to show a positive NPV. Following are some of the positives to incorporate into a winning business case.

•       Stay competitive: improving account retention and increasing sales

•       Improve sales by differentiating your products and services with online functionality

•       Increase cross sales, especially credit/loan products

•       Increase online banking and bill payment transaction fees

•       Create a new stream of monthly and/or annual service fees with a premium service option

•       Use marketing dollars more effectively through targeted online promotions

•       Reduce costs through self-service

•       Improve customer satisfaction, retention, and cross sales

If you are looking for the biggest bang for your buck, look to online lending and small- and micro-business initiatives. According to Celent’s study across 1.5 million Digital Insight users (in 2001), online lending generates four times the combined value (NPV) of banking/bill pay. Business services were even more valuable, resulting in returns of nearly six times that of banking/bill pay.

Everbank made a sizable investment in a new online banking platform, a highly customized mix of Metavante and Teknowledge software. Previously, the bank used the S1 online banking platform.

Table 1

NPV from various online banking products

Source: Celent, 10/01  For a better understanding, read Celent’s Customer Retention and Cost Savings Drive Online Banking ROI, Oct. 17, 2001
(1) NPV over 5 years at a 50,000-customer bank; includes direct revenues, cost savings, and retention. (2) Per-customer figures are across all customers, on- and off-line, consumer and small business.