After an inspiring trip to FinovateEurope, being completely immersed in new technology such as voice/facial recognition, intuitive UIs, and hassle-free mobile payments, I was jolted back to reality when I came home and opened a letter from my bank.

The bad news arrived in a plain-looking envelope, always a bad sign. I was told that Chase Bank was reversing a $6,000 check we'd deposited a week earlier. 

I've seen some awful customer correspondence over the years, but this may be the topper. The bank would never send something this illegible to consumers (I hope), but I guess they think small business customers are savvy enough to understand the jargon and ignore the bad design and inconsiderate copywriting.

The bank is wrong. They can't just grab $6,000 from a small business owner and make no effort to apologize or explain what's going on.

Here's the backstory:

• We deposited a check over the counter at a Chase branch that was made out in US Dollars, but drawn on a foreign bank.
• It was accepted with no questions asked by the teller and credited to our account with next-day availability.
• A week letter, the bank changed its mind, removed the money from our account, and sent the letter shown below. 

I can understand putting a hold on the funds, but the utter lack of courtesy in communicating the issue is inexcusable. Ideally, the teller should have warned us about the hold period. But since that didn't happen, the bank should have sent me an immediate email apologizing for the delay and explaining the situation in simple vocabulary.  

Instead, I got an absolutely ugly letter (see below) that looks more like a Nigerian 419 scam than something a huge corporation would send.

Here are nine problems:

1. Mixed use of ALL CAPS and sentence case, bad spacing, and black & white logo, makes it hard to read, amateurish looking and potentially fraudulent.

2. "Convert Notification"
What does that mean? I've never heard the term before.

3. "Batch - 3040743 p. 1"
Huh?

4. Chase PO Box in Houston 
I deposited it in a Seattle branch, why am I getting a letter from 1,900 miles away?

5. "We are debiting your account"
Please no accounting jargon, just say that you took the money out.

6. "We are converting your 6000.00 item to collection"
What? You are sending a collector after me? What did I do? And why is it called an "item"? And where is the $ sign?

7. Reason: "Not eligible for immediate credit; new FX rate at PMT"
What? First off, stop with the abbreviations, FX and PMT. It won't cost anything more to spell out the words. And even knowing the jargon, this particular "item" was written in dollars (but did come from an international company), so it's a little hard to follow the logic here. 

8. "Industry standard for International Collections is 4-6 weeks"
What, I'm not getting the money for 4-6 weeks! Really? Why? Don't you think we are good for it if it were to bounce. And why didn't the person at the branch mention this in the first place?  

9. There nothing quite as user-friendly as a 16-digit alphanumeric confirmation number. It could at least have spaces or hyphens so I can read it. 

Bottom line: This is mostly an off-topic rant about one poorly written letter. However, had the message been delivered to me electronically, it could have included links back to the original check, links to FAQs covering international deposits, or even a direct form to ask questions.

------------------------------

Chase letter "explaining" a deposit reversal (27 Jan 2012)

Yesterday, I mentioned Capital One's self-service travel notification process. Another aspect of the service is a follow-up email before you head out of town (see below).

I like the email for a couple reasons:

• The well wishes make you feel good about the bank
• The message provides helpful contact info in case of trouble
• It's an an additional fraud check to ensure that it's really you traveling to Yakutsk next week

The bank even tells you to call collect. Nice.

Capital One could jazz up the message with more color and snappier copy (note 2), but it gets the job done.
-----------------------------

Capital One email to customers who've told them they are traveling internationally (31 Jan 2012)
Note: Sent the day before scheduled departure

Notes:
1. Picture credit: Greeting card at Zazzle.
2. I'm surprised Capital One doesn't use this opportunity to reinforce its travel rewards, mobile app, and zero FX fees. 
3. We've tackled remote banking customer service and messaging a number of times in previous issues of our Online Banking Report. The last one was Live Help earlier this year.

I've always disliked toll-free (telephone) customer service. You have to find the number, identify yourself repeatedly, choose from confusing categories, then wait on hold until you finally get the honor of pleading your sorry case to someone who has all the power. I usually end up feeling like an idiot or a third grader asking for a bathroom pass.

Before the Internet, call center service was a necessary evil. Going forward, let's get rid of it. Self-service, whether completely automated or "guided" by real humans, saves money, and done right, can be a more satisfying customer experience.

Back to my sample of one. When I have a question, I always look for the webform, email address, or even the live chat button; anything that keeps me from dialing 1-800-IMAFOOL.

But when you want to do something at your bank that's relatively complicated, such as investigate a suspicious charge, change your credit limit, etc., it can be difficult to figure out how to do that on your own. That's why I like Capital One's "Ask a question..." box in the middle-right of all its credit card management pages (see first screenshot).

Today, I wanted to tell the bank I might be using its card internationally. I was already logged in to pay my bill, so I simply typed "travel" in the right-hand box (see first screenshot) and a link to the correct online form was delivered in the "answers" section (see second screenshot). It worked just like I expected.

So kudos to Capital One for making it easy to navigate to the right page, and more importantly, handling the entire travel notification process online. Of course, I'd prefer the bank just tracked me automatically via GPS (note 2), but we'll get back to that another time.  

-----------------------

Capital One aids do-it-yourselfers with a prominent search box on every page (28 Jan 2012)

Search results for "travel"

Notes:
1. Western Electric ad from 1959 (from eBay)
2. At FinovateEurope next week, one of the presenting companies, Finsphere, offers just such a technology. Capital One, you should give them a call.

I get that multi-channel messaging is a mess. I understand that new regulation is creating huge backlogs in project queues. But 17 years into the Web-banking era, I should be able to service my bank account entirely online, if that is my choice. And more importantly, if I've signed on for alert services, there shouldn't be any surprises when I go to log in to my account. 

Yesterday, <largebank> failed me on both accounts (see note 1).

With Finovate Europe less than two weeks away, we are wiring large sums to London to pay for it. My bank got a bit concerned about all this outbound activity, which is good. I'm glad they are paying attention.

But how they went about notifying me about their concerns was simply outdated. Here's how it went down:

1. The bank called me from a toll-free number and left a voicemail asking me to call them back. Despite the fact that I get every alert under the sun, the bank did not send an email or text message. I don't know about you, but listening to voice messages from random 800 numbers is very low on my priority list. By mistake I did happen to hear it a couple hours after the fact. 
2. As soon as I listened to the message, I first went to my email to see if I'd also received a message from the bank to verify the authenticity of the phone call. Seeing nothing there, I attempted to log in to online banking to verify the call and assure myself that my account had not been drained. But guess what? The bank had disabled my account access and gave me a vague error message with instructions to call a toll-free number. The number matched the one on the voice mail so at least I could confirm it wasn't a vishing attack. There had been no mention in the voice mail of my account access being disabled.

Now, when you are 11 days out from an event and the cash in the bank is needed to pay for it, it's beyond disconcerting to be locked out of your account for no known reason.

Luckily, we were able to quickly assure the bank that yes, we really did need to wire that much money. So we are back up and running and our patient vendor simply had to wait one more day. (Update: I wrote this post yesterday. Today, the same thing happened again with another wire. While it wasn't a surprise this time, it's annoying.)

________________________________________________________________________________

A Better Process
________________________________________________________________________________

Let's repeat this scenario using an approach that preserves your customer's sanity while making it more convenient for those that favor digital channels:

1. Bank sees something odd so it freezes outgoing wire-transfer capability and sends me a text message, an email message, and also leaves a voice mail.
2. Instead of shutting down my account access, they let me into my account so I can verify that the balances are still there. And for extra credit, the suspicious activity is highlighted.
3. After confirming the transaction through an extra authentication step, the bank re-opens my outgoing wire capability.
4. For extra credit, let me simply authenticate the suspicious items by replying back to the messages (at least on smaller dollar items).

Now that I can breathe again, I can lay out three rules to guide your "suspicious activity" messaging:

1. Contact the customer via the channel of their choice (but also use others for backup in urgent situations).
2. Allow the customer to authenticate transactions without moving out of that channel.
3. Never completely disable online access (unless absolutely necessary). Yes, shut off transfer-out functions, but continue to allow "read only access." And post a red warning graphic within the account to draw attention to the suspicious activity. 

--------------------------

Notes:
1. I'm not identifying the bank because my "data point of one" may not be indicative of what other customers experience. But I will disclose the name "off the record" if you email me jim@netbanker.com.
2. For more on messaging, small business, security and much more, see our Online Banking Report (subscription required).

Last month, I reported that my "aha moment" at BAI's Retail Delivery was the realization of just how challenging it had become to manage customer messaging across multiple channels and products.

Consider this 9x12 matrix of 108 product/message options a bank could conceivably use to reach a couple about their banking and loans. The whiteboard in the marketing conference room just won't cut it any more as the master scheduling tool. 

If that wasn't complicated enough, unique regulations can govern each channel and/or product.  Some examples: new mortgage rules for a single source of contact; time-of-day preferences (don't text me while I'm asleep); and privacy issues (don't alert my spouse to card charges).

And this table gets bigger if you add mail, in-branch, ATM messages or more products such as small business accounts, savings/CDs, and accounts held jointly with other family members. You could also add inbound vs. outbound calls/messages.

But one person's mess is another's opportunity. Fintech companies are hard at work on  solutions that turn multi-channel snarls into opportunities to increase satisfaction and/or cut costs.

One key player is Seattle-based Varolii, which delivered my aha moment last month. In a followup last week, I had a chance to sit down with CEO David McCann and have a wide-ranging conversation about customer messaging in the age of the voice/email/text/notifications. I was impressed, both with the enormity of the challenge of coordinating customer messaging, and with the solutions it offers (note 1).

Then yesterday, I met with Amit Ashman, Marketing Director at Nice, who happened to be here on a whirlwind visit from their headquarters in Israel. His company, which booked $200 million in revenues last quarter, provides call-center technology for large U.S. financial institutions. They have developed a very cool call-center/mobile-app solution about to be unleashed on the world. It blends self-service with agent support in a relatively seamless fashion that I suspect will be the industry standard five years from now.

It's convinced me to write a report on Multi-Channel Customer Support for our Online Banking Report (note 2). We are also looking to recruit more companies in this area to 2012 Finovate events. So, please email suggestions for solutions providers and/or financial institutions who are tackling the problem.  

-------------------------------------

Notes:
1. Great tagline, "Better return on interactions"
2. The multi-channel report won't be published until early next year. However, we've tackled remote customer service and messaging a number of times in previous issues of our Online Banking Report. The last one was Live Help earlier this year.

It's been years since we did a deep dive into what I call "site search," trying to find answers using a banking site's own search and navigation tools. While things have gotten much better, most financial sites still have plenty of room for improvement (note 1).

And it doesn't seem like a monumental problem. Even a large bank has how many retail products? 50? 100? Even if five times that, it's TINY compared to other ecommerce sites. Amazon.com has 9,070 results just for "toaster."

Consumers should be able to quickly find appropriate banking products by inputting four or five data points: age, ZIP code, family size, home ownership, annual income (for credit products), and average balance (for deposit products). Then, a list of relevant products should be returned in tabular format with a clear link to more details.

To see how this works, stripped of all ads and cross sales, check out the side project of Seattle entrepreneur Adam Doppelt, PickHealthInsurance.com. Users enter four pieces of info: ZIP code, age, family size, and whether they smoke. A few seconds after pressing Find Plans!, the site returns a table of potential choices (second screenshot).

It's a very Google-like experience, something you can't say about most banking sites.

----------------------------------------

PickHealthInsurance input form (14 Sept. 2011)

Results page

Plan details page

Note:
1. Many financial institutions have sophisticated product comparisons, but it's not always easy to find the tool to begin with.

Several months ago (previous post), I wrote about Bank of America's online fraud-warning resolution center for consumer cards, MyFraudProtection. It's a great service, though a little hard to use.

At that time, I showed only the online functions. The more important piece is the email alert (below). It's a great way not only to reduce fraud, but also maintain good customer relations.

But it's still read-only. What I'm really waiting for is a truly two-way email, or better yet, text message. That way I can simply respond to the bank's question in a few seconds and both of us can get on with our business. 

Email alert from Bank of America: Irregular Credit Card Activity (11 Jan. 2011)

-------------------------------------

Note:
1. See our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.

(Rant alert: If you are tired of analyst/blogger whining over perceived personal service affronts, it would be best to hit delete now.)

I don't think there is an actual name for this, but I am car-dealer phobic. Seriously. On more than one occasion, I've driven all the way to the dealer. Parked my car. And then driven away as soon as I saw the sales guy (they have all been guys) ambling over. It's weird.

But I found eBay Motors about 10 years ago and have been overall very happy with the three vehicles I've bought there. So that would be the end of the story, if I wasn't married.

My otherwise wonderful wife greatly prefers vehicles with that new-car smell, not the ones that arrive needing an $1800 catalytic converter to pass the emissions test (my most recent eBay "deal"). And I can't really complain, because she's perfectly willing to drive the thing for a decade or more.  

Good online application UX
So she ordered a new car and put me in charge of paying for it (does that sound familiar to anyone?). Being an online-only shopper, I went to my favorite car loan specialist (note 1) and completed their online app. The app itself was flawless and took only a few minutes.

While I was disappointed that I wasn't approved in real-time, I received an email a few minutes later congratulating me on my loan approval. But there was a catch. In order to "to protect my privacy, (the bank) needed to verify some information." So would I please call. That was 2 weeks ago.

Terrible income verification UX
So I called the next day. What I found didn't totally surprise me. Despite being a customer of this financial institution (with an open credit line higher than the price of the car), and the fact that I've borrowed and paid back two car loans with them previously, and that I requested a 3-year loan which minimizes their collateral risk, and that I have good credit, the bank wanted to verify my income. And because I'm a business owner (not salaried), they needed 3 months of bank statements.

So I dug out the old statements, scanned them (note 2), and emailed them to the bank. There was no confirmation they were received, nor did the online loan-status indicator change (it simply said "approved"). I did that 12 days ago.

Then I waited for a week and heard nothing. So I called back and was told they hadn't looked at the docs yet, but that they would expedite them. That was six days ago.

The next day, I received an email from the bank asking me to call again. You know that's not good news. Here's how that call went:

• Bank: We cannot verify your income because it shows as "Internet transfers" on your bank statement.
  Me: But my business banking account is at the same bank as my personal one, so when I get paid, it's called a "transfer" because it is one.  
  Bank: Sorry, we only consider it income if the bank statement says "deposit."  
• Me: OK, I can understand that, how about I send you my 2010 tax return?
  Bank: Sorry, we don't accept tax returns for income verification.
• Me: OK, how about if I send you the last 3 months of my business bank statements, then you can see the transfers leaving that account and landing in my personal account. 
  Bank: Sorry, we can't accept biz-bank statements because we don't make commercial loans.
• Me: Can we move this application to an exception processing area for manager review?
  Bank: Sorry, we don't do that.
• Me: Is there any way you can think of that I could verify my income? 
  Bank: Do you have a spouse with W-2 income?
  Me: No
  Bank: Then unfortunately, I don't see any way that we can verify your income. Sorry.
• Me: Then what I hear you saying is that there is no way for me to get the loan you approved me for?
  Bank: Sorry, but that's the case.

With that we ended the conversation. Rather abruptly if I recall. (I will say, she was actually very nice throughout the whole call, so partial credit for that.)

After I'd cooled down a bit, I decided to call back and try my luck with another rep. Sure enough, after I explained the situation and offered to send the corresponding biz-bank statements to verify the transfers, he said, "That makes sense, let me check with my manager." Within a minute or two he came back on and said that my solution should work and to please send the business banking statements. Which I did, right away. And again no confirmation that they were received. That was 4 days ago.

After hearing nothing for two more days (this is supposedly being "expedited"), I called back and was told it was under review and there was nothing they could do to speed it up. That was 2 days ago. I haven't heard anything since.

The car dealer to the rescue
Because I had to pay for the car in full this week or forfeit the deposit, I gave up on my online bank and called the dealer. At their instruction, I completed their short online form, was approved by their indirect lender (thank you U.S. Bank!), and went in and signed the papers. Start-to-finish in just a few hours. There was no income verification. And I even got a better rate.

Lessons for Netbankers: Experiences like this is what gives online lending a bad name. This is the third time in a row I've had a really poor experience with an online loan app. I understand that my self-employment, even after 16 years, makes underwriting more difficult in these cautious times. But you need to have a process in place where denied applicants can request a quick review of their application, detailing the mitigating factors.

Simply leaving prospective customers hanging is not good business.   

----------------------------------------

Notes:
1. My policy is to not to disclose the name of the financial institution if it's about an issue or problem with my personal situation. But I will email you the name as long as you identify yourself and agree not to publicly post it (send to jim@netbanker.com).  
2. Unfortunately, I couldn't simply download estatements since my bank does not offer them, unless you give up your paper statement.
3. For more on online account opening, see Online Banking Report: Improving Online Account Opening ROI (published June 2009). 

Ally Bank made news this week as one of the few major banks offering consumer PC/scanner-based remote deposit (USAA and US Bank also offer it, note 1). But that new feature has not yet filtered out  to its website. While disappointed in not finding what I was searching for, I did notice something even better:   

The wait time for its call center, updated in real-time, right at the top of every page (see screenshot, below). 

The first few times I checked the site, it always said zero and I wondered if the bank left it permanently there to demonstrate its call-center prowess. But now the wait-time has moved out to six minutes (11 AM Pacific time on a Thursday...a couple days in front of the U.S. tax deadline).

But that's even more important for public acknowledgement. When wait times stretch to several minutes, customers can decide to call back later or spend a few minutes checking Facebook before a banker comes on the line. It also gives Ally's customer service department a big incentive to keep the queue at a reasonable level. It's a complete win-win.

The bank should also add a click-to-call feature so customers can skip the queue and simply request a call-back, a technique that can potentially cut support costs by shortening average call time (see note 3). Ally does offer live chat on its Contact Us page. However, it must be a lower staffing priority as I found intermittent availability on a Friday morning (8:30 AM Pacific) even though wait times for the call center were zero.

Bottom line: Ally's real-time availability is so much better than simply plopping a smiling face in the corner of your website and inviting calls. The estimated hold time demonstrates the bank's respect for its customers' time, something rare at large consumer brands in any industry. It's a great tangible benefit to the "ally" positioning.

Because it raises the "state of the art" in online support, we are awarding it our first OBR Best of the Web for 2011 (see note 2).  

Ally Bank homepage with real-time call center wait time monitor (14 April 2011)

--------------------------------------

Notes:
1. Post updated at 10 AM: Originally I said the new Ally service was "mobile" remote deposit, Ally let me know that it was PC-based online remote deposit (previous post on US Bank's service)
2. Since 1997, Online Banking Report has periodically given OBR Best of the Web awards to companies that pioneer new online or mobile banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important industry development. If anyone knows of other financial institutions offering a similar feature, let us know and we'll update the post. Ally is the 81st company to win the award since 1997 and the first in 2011. Recent winners are profiled in the Netbanker archives.
3. For more information on delivering "live help," see the most recent issue of Online Banking Report.

At Online Banking Report we've written a few reports about online customer service over the years (see note 1). However, we'd never looked in-depth at so-called "live help," (note 2) which includes:

• Live chat: predominantly audio, but can also be one or two-way video
• Click-to-call: a button used to request a call-back from an agent
• Co-browsing: sharing a screen between user and agent

Co-browsing is still a little too out there for most customers, so we focused primarily on live chat and click-to-call, both relatively widely adopted and proven money makers for online retailers.

Bottom line: After reviewing dozens of white papers, talking to a number of industry experts, looking at a hundred websites, and live chatting with service reps in the wee hours, I've come to a definitive conclusion on the value of live chat.

It depends. 

Clearly, live chat delivered perfectly can cut costs and lift revenues. But it can also confuse customers, drive up support costs, and get in the way of moving from point A to point B on a website.

But as generation text moves into their prime banking years, banks will be chatting more and more with customers, both online and via mobile messaging. So eventually, most financial institutions will need to offer some variation of Live Help to remain competitive (note 3).

______________________________________________________________

About the report
______________________________________________________________

Delivering "Live Help" Online (link)
Live chat and click-to-call promise to increase sales, make customers happy, and save money; what's not to like?

     Published: April 5, 2011

     Authors: Jim Bruene, editor & founder, Online Banking Report 
                    with Philip Britt, founder, S&P Enterprises

     Length: 60 pages (12,000 words), 14 Tables

     Cost: No extra charge for OBR subscribers, $495 for everyone else here

-----------------------------------------------------

Notes:
1. The most recent Online Banking Report on email customer service is here (2004)
2. Our inspiration for the latest issue was Jeffry Pilcher's post in The Financial Brand (Jan. 2011).
3. However, the first order of business remains turning email into the valued support tool it needs to be. See Email Banking: Revitalizing the Channel (Aug. 2010)

Over the years I've published more than a million words and this is the first time I can remember using the term "vision statement," and in a headline no less. I've spent enough time in large companies to know that when you hear "vision statement" it's time to run for the exits. Usually, even the employees don't buy it, let alone the customers it's supposed to impress.

However, BankSimple's vision statement is not only believable, but also sets a great tone for the startup's upcoming launch. It's also cleverly positioned on the homepage to "jump up" above the fold as you scroll down.

Why does it work? Everyone knows that BankSimple, with its Twitter DNA and $3 million in venture funding, will have good tech. So the startup focuses on people and service in its vision statement to make it clear that it's not some aloof, high-tech company where it takes a search warrant to find the customer support number, but an actual human-powered organization (see details below). Nice touch (note 1). 

____________________________________________________________________________

Breaking "the vision" down point by point
____________________________________________________________________________

It's no surprise that the non-bank bank is tackling the fee issue. It's in the news and it's always high on the list of customer dissatisfaction. But notice they are not using the word "free" or saying "no fees." They are just saying they will be transparent with pricing and will not surprise with penalty fees when you can least afford them.

Everyone talks about service, so this isn't particularly novel. But the use of "prioritize" and "real" will resonate with the segment they are targeting. 

 Grabbing the mobile positioning is brilliant. That's absolutely where the market is headed, so you might as well make it a key differentiator. And while no one knows what "true mobile banking" means, it sounds good.

I'm not sure this adds a whole lot to the vision. In the text by this point, the bank talks about "plain, simple language." Sounds OK, but not as compelling as the other points. I'd have nixed it and kept it to a tidy four-point vision instead. 

The tagline for this point is, "You're a real person, not an account number."

Bingo. Here's a pure-play online bank run by uber-techies, but they are saying they are really all about the people. High tech. High touch. Love it!

-----------------------------------------------------------

Note: Yes, I'm aware that BankSimple abbreviates to BS. And no, I'm not its biggest fanboy. See this self-proclaimed "love letter to Bank Simple."

From time to time (2x per year?), Google drops an interstitial after login to verify that it has the correct email address and mobile phone number on file.

While financial institutions are far more likely to have current contact info on their online banking customers, it's still advisable to check in annually to verify contact info, especially with the growing importance of mobile.

And while you are at it, ask customers for alternate email address(es) and phone number(s).

Google interstitial page displayed after logging in to Gmail (7 March 2011)

I honestly don't think branches will be extinct anytime soon. Yes, I think they will drastically shrink in size/staff as transactional activity is eliminated. But they are part of the American landscape, provide a convenient place to open accounts, and reinforce your brand.

Or do they?

I spent 34 minutes in a branch today and came away with a number of brand impressions, none of them good. Here's the blow-by-blow account (skip to the Bottom Line section if you, too, have recently sent a wire from a bank branch). 

Yesterday, I went to a small branch of a major bank to send a $20,000 international wire, something I've done only once before. I missed the "12 or 12:30" cutoff time and was told I'd need to come back tomorrow (note 1). They were nice about it, but it was 15 to 20 minutes wasted, although I did grab a tasty Americano across the street, so it wasn't all bad.

Today, I was near a much larger branch, so I decided to give it a try, hoping that the process would go faster with more staff available. It was mid-morning on a Friday (note 2) with only two or three customers in the branch and at least six employees, so I thought I'd made a good decision. Unfortunately, the only person available that could process an international wire was the busy branch manager (note 3), and I was directed to a seat on the couch where I waited for 12 minutes watching the six employees handle a trickle of customers.

No one approached me during this time to offer an update on the wait. Finally, the harried branch manager stepped over and apologized for being "slammed" (even though the branch was nearly deserted) and went on to explain his staffing woes that would soon be over since there were "three job offers out at that moment." 

At that point, I had to turn over my driver's license, tell him my Social Security Number, and then wait another 22 minutes as he hammered away on the computer to complete the wire. At least once I'm pretty sure he was typing an email to someone, and he also made a quick phone call about another matter. Along the way, he asked me for the symbol for British pounds. Since I didn't know, he proceeded to the back room (where more employees were hidden, note 4), and since they didn't know, he said he would Google it. And he did. 

Next, he handed me all the info on the transfer so I could proof his work. And, like the last time I sent an in-branch wire, an error popped out. The form stated payment was for a boat, which, besides being incorrect, was especially interesting since the money was headed to London. He blamed the autofill on the computer (why would autofill be enabled on wire transfer forms?).

I said I wished this could be done online, and he said it had to be done in branch to reduce fraud and money-laundering. While that may have been an okay answer, he then contradicted himself and said if I did more than two wires per month, I should consider the bank's $100/mo commercial service. So much for the fraud problem, I guess.

Finally, he walked across the room to call in the wire (why didn't he use the phone on his desk?). He completed the process by scratching in pencil on the back of his business card my confirmation number and U.S. dollar equivalent of the transfer (see inset). Apparently, the branch's wire system doesn't provide an automated receipt.

Bottom line: Branch proponents say that consumers value the "personal touch" and hand-holding that branches provide on major transactions. And that those warm feelings create trust and positive brand associations. 

So what were my takeaway "brand impressions" after my experience today? (And I'm not saying these things are necessarily true, but they are my very real perceptions). 

• They do not value my time: First, I had to make a second trip since I'd missed the cutoff. Then on the second trip, it took 34 minutes to complete the process.    
• The bank is inefficient: The branch manager had to spend 22 minutes with me to generate $50 in fees. And I was in a huge, 10,000 square-foot structure with a large parking lot and 30-foot ceilings, that was serving a trickle of customers with a bevy of staffers. 
• The staff is poorly trained and/or lack tech support: The branch is "slammed" with 3 customers across 6 employees! The branch manager has to use Google to fill out the wire transfer form.
• The systems are cobbled together: Employees have to find currency abbreviations on their own. The wire had to be "called" in by the branch manager.  My "receipt" was handwritten on a business card. 
• They made me feel less than secure: I had to tell him my Social Security Number out loud, which is always unnerving when you don't really know who's listening. And they left me scratching my head about wire fraud.
• It must be a crappy place to work: They were down 3 employees, despite a 9+% unemployment rate.  

On the plus side: The staff was very friendly, cookies were on the counter, and I got a blog post out of it. That helps. A lot.

--------------------------------------------

Notes:
1. I'm not sure why they couldn't take my info today and send the wire tomorrow, something they had done before on a domestic wire. 
2. He did mention something about an "operational audit" going on, so this might not be the normal experience. Although the last time I sent a wire at another branch, it took even longer because that manager "was learning the new system." 
3. The astute reader will notice that today is Wednesday, not Friday. I wrote this a few weeks ago on a Friday afternoon and held it until today. Frankly, I wasn't sure whether to publish another "analyst whines about customer service" post. I promise it's my last one of the year.
4. I'm not naming the bank, because this is a story about two visits to two branches which may or may not reflect what goes on in other parts of the bank. But I will name the bank via private email if you promise not to publish it. Just drop me a line.
5. Graphic upper right: Kinesis

Like American Express, Arvest Bank is one of the dozen or so U.S. financial institutions with multiple apps in the Apple iTunes App Store (note 1). The bank has one app for account access and another which can be used only to find its branches and ATMs (app link).

However, the non-transactional app, which debuted last November, is undergoing a major facelift, with version 2.0 due in the store shortly. The bank offered a sneak peek on its blog this week (see inset).

The update contains four new functions:

• Calculators: The app now includes access to a suite of 40 financial calculators (e.g., loan payment calculator) saving customers the time and hassle of searching for similar tools within the App Store.
• Customer Connect will use the user's GPS location to provide location-sensitive customer service contacts, a great way for a financial institution to demonstrate their commitment to local service. 
• Current Rates are easily accessible from a single button on the main page.
• Arvest News houses its blog feed.

Bottom line: While these functions have been common on websites for a decade, as far as I know, this is the first app from a bank or credit union that includes all these features. Nice work.

Note:
1. In a search at AppFinder.com, there are currently 583 iPhone apps in the finance category with "bank" in their name or description. Another 483 contain "credit union" for a total of 1,066 banking apps. Not all of these are from financial institutions, but an estimated 70% to 80% FI apps.

If you've ever worked at a financial institution, you've no doubt heard the often-true horror stories from the loan department. You know the ones, where senator so-and-so's spouse or the CEO's brother were turned down for a car loan (see note 1).

The problem with automated loan systems is that there is no human doing a reality check on denied applications. Was it really a deadbeat applying or did someone just make a mistake on the application form? You can bet if a senator's spouse had applied for the loan in person the loan officer would have picked up some clues that maybe this app deserved some extra scrutiny.

But the flip side to human involvement is discrimination, whether intentional or not. A huge benefit to automated loan decisioning is the virtual elimination of certain biases from the process. Computer algorithms only evaluate the factors they've been told to look at. Nothing more. Nothing less. 

And because computer analysis has put more science into the underwriting process (notwithstanding the recent housing bubble), most people agree that it's generally been good for the bank and (most) consumers. But even the best system will generate a certain number of false negatives leading to the occasional embarrassing decline.

So it's worth considering installing a second-look system in your online process, providing wrongly denied applicants another chance at proving themselves worthy, before they end up embarrassing your CEO at their next family gathering.  

And why might I be thinking these thoughts? Yesterday, I went online to accept the direct mail offer from a major credit card issuer who's sent me more than 100 solicitations over the past decade (note 2). And I was flat-out rejected. Either I fell victim to a false negative or the issuer's underwriting is not in sync with their marketing.

The application process = great
The online acceptance process itself was flawless. I typed in my registration code, answered a few questions, and hit enter. It had taken about 3 minutes up to that point. Then wham! Twenty-four seconds later, the application was denied (note 3).

The rejection process = sucks 
And even though I could live without the card (note 4), it's frustrating and disappointing to be turned down flat with no recourse. Especially after being aggressively solicited for years.

And the company pretty much disowns you after the bad news. The website returns a two-sentence rejection thanking you for your interest, saying that they couldn't approve the request, and that they'll followup in writing in a couple weeks explaining their reasoning. And BTW, please don't apply again for at least 45 days. No apology. No email. No phone (or even email) to contact for more info. No referral to the credit bureaus or other resources. Just a simple, cold brush-off.

So I went back to the direct mail letter and called the number listed there. The bank rep said there was no way to look at the app I'd entered minutes earlier to see why it was denied. All he could do was take another new app, but he warned that the system wouldn't like seeing multiple apps and would likely reject it again.

Recommendations: You cannot avoid making credit denials, lots of them. And you can't avoid the occasional false negative. But you can, and should, create a way for online applicants to ask for a second look, and perhaps correct any errors that they might have made. And if you can't do that, at least be compassionate with the immediate messaging and try to offer some helpful resources.  

My three-step, face-saving, loan-denial process:

1. Thank the applicant and apologize for not meeting their needs. Say this both on the website and in a followup email.

2. Explain that although you're not perfect, there appears to be circumstances in the application that preclude you from offering credit at this time. Refer them to Credit Karma, Quizzle, or other credit resources to view their credit score and learn more.

3. Provide a second-chance option either through email or telephone for applicants with strong credit to ask for a human review. 

Optional: For customers you must turn down now, but who you think might be good future prospects for loans and/or other products, or who are already profitable existing customers, consider sending a consolation prize: $5 statement credit, a Starbucks card, two-for-one movie certificate, etc. 

Second-look apps would need a higher level of scrutiny to ensure against those trying to game the system. But there will likely be some gems uncovered in the process. 

--------------------------------------

Notes:
1. My favorite personal story of botched celebrity banking happened at First Interstate Bank of Washington where I worked in the late 1980s. Bill Gates, whose mom was on our board, supposedly used what was then our "state-of-the-art" telephone bill-payment service. Apparently, we didn't send off his mortgage payment and the late fee we ate was more revenue than the entire bill-pay program generated in a month. It happened a few months before I started working there, so I can't vouch 100% for its accuracy. But I can tell you it was a popular story within the bank with a "failed tech" angle and a juicy tidbit about the outlandish size of the mortgage on the Gates property.    
2. This is a rare situation where I'm not naming the company in a public blogpost because a credit denial is such an individual thing. It doesn't seem fair to single them out for one incident which is most likely not indicative of the normal experience there. However, I will disclose the name on an individual basis if you email me and promise not to post it publicly.  
3. I'm not sure what went wrong with the application. I have several decades of excellent credit, zero inquiries in the past 6 months, reasonable debt-to-income, and a decent level of household income. And I checked all three bureaus recently and everything was fine. However, the bureaus do have inconsistent, and partially incorrect, info about my employment history. But the application did not ask for employer name, so I don't see how that could have sunk it.  
4. I actually planned to use the card frequently; it had better terms than the one I was hoping to replace.

Over the weekend, Chase Bank sent a short email apology to its online customers. Overall, the message was fine and now the bank can check that off its to-do list.

I'm glad the bank didn't waste a hundred million dollars giving everyone a $5 credit. A simple apology is the best approach, preferably during the actual outage. This message, six days after the initial downtime, is a bit sub-par for a company with the resources of Chase (for a review of its initial communications, see our previous post and today's review at The Financial Brand).

Analysis of the Chase email (screenshot below): Overall, the email message was adequate. The title was good, "Please accept our apologies." And that was all most people needed to hear. But I'm a little surprised by the lack of detail provided within the message. Especially, considering the much better note posted to Chase.com over the weekend, then apparently taken down (see note 1 below).

In Sunday's email, Chase reassured customers that "(your) account information was not compromised." That's great, but the bank could have scored extra points by saying exactly what went wrong, how they fixed it, and what they are doing to prevent a recurrence (this info could be delivered via a link to more detail on the website.) 

The bank should also have made the apology unconditional. Chase's exact words (italics mine), "we apologize if this created difficulties" and "please accept our apology for any inconvenience this may have caused." Forget the conditions. Assume it inconvenienced everyone and just straight-up say you are sorry.

Another no-small thing. A note of apology should be from an actual person (like the bank's website message, note 1). The lack of a signer imparts a nagging impression that no one at the bank has stepped up to own the problem. An email address or phone number for additional info would also make it seem more sincere.

Finally, according to the info posted on the site over the weekend, the bank is covering late fees caused by the outage (see note 1). Perhaps that email went only to bill-pay customers (which I am not). But still, why not mention it?  

----------------------------------

PS  One last question and then we'll move on, promise. Why was the online apology taken down after just a few days? Many customers affected by the outage will never see the all-important public apology on the bank's homepage (see screenshot at The Financial Brand).

Chase Bank apology email (19 Sep 2010, 2PM Pacific)

Note:
1. According to the New York CBS affiliate, the following appeared on the Chase website on Friday, 17 Sep (link):

We are sorry for the difficulties that recently affected chase.com and we apologize for not communicating better with you about this issue. As you may know, we experienced a significant service interruption and Online Bill Payments that were scheduled to be sent on September 13, 14, or 15, 2010, were sent by the morning of September 16, 2010.

If you scheduled a payment to be sent during those dates, but do not see it reflected in your payment activity by September 16, 2010, please contact us.

We are working hard to make sure that any late fees you may have incurred as a result of this processing delay are being refunded:

• If your payment was to another Chase account (for example, Chase Credit Card Services), we are automatically refunding any late fees.
• If your payment was to anyone other than Chase (for example, your telephone service, utilities or another financial institution), we are contacting many payees to prevent late fees from being charged.
• However, if your payee charged you a late fee, please call us at one of the numbers below or visit your nearest Chase branch. We will refund the late fee to you.

We recommend that you keep this letter in case you need to provide information to your payee.

Please be assured that Chase's online security has not been compromised as a result of this service interruption. Your accounts and confidential information remain safe and secure.

Giving you 24-hour access to your banking is of the utmost importance to us. This was not the level of service we know you expect, and we will work hard to serve and communicate with you better in the future.

Again, please accept our apology for this disruption and thank you for your patience. If you have any questions, please stop by your nearest Chase branch or call:

• 1-800-935-9935 for Personal accounts
• 1-877-CHASEPC (1-877-242-7372) for Business accounts
• 1-800-848-9136 for Home Lending and Auto accounts
• For credit card accounts, please call the number on the back of your card

Sincerely,

Patricia O. Baker
Senior Vice President
Chase Executive Office

For much of Tuesday (see note 1), Chase Bank had a message in the upper left corner of its website saying that the website was temporarily unavailable "due to scheduled system maintenance" (screenshot here). Later in the day, the bank finally took that excuse down and merely said that the site is "temporarily unavailable" (see screenshot below and inset).

The outage appears to have afflicted iPhone app users as well. I tried several times and was not able to connect. But, unfortunately, and here's a new downside for an app compared to a website, there is no way for the bank to warn users within the app that there's a back-end problem. So users just tried and tried to connect. 

Interestingly, text banking seemed to continue working, at least on the card side. During the outage I was able to retrieve the current balance and available credit via a text message to the bank's shortcode. That could be an interesting side benefit to text banking, "works if the website is down."

Lessons for Netbankers: There's no way to avoid the occasional tech glitch. The important thing is how you handle it. Today's salient lessons reveal how to communicate during downtime, scheduled or otherwise.

1. Homepage warning: The message on the website is crucial, and Chase does an okay job prominently posting a concise warning on the homepage. Sure, the bank could have been more specific, but when you are in the middle of an IT crisis, there often isn't a whole lot more that can be said. Still, they were tardy in pulling the "scheduled maintenance" excuse down.

Chase website grade = B-

2. Referrals to other channels: Some of the press reports quoted a Chase spokesperson referring users to the toll-free number as well as ATMs and branches where the systems were apparently working fine. The bank's website message should also have made those recommendations. Even if live operator support was hopelessly backed up, the bank should admit that and encourage customers to call the toll-free number to check balances and other activity. 

Chase website grade = F

3. Apologize and reassure: From crisis management 101: apologize first, then reassure customers and tell them what you are doing to fix the problem. Chase was doing little of that from what I can see. There was no apology. There was no real explanation. And there was no reassurance that your money was safe. The information void was left to be filled with tweets and blog-post speculation. (15 Sep update: When I logged in today for the first time since the outage, there was no mention of the problem. And oddly, my last login showed as having happened during the middle of the outage. I'm trying to figure out how that could be; perhaps from my attempted iPhone app login?)

Chase website grade = Incomplete (I'm sure it's coming, but it should have been visible today.)

4. Communications to mobile customers: If the mobile app is also down, you need to proactively send a message to app users explaining the situation. Conversely, if the mobile app or text messaging is working, refer Web customers to those channels.

Chase mobile grade = F (didn't see that message)

All in all, a bad day for Chase online banking. But a good learning opportunity for everyone else.

--------------------------------------

Chase Bank homepage with "unavailable" message (14 Sep 2010, 3:41 PM Pacific)

Online banking main page with unavailable message (14 Sep 2010, 3:41 PM Pacific)

Note:
1. According to various Twitter messages, Chase online banking went down at about 10 PM Eastern time on Monday, 13 Sep and came back online a few minutes ago (1:45 AM Eastern, 15 Sep, Wed.), a little under 28 hours.

How did USAA become the most innovative bank in America? I guess its big-bank competitors have been kind of preoccupied with other matters the past few years. And because USAA serves most of its 5 million banking customers remotely, it stands to profit from pushing the envelope in online/mobile delivery. 

The latest proof that the bank is both innovative and adored? Posting user reviews right in the middle of the homepage, an inventive and unique approach. And with an average score of 4.7 out of 5 for both checking and auto insurance, the reviews serve as a transparent and effective mass endorsement.

Here's the breakdown of scores received on 6,350 total reviews for USAA's free checking account (as of 12 Aug 2010):

     5 stars (excellent) >>> 5,550  (87% of total)
     4 stars (good) >>>>>>    329  (5%)
     3 stars (average) >>>>   154   (2%)
     2 stars (fair) >>>>>>>    110   (2%)
     1 star (poor) >>>>>>>     214  (3%)

Relevance for Netbankers: Frankly, I never thought I'd see user reviews posted anywhere on a bank site, let alone the homepage (note 1). If your customers love you, I mean really love you, customer reviews posted directly to an in-house site is a great way to prove it (note 2).

USAA homepage (12 August 2010)
Note: Ad on top for its new Auto Circle car-buying service, complete with its own iPhone app.

Notes: 
1. Bank of America also posted user reviews on its site, but the feature appears to have been discontinued a while ago. The last reference I could find on Google about the reviews was in Jan. 2008.
2. This would not be an easy project and would require a significant investment in ongoing monitoring and maintenance. More importantly, it requires a thick skin; your organization would have to be comfortable with a certain amount of complaints being posted. As good as USAA's overall score is, there are still 314 poor reviews posted, 3% of the total. But allowing customers a salient vent-fest on your website may keep them from doing so in more public venues such as Twitter. It also gives you a chance to respond to and resolve posted problems.

Chase Bank is sparing no expense in launching its brand in former WaMu strongholds, particularly Seattle, the previous headquarters of WaMu. The bank is remodeling the branches, hanging new signage, taking full-page ads in the Seattle paper, running radio spots, and bidding for the top spot on Google.

Analysis
The Chase Washington State microsite is gorgeous, really impressive. The graphic design is eye-catching, serene, and uplifting. Chase's logo is superimposed where the sun would be, creating a nice effect and great first impression of the bank, which is new to Washington state (see screenshot 1 below).

While the website designer scores an A+, the online app gets an incomplete (as in, I couldn't get it to work), at least for the checking account I tried to purchase (note 2). 

My first issue with the application, and this is more of a nitpick, is the location of the compare accounts links. Chase lists four main checking choices plus two student-oriented accounts (see screenshot 2 below). Since the account names provide no help in selecting the right one, I looked for a way to compare accounts. But my eyes were drawn to the Get Details and Open now buttons, and I never saw the links in the upper right corner. Since most users will need help selecting the right checking account, the Compare option should be at least as prominent as the Get Details button.

The much bigger issue prompting me to write this article is that online account opening didn't work, at least for the account I selected, Chase Premier Platinum Checking. After completing the first page of the online app (see screenshot 3 below), I was greeted with a cryptic message telling me to visit a branch for help (see note 1). And this is from a bank introducing its name in a new market.

Lessons for financial institutions:

• Make sure you test all the options in your online application (see note 3)
• If there are valid reasons why you cannot open the account online, explain them to your customer in detail (and don't lead them to believe the account can be opened online if it can't)
• Provide more options for help than just "visit your branch;" for example, online chat, telephone numbers, Web-based inquiry form, and a call-me button
• APOLOGIZE and thank the customer for their application attempt. Chase does neither. The bank's entire message (see screenshot 4):

   Unable to Continue: We are unable to open a Premier Checking account
   online. Please visit your local Chase Branch for assistance.

1. Chase Bank's Washington-state transition site main page (1 June 2009)

2. Chase checking account options

3. First page of Chase's online loan application

4. Fail screen displayed after hitting next on previous screen 

Notes:
1. I had selected "not a Chase customer" so I thought perhaps I was having trouble because the bank's cookie's showed me to be a Chase card holder. So I tried it on another machine, with the cookies erased, and the same thing happened.
2. The problem seems to be with Premier Platinum Checking. I was able to start the app process just fine with Chase Checking.
3. Chase isn't the only one with online account-opening problems. I am researching account opening for an upcoming Online Banking Report, and just today I reached a complete dead-end in the online application at a large credit union, and was forced to abandon the app late in the process, after I'd been through credit-bureau validation. 

We just uploaded our latest Online Banking Report.
It will be mailed to subscribers next week. It's also available online here. There's no charge for current subscribers; others may access it immediately
for US$595.

---------------------------------------------------------

Connecting to Customers with Twitter
The comprehensive guide to Twitter for financial institutions

84 pages (published 25 May 2009)

Twitter is everywhere these days (note 1). Those who use it think it's the best thing since the invention of email. Those who don't, think it's just another Internet fad, enjoying its 15 minutes of fame before flaming out with only a Wikipedia entry to remember it by. 

The reality: No one knows exactly how it will play out, but it's something likely in between those two extremes.   

We are not surprised Twitter has taken off as a social connector. It's a lot like other extremely popular communication methods: email, texting, and instant messaging. The rise of MySpace, Facebook and other social networks has paved the way.

However, what's surprising is that Twitter is actually a surprisingly effective, and extremely cost-effective, way for companies to engage online with customers and prospects (see Wachovia example in the inset).

Numbering more than 200 in the United States alone, there are already more financial institutions using Twitter than any other so-called social network. Most have started in the last month or two (see previous coverage). 

In this report (abstract), guest author Jeffry Pilcher (note 2), a branding and marketing guru who recently launched his own brand consultancy, ICONiQ, tells you exactly what you should and shouldn't do with Twitter. He was an early adopter of the tool, and an expert on harnessing its power.

The report includes:

• An overview of Twitter terminology and how the service works
• Advice on how to develop a successful Twitter strategy and
  avoid common pitfalls
• Explanations and examples of the different ways
  financial institutions are using Twitter 
• A step-by-step guide on how to implement a Twitter strategy
  and navigate the "Twittersphere," including explanations of
  how to create and customize a Twitter profile and presence

Notes:
1. USA Today even had a story on the front of the Money section two weeks ago, entitled, "Banks try social networking, jump on Twitter wagon"

2. Jeffry Pilcher blogs at The Financial Brand and frequently tweets here. He maintains a comprehensive listing of banks and credit unions on Twitter here.

Is it just me, or have people become more friendly lately?

I was flabbergasted, in a good way, by the service I received from Comcast yesterday. When our Internet service started failing Tuesday morning, I was initially worried we'd be out for a long time. At mid morning the Comcast call center was already backed up more than 10 minutes, but the friendly robot asked whether I'd prefer a call back instead of waiting on hold. I went with that option of course. Then, not only did they ring me when they said they would, the woman who called was the most empathetic tech support person I've ever conversed with.

Then (here's the part that floored me), she said someone could come over that very day to fix it (note 1). The repair guy showed up on time, was nice as can be, seemed extremely knowledgeable, installed a new modem, and even put covers over his shoes before coming in the house. Comcast, you rock, and now I don't feel nearly as bad about the $150/mo we send your way!

One thing about a nasty recession, it makes you appreciate your customers.

So in the vein, I'd like to thank the sponsors of our Netbanker blog, WorkLight, a Finovate Startup 2008 alum (video here), who has been handing out a free white paper via the ad on the upper right. And also our link sponsor on the bottom- right, Bankaholic, who is on its second year with us.

And as much as we like our sponsors, our biggest thanks is to you, the reader, who makes this all worthwhile. We've added more than 1,000 new subscribers in the past year, bringing the total to more than 8,500.

So thank you all from the Netbanker team!

Note:
1. This is just standard residential $45/mo Internet service.

It's not easy deciding what messages to send to customers these days (note 1), but there's no doubt a clear email about increased FDIC coverage is a winner. For example, ING Direct does a great job with this simple and very clear message outlining the temporary increase in U.S. deposit insurance coverage.

I especially like how they demonstrate how easy it is for joint account holders to get $1 million in coverage (note 2). It's so much easier seeing it laid out in a table. Here's the email sent to customers this afternoon under the subject:

Subject: Your FDIC coverage just went up

Notes:
1. Jeffry Pilcher posted some interesting quotes with differing perspectives on how to approach "crisis communications" in his Financial Brand blog today.

2. Not that many people need that, but it's still somehow comforting to know that if you had to deposit your lottery proceeds, or if you were Mark Cuban and you shorted the DJIA at 1100 with 8% of your net worth, you wouldn't have to spend so much time opening accounts to deposit your windfall.

It's not often that bank collection techniques make the business press, and when they do, it's usually not a good story. But last week's WSJ article by personal finance writer Jane Kim featured a relatively positive spin on how banks are working harder to collect revolving credit debt.

She cited two examples of Web-based self-service applications trying to turn early collection efforts into a non-confrontational, positive experience including:

• WaMu's self-service website, <wamucanhelp.com>
• The Virtual Collection Agent powered by Online Resources that is being rolled out by three of the top-10 card issuers. The system was first shown to the public at last year's Finovate conference (video here)

You can only look at the WaMu collection site if you have a WaMu credit card (screenshot below), but in perusing domain-ownership records, it appears to be hosted by Online Resources, so it likely resembles the screenshot below, a generic mockup from the Online Resources website.

Note the settlement offer listed at the bottom of the page. This offer can be produced dynamically based on input from the user as they use the self-service site.

What's innovative?
While it won't work for everyone, collecting past-due debts is one of the trickier areas of bank operations. Financial institutions have to be careful not to be too aggressive early on so they don't appear heavy-handed and end up driving away an otherwise profitable customer, not to mention that customer's friends and family.

That's why a gentle email/text reminder with a link to a self-service support area makes so much sense. Not only can you speed repayments from delinquent borrowers, but also garner valuable goodwill by offering a positive experience via a collaborative online tool. Given the current environment, Web-based collection efforts could maintain precious account relationships.

Virtual collection agent from online resources (19 Sep 2008) 

 
WaMu's Web-based collection website <wamucanhelp.com> requires a WaMu card number for login  (19 Sept 2008)

Taking a page from Wells Fargo's playbook, Wachovia has ventured into social media, giving Twitter a try (see screenshot below and previous Twitter coverage here). The bank has sent 94 updates (aka Tweets) via its Twitter page since it began Aug. 18 and has amassed 340 followers.

But more importantly, they are leveraging the minimal customer-support expense to support Twitter (see note 1) with a nifty badge on its Contact Us page (see inset and screenshot below). That little bit of online marketing, demonstrating the Web-savviness of the banking colossus, is probably worth 1000x whatever goodwill they earn actually talking to customers via Twitter.

Analysis
I'll admit, I was expecting the usual corporate marketing-speak. But Wachovia is actually using the medium very well. So far, the bank has provided a realistic mix of low-key promotional items such as the following "Ike update" with real customer service response (see second example below).

Example 1 (earlier today): Promotional Tweet today mentioning the bank's Hurricane Ike response with link to more info, e.g., <tinyurl.com/4vbbyn>: 

Example 2 (this morning): Responding to a customer complaint: 

This last message is directed back to a customer who posted a complaint about Wachovia in his public Twitter stream. Wachovia could have sent it privately, but they elected to respond publicly.

This is surprisingly bold, considering that the bank risks elevating the issue. For example, anyone following Wachovia's updates can click on bastille71's username and see that she is upset about a $250 overdraft charge. It's unlikely anyone outside bastille71's friends would have known about that had Wachovia not responded publicly via Twitter.

But anyone who really believes in social media will argue that the bank has far more to gain by demonstrating real commitment to solving customer problems.

Looking further at the above example, bastille71 (inset) has 135 followers on Twitter, her own blog, and who knows how many friends on Facebook. What are the chances that if Wachovia ends up refunding her $250, bastille71 (aka Miss Rehobeth) will write it up in her blog, Twitter it, and even talk about it with her co-workers and friends? 

And if you need more ROI than that, Wachovia has already received a good payback on its Twitter investment (note 1) with a nearly full-page article in American Banker last week during an otherwise not-so-positive news cycle for banks. In addition, the customer service innovation made several blogs and of course the bank's been Twittered about in a positive way.

Note:
1. There's no real cost to using Twitter other than staffing it with a social-media-savvy customer-service rep and someone in marketing/PR to look over his or her shoulders. 

Apple's iPhone has garnered the kind of media hype we haven't seen since Windows 95 launched Aug. 24, 1995. I don't know if people are lined up at AT&T Wireless/Cingular stores yet, but I'm sure we'll see huge crowds mugging for the cameras at midnight, June 28.

But unlike 1995, when only Wells Fargo could brag about "Windows 95 compatibility,"  most banks offer services that will work on the iPhone, at least to some extent. While the phone has not been made widely available to third-party testers, the built-in Safari browser provides website designers with much of what they need to make website functions "iPhone compatible." One issue: The phone is not expected to support Java (see Design Issues below).  

Product & Marketing Ideas

Here are 10 ways to jump on the iPhone bandwagon:

 1. iPhone loans: It costs $500 or $600, not including the monthly AT&T fee. As a promotion, you could offer term loans, specifically designed for purchases of the iPhone (see note 1). (See our next post for more info on the Prosper loan listing to the right.)

2. iPhone rebates: Offer a $50 rebate for customers who buy an iPhone with your credit or debit card, then sign up for online banking/bill pay/estatements or whatever online service you are promoting.

3. Announce iPhone compatibility:  You might want to hold off on this until you can run tests on an actual phone. But if you are compatible with Safari, you will most likely function fairly well on the iPhone.

4. Create an iPhone landing page designed specifically for the 336 x 168 screen, complete with its own URL <iphone.yourbank.com> or <yourbank.com/iphone>.

5. Advertise under "iPhone" or "iphone banking" on Google: There will be zillions of searches on this term this summer. If you had some type of iPhone-related promo this could provide significant (albeit expensive) traffic.

6. iPhone giveaways: You wont' be able to give them away for new accounts, but a sweeps with an iPhone prize would be a good attention grabber. 

7. iPhone compatibility FAQs: As soon as you've tested the phone with your banking services, document it all with screen captures and post to your website. You can run a link of your homepage with an eye-catching, "see how to bank at mybank with your iphone."

8. Designate one or more customer service reps as "iPhone banking" support complete with their own Web page, email address, IM address, and mobile phone number of course. 

9. Use the iPhone as an attention getter in general promotions for online banking or mobile banking: You can use the name recognition to further your mainstream marketing efforts, for example, "You don't have to have an iPhone to bank with us. Any web-enabled phone will connect with our mobile site, <m.yourbank.com>.

10. Create an iPhone banking users group, club, forum, or blog: To promote banking with you via iPhone, entice iPhone owners to register their phone with you and join the club. Club participants could get a special t-shirt and special attention from the bank such as a dedicated "iPhone banking" tech support rep (see #8) and iPhone tips and tools delivered via email/RSS.

Design Issues
From a design standpoint, the main concern is how your website, and online banking area, appear on a 168 x 336 pixel screen size (3.5 inch screen). The screen is designed to display the entire webpage with users using the touchscreen to zoom in on specific areas for better readability (see below). Apple has a good demo of how it works here. 

If you have a standard 800 x 600 layout, it will be shrunk to about 50% of its normal size when viewed on an iPhone. Another design complication: user's can rotate the phone 90 degrees and instantly go to portrait mode (336 x 168) (see example screenshots an Marketing Pilgrim here).  

Here's how Fandango looks in full-screen mode and then zoomed in on the box-office list:

Financial Institution Action Items
Of course, step one is convincing your boss you need an iPhone right away for research purposes. Then, at a minimum, address iPhone compatibility in your FAQs as well as briefing your service reps that deal with website access questions.

Whether you go decide to ride the wave further depends is up to you. And looking back at this list, I realize I probably should have stopped at five. But the point is, banks and credit unions can use current events to drive traffic, generate buzz in your community, and let your customers/employees know that you are "with it."  And please send us picture of you with your iPhone on June 29th and we'll post it here.

P.S. For those of you who want to understand the broader mobile banking trend and how the iPhone fits into it, check out the new mobile banking report from Online Banking Report.

---

Note:

1. Alternatively, you could offer an iPhone banking package with "free" iPhone. For example, bundle an iPhone with a checking account, credit card, credit line, etc. and sell for $20/mo with 3-year commitment (and early termination fee), with the customer paying the AT&T monthly charges separately.

Looking through my notes from the Mobile Payments Forum last week (post here), I came across this tidbit mentioned by several speakers:

One thing you should do right away is capture mobile phone number(s) in your customer information system.

Not only does this provide a marketing database for people to contact when you introduce mobile services (note 1), it provides an alternative number for account problems now.

You should add the fields to your online banking My Account area and also begin asking for it on account signup forms and loan applications. While you are at it, seek permission to send a text message(s) when new mobile services are launched.

Note:

1. We are not suggesting you telemarket to the mobile numbers; that's a bad idea. But you should contact these customers through normal channels (email, mail) when mobile options become available. Also, seek permission to send a text message(s) to inform users of new mobile options.   

Every financial institution should offer feeds to its contents. It's an extremely low-cost way to reach out to the growing body of customers using feeds to track their favorite information sources (see previous NetBanker coverage here; for a detailed analysis and forecast, refer to our sister publication, Online Banking Report, Web 2.0, Feeds and Blogs for Financial Institutions #135/136).

One new approach is making your FAQs, knowledge base, or other self-service areas available via RSS feed. That way, customers interested in certain topic, say, "student loans," can stay abreast of any new information that becomes available.

One self-service solutions provider, Seattle-based Fuze Digital Solutions <fuzeds.com> has imbedded RSS feeds into its platform allowing its credit union clients to make feeds available for specific topical areas such as credit cards or online services. 

You can see how it works at Washington State Employees Credit Union's <wsecu.org> Info Center, the first Fuze client to use the RSS option. Browsing the list of available topics, users are alerted to the feed option by the orange RSS button (see screenshot below). Clicking the button displays the feed URL that can be imported into a newsreader.

Startup Pinger <pinger.com> launched a service last month that makes it easy to send voice messages to mobile phones or computers along with an email or SMS alert.

It combines the immediacy of instant messaging, the functionality of email, and the more personal nature of a voice message. And it's free.

To use the service, which is currently in public beta, users upload recipient email addresses to the Pinger server where communication preferences are stored. Voice messages are created using any phone or a PC microphone.

The San Jose, CA-based firm received $3 million in funding from A-list VC Kleiner Perkins in Nov. 2005.

How it Works
To send a message from a phone, you simply call the service, say the name of the recipient, record the message, and hang up.

To send a message from a PC, you select the recipient from your address book, record the message on your PC microphone, and send. 

Either way, the recipient is notified via SMS and/or email. If on a mobile phone, they dial the number in the SMS message and listen. If at a PC, they can click on the link and listen to the message on their PC speakers.

The recipient can sort, replay, forward, store, and even reply via voice to the messages, which makes them as functional as email.

Pinger demonstrated the service last week at Demo's fall conference (see the demo here).

Financial institution opportunities
With believability of financial emails at an all-time low, short voice messages could be more effective for complex information, such as explaining options to someone late with a loan payment, or who has just been given a credit line increase.

And since many banks have stopped using links in their emails due to phishing concerns, voice messages could be used to say, "See us on the Web at www.yourbank.com/loans" or "Log in to your account and go to the Your Loans tab."

The novelty of the voice message will also provide a boost to marketing efforts, at least temporarily. The first few messages are likely to generate quite a bit of interest, until users learn to ignore them like other marketing messages.

Voice messaging isn't for everything. Routine information, such as balance alerts and deposit confirmation, should continue to be sent via text only.   

It's yet to be seen whether Pinger takes off. But it's a safe bet that something similar will soon enter the lexicon along with Googling, IMing, and texting. With dozens of voice-over-Internet-protocol (VOIP) startups challenging the bigger players, such as Vonage and eBay's Skype, we are sure to see interesting, cost-effective new ways to reach customers.

For more information:

• TechCrunch article on new VOIP providers here
• Coverage at Under the Radar blog here
• Short article in New York Times Sep. 27 here

Hoping to download a movie to watch on the long Seattle-NYC flight, I sent Amazon an email with a question about its new Unbox video service. Not only did they answer within the hour, they also included a link to indicate whether the answer solved my question or not. 

Choosing the "yes" option, I was delivered to a "Thanks for your feedback!" message, which not coincidently put me back onto the Amazon site. The thank-you also contained a link to provide additional feedback.

Following that link leads you to a page to provide detailed comments:

If you responded "no" to the original question, you are taken to a similar page to rephrase the question (see below).

Analysis
This simple feedback mechanism provides five important benefits:

1. Demonstrates you actually care whether the user's problem is resolved satisfactorily
2. Allows customer to easily submit another question if not satisfactorily resolved
3. Allows you to quantify the performance of the service department
4. Identifies areas where better answers are needed
5. Helps identify tricky problems that can be corrected

All financial institutions should consider similar techniques for improving electronic customer service.

Now, if only the Amazon video-download service were as efficient as its service reps. First, it took two tries to get the player downloaded. Then the 90-minute, 1.7 GB movie took nearly eight hours to download via my Wi-Fi connection to our Comcast cable modem, never going much faster than 80k per second. Bottom line: For $2.99, it's still worth doing, provided you plan far enough in advance.

Score:
     Tom Brown -- 1
     Citibank -- 0

How many times have you been frustrated by your experience at a call center? Well, if you were a multi-millionaire hedge fund manager with his own blog, you could get back at the company, and then some.

Read today's extremely thorough account (transcribed verbatim from a tape recording) of Second Curve's Tom Brown as he attempts to add a PayPass contactless debit card to his Citibank account <bankstocks.com>.

A couple lessons here:

1. Flag Tom Brown, and other influential VIPs, in your customer database so they get topnotch phone service
2. Be careful with geographic-based product rollouts to avoid irritating customers
3. Simplify call center scripts

--JB

Although our readers won't find much new information in today's Wall Street Journal article, Online Banking Strives for the Human Touch, it's significant for two reasons:

• Another example of a leading personal finance writer looking for "the next big thing" in online banking (see also NetBanker June 28); expect a wave of these stories through year-end
• The article included a full-text screenshot of a banking chat session with SunTrust. You might circulate this among your reps so they understand that what they write in a chat session potentially becomes part of the "public record" (by the way, the SunTrust rep, and/or the marketing guru who scripted the canned responses, deserve a raise for their sales technique).

If you make it to the end, you'll find a couple interesting online lending factoids:

• Bank of America claims an 8-fold increase in online-mortgage sales in Q1 2006 compared to the year earlier quarter, with live-chat part of the reason; it also said home-equity loan volume doubled
• Citbank says 90% of its live-chat users complete a home-equity application, presumably at its <myhomeequity.com> site mentioned earlier in the story (see screenshot above); the bank also said it expects to originate $2 billion in home equity loans online in 2006, double that in 2005

--JB

When your customer makes a significant purchase or signs up for online banking, make sure you take the time to send a well-designed welcome/thank-you email message. It not only helps make a good impression with your new customer, but also can pay for itself by decreasing telephone inquiries about the status of the new account. The message can also be used for SUBTLE upselling, such as a balance transfer offer for new credit card accounts.

Dell's Welcome Message

Today we received this message from Dell thanking us for purchasing a new PC. Even though we've been frequent Dell buyers for years, they are not taking us for granted. The welcome message includes friendly graphics and a short welcome message with an embedded link to the "order status" page (click on inset left for a closeup).

The bottom of the message, which requires scrolling for most users, contains key information for future use such as serial number, customer number, support numbers, rebate info and so on. There is also a link to purchase add-ons (click on inset right for a closeup).

Click here to download the entire email message on one screenshot.

--JB

For only the second time in the 5.5 years since I became one of the first customers of online home-equity pioneer DeepGreen Financial <deepgreenfinancial.com>, I had occasion to contact customer service over an error on their end. Normally, I would use email, but this was one of those times when you need to speak to a human.

After navigating a relatively sparse phone menu, I pressed zero and found myself on hold; nothing unusual about that. After about a minute the recorded voice came on with the usual yada-yada about the importance of my call. But then I was surprised to hear the computer offer the choice of staying on the line, or leaving a voice message for a return call.

I chose to hold and my call was answered a few minutes later by a helpful service rep. Overall, I left this interaction thinking more highly of the bank, even though their error had forced me to call and spend four minutes on hold. It's all about exceeding expectations. And it doesn't take much to do that when it comes to banking customer service, or really any toll-free support line. So keep working on those incremental improvements, as they can pay off immeasurably in the long run.

What would be even better, given the bank's customer base of experienced online consumers, is to also offer a special email address such as urgent@deepgreenbank.com with a guaranteed 30-minute response time. That would really leave a great impression with Internet-savvy callers (see OBR 106/106 for hundreds of more ideas to make your E-service shine).

--JB

Despite intense competition from MasterCard and Visa issuers, American Express has been able to maintain a substantial share of the high-end market for credit/charge cards. For the twenty years we've followed the company, its marketing has consistently conveyed an upscale image.

Case in point: The email we received today asking us to upgrade from our existing Gold Card to an American Express Platinum (click on inset for a closeup look).

The subject line said it all:

     Upgrade to a card with premium service

The benefits cited included:
* Complimentary airline ticket on any of the 18 participating airline partners
* Airport club access (Continental, Delta, Northwest Airlines)
* Hotels & resort special privileges
* Free Membership Rewards program
* By Invitation Only (privileged access and tickets to events that, in many cases, can't be purchased through any other source)

Analysis
The American Express solicitation is heavily oriented towards travel and entertainment benefits which plays to the company's strengths. A bank could do the same by concentrating more on the "premium service" aspect. For example:

• Front-of-the-line service: Your service request, whether by email or phone, always goes to the front of the queue
• Branch manager access: If you ever need to go direct to the top for any reason, just call (212) 555-1212 or email branchmanager@yourbank.com
• Preferred access to product specialists: If you ever have an unusual problem, whether it be accessing your online banking account from your laptop, or how to fund your Roth IRA, we will connect you with a specialist with state-of-the-art knowledge in that area
• Ft. Knox security: You need not worry about the safety and security of your bank accounts with our upgraded security and authentication algorithms

For more ideas, see "E-Service 2.0" (OBR 105/106).

When natural disasters strike, such as the Southeast Asia tsunamis or Monday's Hurricane Katrina destruction in New Orleans and the Gulf Coast, banks should use their considerable web reach to help their customers make safe and secure donations to sanctioned relief agencies such as the Red Cross.

With all the concern about online phishing and fraud, consumers need a trusted conduit to make donations. And the sooner the link is posted, the better. As bad as it is, for much of the country, it will no longer be top-of-mind in a few days or weeks.

Major banks fail to respond thus far
Granted its only been three days, but we were surprised to find that of the largest 50 U.S financial institutions only three, Chase (Chase.com and BankOne.com), Wachovia (Wachovia.com and Suntrust.com), and Washington Mutual (wamu.com), have posted links to the Red Cross to make online donations (see Wachovia banner above).

Seven others had hurricane-related information, but no links for donations:
- Regions, AmSouth, Navy FCU, Compass Bank, and of course New Orleans-based Hibernia all had information on branch closings
- USAA posted tips for dealing with the aftermath of a hurricane
- Commerce Bank (NJ) ran a headline ticker on the top of the homepage offering to match donations up to a total of $50,000 (which strikes us as bit stingy if you are going to blast it across your homepage)

Action Items
The best response, from a customer service and PR perspective, is to announce a corporate contribution and provide secure links to the Red Cross and other relief agencies. Contributions should also be accepted via mail or in-branch.

Wachovia does it right, with a small, but highly visible homepage link explaining its efforts and providing the important message, You Can Too (see inset above). Clicking on the link leads users to a landing page that explains Wachovia's $250,000 corporate commitment along with two important links (click on inset for a closeup look):
1. Donate Now link to a Red Cross store established on Yahoo handle Katrina donations
2. Email this page to spread the word

Even if your bank is not prepared to make a corporate contribution, it can still support fund-raising efforts with a link to the official donation site.

--JB

Our new Visa debit card arrived today from U.S. Bancorp. As we were reaching for the phone to activate it, we noticed a new URL on the holder <usbank.com/activate>.

Curious as to how the bank handled security on the process, we went online for activation. It turns out you must be enrolled for online banking. If so, you simply login, navigate to customer service, choose ATM/debit card options, type in your card number, security code on back, and expiration date (click on the inset to see the full screenshot). .

Analysis
This feature certainly falls into the "nice to have" category rather than "must have." The two-minutes it takes to phone in for ATM card activation once every two years is not on anyone's pet-peeve list. And doing it online doesn't even save much time, if any.

But, the bigger issue is making sure that all the routine customer service issues can be handled online, so customers think to go there first to manage their account. Overall, that behavior will save the bank money and if implemented well, improve customer satisfaction.

--JB

Password management is a pain and only promises to get worse as banks and other ecommerce providers tighten up access controls due to sophisticated fraud attacks.

However there is one area where some banks are still "penny-wise and pound foolish." Specifically, the old-fashioned notion of locking an account after three unsuccessful password attempts.

It's just too easy for to miss three times. Here's what just happened to me at Bank One's credit card site:

1. Correct username, incorrect password
2. Correct username, retype same (incorrect) password in case I made an inadvertent typo the first time (since the password is masked and I can't see what I typed the first time)
3. Correct username, another shot at the password which turned out to be incorrect (probably because I changed it last time I was locked out)

RESULT: Locked out and in need of an account reset, which luckily you can do online if you have the card number, expiration date, 3-digit code, and primary social security number.

Analysis
The last time we took an in-depth survey, in our April 2003 report on Security & Privacy (OBR 93/94), 4 of the 14 major financial institutions we tested locked users out after just three attempts, while 6 of 14 fell within the recommended range of 5 to 10 attempts.

We recommend that you allow at least five unsuccessful logins, and preferably closer to 10, prior to freezing the account. The amount of fraud deterred between locking out at three attempts vs. locking out at six is so small as to be virtually unmeasurable. However, there is a real cost in customer service and consumer dissatisfaction for constantly requiring password resets.

OK, I feel better now. Thanks for listening.

-- JB

Looking for an alternative to email for marketing and service communications?

As more users subscribe to RSS (Rich Site Summary or Really Simple Syndication) or XML feeds to automate the process of reading online news, blogs, and other information, they will expect their financial institution to support this communications technique.

The only bank XML feed we've seen so far is Bank of Montreal, which publishes its Online Banking News as an XML feed. Bank of Montreal has published 15 items since the feed became available in early March, including interest rate changes, usage tips, and security warnings (click on the thumbnail left to see all 15 items published).

The bank pubicizes the feed on its online banking login page (see inset right).

Analysis
According to the Pew Internet Project, only six million U.S. users were receiving RSS feeds in November, 2004, approximately 5% of total Internet users. Even if that number has doubled by now, it still a small minority of users.

However, now that Firefox and Apple's Safari browser contain built-in RSS readers, it's only a matter of time before Internet Explorer supports this feature. IE users can still use RSS feeds, but they must download a toolbar add-in such as Feed Scout (www.bytescout.com), use an aggregation site such as BlogLines (www.bloglines.com), or download a standalone newsreader such as Feed Demon (www.download.com). 

Once newsreaders become incorporated in most browsers, we expect usage to skyrocket. Most ecommerce players are expected to published feeds to support customer service and sales. For example, Amazon already offers XML feeds in more than 100 categories, updating users on new items in everything from mystery books, to hip-hop CDs, and action-figure toys.

Banks looking to project a modern image might as well get ahead of the curve and start sending service messages via XML feeds in 2005. It's a good way to get information out to users who no longer receive or trust your email messages. Producing an XML feed is a relatively inexpensive project with little downside. If resources are too tight, make sure you add it to your 2006 plan.

For more information:
Wikipedia definition
Walt Mossberg's Personal Technology column (5/5/05 Wall Street Journal)

--JB

We believe a strong bill payment guarantee is crucial, not only to the credibility of your epayments program, but by implication, to your entire online banking offering. CheckFree has offered its logo up for years, but your customers want to know what YOU will do for them; most would prefer to know nothing about CheckFree.

And your guarantee needs to be visible to both online banking users and those just thinking about it. One of the best ways to increase visibility is by creating a "bill-pay guarantee" icon that users can click through to learn more about it.

One of the better examples is at Citibank (inset) on its logon page. When you click on the logo, a small popup appears (click on the thumbnail below):

*

This guarantee has great copy, you can tell the marketing department was heavily involved. Rather than just reiterating the rather droll performance guarantee,* the bank also highlights several benefits:

• No hidden charges, in other words, unlike "free checking," bill pay really is free
• 24/7 service with "fast response"

*Citi's bill-pay guarantee states that payments will be processed within 24-hours and delivered to payees according to the schedule, or the bank will pay for any fees incurred.

--JB

I first wrote about the benefits of email alerts in the third issue of Online Banking Report nearly ten years ago (OBR 3, June 1995). Since then I've enjoyed watching the service unfold, and I've never met an alert I didn't like -- until this week.

An email messaging pioneer, Charter One Bank, with a suite of email/fax/voice alerts named OBR Best of the Web in 2003, laid an egg this week.

I've had an account there for years and have received seven or eight hundred daily mini-statements in that time. Surprisingly, those daily messages have remained absolutely the same. No advertising, no service messages, no cross-sales. Not even a holiday greeting.

Imagine my surprise when last week I received, in addition to my daily statement, a New Message Alert (click on screenshot above) that said in part:

On March 21 a new message was delivered to your Online Banking Message Center. Please click here to view this important message.

Surprisingly, it didn't occur to me that this could be a phish (it wasn't). I really was afraid something had gone terribly wrong with my account. I couldn't remember my username or password and the "lost password" function returned an error message. So I had to wait until I was home where it was written down.

As I anxiously logged into my account, expecting the worst, I wondered how I would cover the check I'd just written off the account. The first thing I did was check my balance. Phew, it was what I expected, just enough to avoid monthly fees. Then I crossed my fingers and navigated to the secure message center where the all-important message waited.

Imagine my "customer experience" when I found that Charter One had sent me on this harrowing chase only to inform me that (click on screenshot below):

Effective April 10, 2005, Charter One Bank’s Online
Banking service will no longer process one-time or
recurring online transfers to or from a passbook
savings account.

Not only do I not have a passbook savings account, I have no other accounts beside checking, so I am ineligible to make any type of transfer on the system. What a terrible waste of my time.

Seven days later, I get yet another message insisting that I log back into the site for another "important message." This one wasn't much better. The bank was alerting me to an upcoming bill payment service slowdown. Never mind that I had never sent a bill payment nor activated the service in more than two years of maintaining an account at Charter One.

Moral of the Story
As a consumer, after enduring two false alarms, I feel this way about the bank:

1. They do not know me as a customer.
2. They do not care if they waste my time.
3. They have no ability to send targeted email.
4. They lack a basic level of common sense.
5. They do not know how to communicate through email.

Analysis
It would have been so easy to keep this from happening. The bank could have done any of the following:
a) Sent these message only to users of the specific accounts/functions
b) Assuming their system doesn't allow (A), they could have sent the entire message to my Internet email address so I didn't have to login to see it
c) Not sent the message at all to my Internet email and simply posted the message within the online banking area

Takeaways
The email relationship with your customer is powerful, yet extremely fragile. A few irrelevant "important information" messages, especially if a website login is required to access the message, can kill the entire channel.

-- JB

After giving AOL for Broadband a try, we decided to switch back to our old $4.95/mo plan we've been on for the last 5 or 6 years. Since it wasn't listed as a choice in the normal pricing plan area, we clicked on the "live chat" button.

Within in few seconds we were live with an AOL rep, and within another minute or two, the rep had us switched back to our old plan. It was a very satisfactory experience.

Action Items
During the chat process we noticed two things that financial institutions should consider adding to their live chat functions:

1. Copy/print button in the lower-right allows users to print or save a transcript of the chat session. A great tool for satisfying the finicky customer who wants a record of their customer service interactions.

2. End-of-the-session cross-sell: After fixing our problem, the chat session automatically presented us with an opportunity to purchase an ancillary service at a special discount. The offer was delivered both in text in the chat window and through a banner above the chat area (click on the screenshot above to see more detail). This could be an effective sales technique so long as it's delivered in the spirit of helping the customer.

--JB

There is one marketing technique that is much easier to do online than through other media -- competitive comparisons.

In the old print world, you might be able to update your brochure or ad once or twice per year. Online you can do it in near-real-time.

We've long been a fan of IndyMac's mortgage comparison, first writing about it in Online Banking Report #72 (June 2001). The mortgage lender shows the total mortgage cost at various major competitors, even daring to include examples where it's not the lowest overall price.

These competitive price comparisons are great, and if you consistently have lower prices, then you should use this approach.

But what about companies that compete on service more than price? After all, most consumers aren't going to choose a bank, simply to save a buck a month on fees.

Idea
If your service is markedly better than your competition, create a comparison chart showing your service standards and capabilities stacked up against the competition.

Even better, hire an independent researcher to document search times, wait times, response times, resolution times, and so on, and post them to your website on a frequent basis. Not only will this impress prospects, its excellent reinforcement to your current customers and employees that you are measurably better than the rest.

-- JB

One way around the rapidly declining effectiveness of email communications is to prominently post new messages within the secure online banking area. Not only is it useful to create an archive of bank communications, it also provides reassurance that no message(s) have been missed.

Ebay recently added this capability to its the My eBay platform, where users can login to track account activity. Ebay keeps messages for 60 days. Financial institutions should allow storage for far longer, one year at least.

Because bank messages are often time sensitive, you should also send the message, or a message notification to the user's standard email account. Better yet, allow users to receive message notifications at multiple email accounts, therefore increasing the chances that one will go through.

Action Item
Many banks already have this capability, but it may be overlooked by customers, as they have become accustomed to receiving messages over the Internet.

Now would be a good time to remind customers to look in their message folder periodically. You might run a sweepstakes or treasure hunt that requires looking into message folders to win.

If you'd like to learn more about the future of online bank messaging, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

In our most recent tests, we found great improvement in the quality and timeliness of responses to Web-based queries. However, we found that the “look and feel” of email responses left a lot to be desired. The typical bank response was a few lines of text and perhaps a link or two to general information. And because of poor choices in the FROM and SUBJECT fields, the responses looked spam like and easily overlooked.

Compare those bank messages to email responses from leading Web-based retailers and service providers such as GoDaddy, an Internet domain name registrar (screenshot below). Most savvy retailers use graphically appealing HTML messages to get their point across effectively, and when appropriate, up-sell the user on a solution that solves their problem. In the GoDaddy example below, I asked a question about website capabilities and received an excellent response along with an appropriate upsell into their $3.95/mo hosting option (see note point 4 on the screenshot below).

GoDaddy knows shows their savvy in responding to customer service inquiries. Not only is it good looking and answers my question, it arrived eight minutes after the question was submitted, beating by three minutes the expected call center hold time listed on the website. That’s how to deliver e-service, faster than alternative channels. The email response grabs your attention with a well-designed layout including the following (see corresponding numbers above):

1.      Answer to my question (at the top)

2.      A real person responding to the question

3.      Link to a privacy policy                                                                                                                  

4.      Banner to select the service upgrade about which I had inquired

5.      Phone numbers for customer support

6.      Repeat of my original question (not visible on the screenshot)          

My only major complaint with GoDaddy’s message is that it fails to identify itself in either the email From field (it used “Support”) or the Subject field (it used: “Other: One page website incident 040506-001360”). 

Bank Examples

In comparison, the typical bank response is delivered in plain text with few helpful links. Following are examples of banks responses to a general non-customer query via their websites.  

The question posed: Do you offer overdraft protection that does not charge for each advance?

Email response from Chase to a question about whether they offered no-fee overdraft protection: The speedy response, 41 minutes, answered the question correctly and concisely and provided a phone number for more information. However, there were no links in case I wanted to sign right up for the account I asked about. Score: A for service, D for sales. (09 Apr 2004)

Teller-assist terminals from Source Technologies could be deployed as a pod around a human. This mock-up from the company’s website shows a relatively tight arrangement. Initially, customers are likely to want a bit more privacy to feel comfortable using the semi-self-service terminals.

 Teller-assist terminals can also be installed as standalone terminals anywhere in a branch, or like traditional ATMs, in an off-site location.

Usually we discuss innovations, this is an exception. We'll call this a non-innovation, non-ovation for short.

In a time where all the huge Web-based email providers, led by Google's free 1 GB of storage, U.S. Bank decides to delete emails sitting in customer in-boxes (within their online banking platform) after just 30 days. This includes estatement notifications.

Assuming the average customer gets one message per month, and each message is 2k in length, that saves about 20k in storage costs per customer, compared to keeping the messages for one year. Assuming the marginal cost for disk space is $10 per GB, that policy change will save an awesome 2 one-hundredths of a cent per customer per year, or $200 per 1 million customers.

Extensive online archive space is one of the biggest benefits of banking online. Don't be pinch pennies on one of the lowest-cost aspects of your online Usually we discuss innovations, this is an exception. We'll call this a non-innovation, nonovation for short.

In a time where all the huge Web-based email providers, led by Google's free 1 GB of storage, U.S. Bank decides to delete emails sitting in customer in-boxes (within their online banking platform) after just 30 days. This includes estatement notifications.

Assuming the average customer gets one message per month, and each message is 2k in length, that saves about 20k in storage costs per customer. Assuming the marginal cost for disk space is $10 per GB, that policy change will save an awesome 2 one-hundredths of a cent per customer per year, or $2,000 per 1 million customers.

Extensive online archive space is one of the biggest benefits of banking online. Don't be pinch pennies on one of the lowest-cost aspects of your online presence.

-- JB

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The full text of the message is repeated below:
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Date: 09/14/04
To: Jim Bruene
From: U.S. Bank

Subject: Messages now refreshed after 30 days

In an effort to populate the message center with current information, all messages, including ones related to online statements, will be deleted after 30 days. However, online statements will continue to be available for up to 90 days and can be accessed in the Recent Statement area at the top and bottom of each account Transaction History page. Online statement customers will continue to receive a message in the Message Center when a new statement is available.

Electronic messaging is wide-open for innovation. The content, delivery, and style of your electronic messaging provide numerous points of differentiation, and the business case is positive with potential retention, cross-sale, and cost-reduction benefits (see OBR 91/92 for a complete analysis).







Source: Online Banking Report, 9/04
 

It’s difficult for outsiders to judge a bank’s service levels unless you interview a number of customers as Vividence and others are doing or use the bank’s products yourself. However, the bank’s website does provide clues to the relative value placed on e-service. Here are the things we would look for as a prospective customer, all of which are affordable even to the smallest organization:

Table 35

Ten Clues You Are Dealing with a Top E-Service Organization

1.       Help function accessible from every page

2.       Easy-to-find prices (not buried on the eighth page of the account agreement)

3.       Contact Us or About Us section prominently displays telephone numbers, email,
and mail addresses

4.       Service standards and guarantees prominently posted

5.       Detailed and up-to-date FAQs

6.       Customer feedback encouraged; for example, suggestion box or satisfaction survey

7.       Third-party endorsements/affiliations displayed, such as Member Better Business Bureau, Chamber of Commerce, TrustE, etc.

8.       Hours of operation displayed in appropriate areas

9.       Customer service staff and/or line management (especially branch managers) identified by name with online bios/pictures

10.    Customer testimonials and/or Q&A forums with actual customer questions

Source: Online Banking Report, 3/04

Table 36

Customer Experience at Major U.S. Card Issuers*

Source: Vividence, 4/04; Evaluations took place in July and August 2003; Banks evaluated but not making the top 5 were: Fleet, US Bank, Wachovia

A number of third parties evaluate financial website usability and service. One of the most thorough is Vividence,* which evaluates customer experience at the 10 largest banks and ten largest card issuers. In its latest analysis completed this month, Vividence ranked Bank of America tops in customer experience for existing customers, National City was second, and US Bank third.

The longest-running service evaluation is by Gomez Advisors (now owned by WatchFire), which ranks online banks across five categories, including customer confidence. Gomez determines the customer confidence score by evaluating the bank’s website and mystery shopping customer service. The most recent Gomez scorecard ranked Citibank first, Wachovia second, and Wells Fargo third.              

Table 37

Ranking Customer Experience at Major U.S. Banks

Sources: Vividence and Gomez, see below for details

Vividence, 4/04 & 9/03; Evaluations took place in July and August 2003; Banks evaluated but not making the top 5 were: Fleet, US Bank, Wachovia; Vividence Customer Experience Rankings are benchmarking studies using proprietary software tracking behavior and opinions across a 2000-user panel.

Watchfire Gomez Pro 10/03 & 10/99; Banks evaluated in Fall 2003 but not making the top 5: American Bank/pcbanker.com, American Express-Banking, Associated Bank (WI), Bank One, Chase, Charter One Bank, Citizens Bank, Commerce Bank (NJ), E*TRADE Bank, First Internet Bank of Indiana, First National Bank of Omaha, First Tennessee Bank, Fleet, Hibernia National Bank, Huntington, NetBank, National City Bank, Key Bank, HSBC, PNC Bank, SouthTrust Bank, U.S. Bank, Union Bank of California, Washington Mutual, Webster Bank

Because online customer service is required for survival, ecommerce companies often have the most highly evolved self-service facilities.

One

Drive users through self-diagnosis

To maintain high customer satisfaction without driving servicing costs through the roof, online retailers and consumer service companies attempt to answer basic questions through a Web-based self-diagnosis. Only after the user has finished the diagnosis is the option given to submit questions via webform. Even then, a newer technique called email deflection uses automated logic to attempt to answer the user’s free-form text question, before it’s submitted to a human. Cloudmark, an email filter provider, uses email deflection powered by iPhrase

Financial institutions should use this approach, especially in the tech support area. But take it slowly, walking before you try to run. Most customers still prefer the telephone for service problems, so they may resent your attempts to at call deflection. Most have spent years dealing with frustrating live-service-rep deflection on automated telephone systems, so it won’t initially be viewed as a positive. You need to position the webform as a quick solution for common problems. Even customers that prefer telephone-based service appreciate an answer in seconds rather than the minutes required via phone.

What you don’t want to do is force the customer to spend minutes searching for an answer online, then minutes slogging through your call center menus and the subsequent wait for someone to help. Make sure that customers who have tried self-service first are given priority when they then email or call with their question. You could use special phone numbers or menu options to identify those that have already exhausted self-service options.

Two

Reward self-service

Users who primarily solve their own problems know they are saving you an enormous amount of money. An unexpected reward could be a powerful tool cement online relationships (the opposite of the old adage
the squeaky wheel gets the grease.). Try to make customers see what’s in it for them to use self-service and electronic channels. One approach that’s good for you and the customer is to reward self-service attempts by not requiring account numbers and other information to be reentered when escalating the question to human service. Data from the user’s self-service session could be made available to the human rep to speed up the process. Not only would this make the customer feel better about the current problem, it would encourage them to use self-service options for future problems. You have to wean customers off the phone one problem at a time over the course of many years.

Financial incentives and sweepstakes are another way to reward self service. Make a game out of it. Provide one sweepstakes entry every time a customer goes for a month without contacting customer service, or one entry for every FAQ page viewed, and so on. You could give away one prize per month, perhaps donated by local merchants for the advertising benefit. The total annual sweepstakes expense would be the equivalent of just a few weeks of a single call center employee’s salary. 

Three

Provide incentives for registering

Few banks allow non-online banking users to register with the site. But this limits your ability to track customer visits from the 50% or more of your online users that have yet to sign up for online banking. Once users register, you can use cookies to track their usage over time, thereby improving your ability to service and sell to them more effectively. During registration you would capture name, email address, account ownership at your bank, and opt-in for future email messages.  

You could boost registration rates with a sweepstakes or other benefit. Registered users could receive one sweepstakes entry every time they visit the site. For customers, you could provide an additional entry for every product they have with you. The cost of the giveaways can be kept small. For example, a portable DVD player once per month or once per quarter would likely suffice for a small or medium financial institution. The total cost would only be a couple thousand dollars per year.

Four

Categorize questions

To provide quick email responses, it’s important to have users categorize their questions before they land in your e-rep’s in-box. At minimum, users need to identify whether they are a current customer and which product they are asking about.

Mock-up of webform for customer service inquiries.

1.       Do you have an account at yourbank?
___ Yes    ___ No    ___ Don’t know

2.       What product does your question concern?
___ Checking
___ Savings, money market, CDs
___ IRAs/SEPs
___ Stocks, mutual funds, or investments
___ Credit card
___ Debit card or ATM transaction
___ Mortgage
___ Home equity loan or credit line
___ Other

3.       Does your question involve:
___ Solving a problem with an existing account
___ Opening a new account
___ General information
___ Other

Five

Provide multiple channels for communication

Customers still prefer to resolve questions with a human. So make sure your customers don’t feel forced into electronic channels. Again, try to make customers see what’s in it for them to use self-service and electronic channels, without hiding your other customer service channels. Let your profitable customers contact you in any way they see fit. If you provide e-service on par, or better, than call center or branch service, customers will gradually migrate to the most efficient channel. The reason customers prefer calling the bank today isn’t because they enjoy reacquainting themselves with your phone tree and on-hold music selection. They continue to call because they believe that is the most effective method to resolve their problem. Once you demonstrate your e-channels to be equally effective, customers will respond accordingly.

It’s a different story for your unprofitable customers. By all means, drive them gently into lower cost delivery channels. Just make sure you don’t create adverse publicity by “forcing” grandma to use email to inquire about her CD rollover.

Six

Provide proactive communications

You can head off many customer service calls by providing timely email account alerts and transaction confirmations. Imagine how much Friday afternoon volume could be displaced if every direct deposit customer received an email when their paycheck hit their account. Charter One Bank uses its call center to sign up customers for its alert service. Whenever a call comes in that could have been handled by an automatic alert, the customer is given the option to sign up for future alerts. Because Charter offers phone and fax options the customer needn’t even be online to use Charter’s system. A significant amount of the bank’s initial alert signups were obtained in this manner. The alert tool also helps drive users into online banking. Once account alerts begin arriving, online banking is a natural progression.

Seven

Provide email response times on par with call centers

The last time we tested email response times, the typical reply, if there was one, took several days. Today, response times are much improved, with half the sample answering the same day. But enormous room for improvement still exists. Before e-service can really take off, users must be treated on par with call-center users. If you answer email questions in 24 hours and telephone calls in two minutes, customers will continue to pick up the phone.

Within the next year or two, we believe banks will typically answer routine questions in less than an hour. That will be good enough to deflect many calls. In our recent test, two top-10 banks beat the 60-minute standard,* Washington Mutual with an amazing four minute response time and Fleet with a respectable 46 minutes. With a network of “on call” e-reps to handle peak loads, email support can eventually be faster than the phone, without any increase in expense. 

*The 60-minute response time doesn’t have to happen over night. You could start with “same-day responses for questions received before 2:00 PM,” and improve from there.

Eight

Cross-sell during service opportunities

Every customer interaction is a potential selling opportunity: overdraft credit lines when checks bounce, online banking when statements are lost; transaction alerts when customers call about a specific check. For best results, emphasize the immediate benefit. For example, “Sure, we can waive that NSF fee, and as long as you take a moment to request an overdraft line of credit so that it doesn’t happen again.”

Nine

Charge for premium support

Some customers demand the best of everything and are willing to pay for it. Take advantage of this sentiment by offering a premium bundle of online services and support. For example, the Platinum E-Account with unlimited bill payment, VIP support line with guaranteed 15-minute response, and 100% no-questions-asked fraud protection. Most software companies now offer fee-based support options that allow customers to select their desired level of service support.

For $40/yr, Dell buyers can upgrade to Express Tech Support which allows users to “jump to the front of the line” when placing tech support calls.

Ten

Humanize the service experience

One of the main reasons customers prefer branch and telephone service support is the desire to deal with a human accountable for satisfying the customer. To recruit users to e-service, you need to provide similar human accountability for electronic service.

High-value customers could be assigned one or more permanent human points of contact within the e-service center. Each service inquiry would automatically be routed to the designated human(s) whenever possible. Alternate routing sequences would be established for off-hours, holidays, and vacations. Alternatively, the human rep could be copies on all service inquiries and could chime in with additional comments or help.

The human point of contact would proactively serve the user, periodically reaching out to see if the customer had questions. Furthermore, the point of contact would keep detailed records of prior service contacts so the customer did not have to reiterate previously communicated information about a problem.                          

Net Earnings, yet another Silicon Valley financial services start-up, has created a service tailor-made for small business banking Webs.

CreditFYI allows users to easily evaluate the credit quality of businesses using simple Web-based forms. The entire process takes about 3 minutes and costs just $14.95.

But the best part of the service is the concise, easy-to-read, and graphical summary of the business’s credit profile (screenshot left).

Front page includes credibility-building logos of partners Fair, Isaac and Experian.

CreditFYI Advice for Denying Trade Credit

If you choose to decline credit or give less favorable terms, use the following explanations:

•  They have had relatively little business credit experience.
•  They have had overdue payments.
•  They have assets pledged as collateral which financially solid companies do not ordinarily use as collateral.
•  They have had relatively few satisfactory trade credit relationships.

Source: Net Earnings, 6/26/98, www.creditfyi.com

Launch Date: June 1998

Pricing (end-user): $14.95 per credit evaluation

How it Works: Since business credit information is not subject to the privacy issues inherent with consumer data, the product requires fewer identify verifications, and consequently is easier to use. Although it’s targeted to businesses, any interested party can use it provided they have a valid credit card number. The user simply enters the target company name, verifies the entry from a list of business name(s) matching or close to matching the desired business, enters their credit card number, and presses submit.

Market Potential: According to Net Earnings, there are currently 3 million small businesses using the Internet. The company estimates that each small business has the need to evaluate business trade credit 30-35 times per year; although most currently don’t use the solutions available from Experian, Dun & Bradstreet and others because they are too time consuming, too expensive, and/or businesses are simply unaware of their existence.

In dollars the potential is:

$15 per report

x 32.5 reports per year

x 3 million small businesses

= $1.5 billion per year

The market would expand as the 7 million small businesses NOT using the Internet today began doing so during the next 5 to 10 years.

Business Model: The service will be sold directly on the CreditFYI Web site and in co-branded partnerships with financial institutions and other Web-based information companies. The company could also sell marketing sponsorships on its Web site.

Future Products: Net Earnings is planning to develop an automatic monitoring service to be sold on a subscription basis. The monitoring service would keep the user apprised of any changes to the target companies’ financial situation so trade credit terms could be changed accordingly, and/or collection efforts could be accelerated. This would be an ideal enhancement for an online business banking program.

The company also operates the Small Business Center www.smallbusinesscenter.com , a small business site positioned as a one-stop shopping service for business related financial and other services. The company is also launching a separate loan-related offering called LoanWise that will compete with Intuit’s Business CashFinder in matching businesses looking for credit with lending organizations.

Financial institution Cost:

Net Earnings plans to charge a fixed license fee plus a transaction fee for each credit evaluation delivered. At the MSRP of $14.95 per report, a bank can pocket a few dollars on each transaction. The remainder of the fee compensates Net Earnings and its two partners: Fair, Isaac who provides company info and Experian who provides credit information.

Financial institution Opportunities: Net Earnings is actively looking for banking partners to offer CreditFYI to their clients on a co-branded basis. Banks could use the service in a number of ways:

•  Spice up small business Web offerings with a useful transaction-oriented service; a welcome departure from the rampant brochure-ware in the market today (OBR 9/97).
•  Bundle it with other online banking services to differentiate your online package from others.
•  Position it as the centerpiece of an image marketing campaign, or as a proof point of how your bank does a better job of taking care of business.
•  Use it as a traffic builder to increase the flow of new prospects to the bank’s Web.
•  Operate it as a stand-alone, fee-based profit center.

Financial Institution Pros:

•  You could be first on the block to offer CreditFYI.
•  The fast, useful, and cost effective service would provide a good impression of your bank’s small business services.
•  It would attract business prospects to your Web, especially if non-customers were allowed to use it.
•  Helps build relationships with existing business customers.
•  Could be a breakeven operation, or even a minor profit center.
•  Easy to implement.
•  Low-risk offering with little financial/operational downside and few privacy concerns.
•  Can be integrated with bill presentment offerings, e.g., before presenting an invoice for payment electronically, the biller could check the credit status of the recipient and alter payment terms accordingly.

Financial Institution Cons:

•  Information presented on new and/or small businesses is often sketchy; can be mitigated by bundling more information into the service such as search engine results.
•  Risk rating can be misleading if based on non-current or small trade credit info.
•  Potential litigation from parties denied trade credit based on inaccurate info in the reports; could be mitigated contractually with indemnification from the information providers.
•  Inability to differentiate service if every bank begins to offer on the same co-branded basis; could be mitigated with exclusive contract, private-branded offering, or bundling with proprietary bank services.
•  Little upside for the service (unless you make an equity investment), especially once it’s an established service offering; you would probably get more bang for your buck by improving the loan origination functions of your Web.

Analysis: In testing the service, we found it to work even faster than promised. It took just 1 minute and 43 seconds to find our target company and retrieve its business credit report. That includes entering and authorizing a credit card number, choosing a company to evaluate, and downloading the evaluation. We’ve spent far longer waiting for a single bank’s home page to download. This makes this product one of the few financial services “impulse purchases” on the Net. For a total investment of 103 seconds and $14.95, businesses won’t think twice before ordering credit reports on all their clients.

In comparison, Experian’s Snapshot Report took 2 minutes and 29 seconds, but that was after spending nearly 3 minutes registering for the service (on subsequent visits registration would not be required).

Net Earning’s report was very easy to read and could be digested in about 60 seconds. The entire report only contained about 150 words. But we were somewhat disappointed at how little information the report contained. That has more to do with the sketchy nature of trade credit files of small businesses, than anything Net Earnings can or can’t do.

However, we found it puzzling that Net Earnings supplier, Experian provides a few more bits of data such as principal name, estimated employees, estimated annual sales, and aggregate dollar value of reported trade credits in its $14.95 Snapshot Report. According to Net Earnings, the extra info isn’t provided for “technical” reasons and will soon be added.

Regardless, a bank offering CreditFYI would be wise to bundle additional information with the credit report, such as search engine results on the target company and/or white/yellow page info from BigBook or others. We predict Net Earnings will do the same in future releases if you prefer to wait.

We spoke with Mr. Grossman and Mr. Belser in San Francisco a few weeks ago. They are anxious to finalize distribution deals with banks, but don’t want to give up their branding if at all possible. They wouldn’t rule out a private-branded deal, but the partner would have to make a significant investment in order to compensate the company for hiding their brand.

If you are comfortable with a co-branded arrangement, you may be able to get in on the ground floor under favorable contract terms compared to those that come later. In addition, a major player may be able to participate in the company’s upside with an equity investment.

Net Earnings needs help finding the three million small businesses, educating them on the benefits, and getting them to try the new service. Banks, with credibility and existing financial relationships with Net Earnings target market, are ideal distribution partners.

No matter how you structure it, if your 1999 plans include attracting more small businesses to your bank, we recommend a trip to the Bay Area to discuss the possibilities with Mr. Grossman.

Contacts:

At Fair, Isaac, Latimer Asch is VP Commercial Products, (415) 472-2211.
At Net Earnings, Michael Grossman is CEO, mikeg@netearnings.com Scott Belser is COO, sbelser@netearnings.com , (650) 401-3600.

You can build a profitable online operation by focusing on one or two niche markets. But to create a superpower like Amazon.com, you’ll need to dominate one or two major mainstream financial services.

Following are 31 building blocks for developing a compelling financial services offering on the Web. The list has been divided into product-oriented “Centers” and interactive “Features.” You’ll need to integrate items from both lists to compete for the interactive consumer in the year 2000 and beyond.

MoneyPage is a financial hub marred by slow and distracting banner ads on the first page.

 

We’ll go out on our last limb of 1997 and offer up bill payment programs for various sales goals using the $500 per account acquisition cost figure developed on the preceding page. For a modest undertaking, looking to generate an incremental 10 new bill payment/loan accounts per month, we have recommend a serious of non-transactional services costing less than $60,000. On the other end of the spectrum, a bank could spend $1.5 million for a Web-based bill pay program generating 250 new accounts per month. In the chart below, solid boxes indicate recommended features. Unshaded boxes are optional.


Notes:

1.) number of new bill payment/loan customers per month; dollar value assumes $1,000 value per new account generated (see p. 2 for derivation)

2.) can be offset with bill pay monthly, annual or transaction fees

3.) can run on in-house server, though development will likely be contracted to a Web shop

4.) range of fees that could be charged for the service, per month unless indicated otherwise
 

A year ago we took our first look at the marketing and delivery of credit products online. At the time we were somewhat surprised by the lack of activity and innovation online. A year later our opinion has changed little, but we are encouraged by all the work being done behind the scenes — projects that should come to market during the next 6-12 months.

You still have time to get your online lending initiatives off the ground before the competition gets brutal. Here’s why it will. Let’s say we’ve got a smidgen of seed capital and our eye on the 40 million households soon to be online in the U.S. We’ll let the existing players keep their marginally profitable checking accounts, their expensive ATM networks, and all that brick-and-mortar investment. We just want the loans. Especially the big ones secured by home equity. A good-sized home equity loan with a reasonable interest rate can have a net present value (NPV) in the $2,000 to $5,000 range (assuming $30-40,000 average balance,
2-3% net interest margin, and 4 to 5-year loan life). If the Web site were to generate 85 of these gems each month (1,000/yr), we’d have more than $30 million outstanding in a year, generating $600,000 to 900,000 in annual revenue. And that’s just from the loans booked in the first 12 months. Run that out for five years, and we’ve got a $3 to $4 million business running on a couple PCs.

If you’re skeptical that a start-up company could generate this type of volume, you’ll be interested in our overview of E-Loan E-Loan just received mortgage application number 1,000 less than four months after launch. After 40 years of credit card direct marketing, it’s pretty clear that U.S. consumers will take money from almost anyone offering a convenient loan package and a competitive rate. It won’t be any different online.

Is your top management, or board, wondering when you’ll make a payoff from all the dollars invested online? It’s a legitimate question. If you don’t have a good answer, then you’re not working the loan side hard enough. From a revenue-generation standpoint, checking account access and bill payment might better be thought of as simply a means of getting customers online in order to market loans to them in a highly personalized way.

Arkansas National’s banner ad on BankRate’s Web, www.bankrate.com .

Look at Arkansas National Bank’s innovative marketing approach. The $182-million bank is featuring its 7.92% APR credit card in banner ads at one of the key venues of online credit card information, Bank Rate Monitor, www.bankrate.com . Once the bank gets the consumers’ eyeballs on its Web www.arknatl.com , it loads the bargain-rate card up with a companion checking account, overdraft protection and online bill payment. But it’s presented in a way that doesn’t make it feel like “bait and switch.”

By this time next year, a typical user’s online session looking at their bank or credit union accounts, will also include targeted messaging for loans and lines of credit. The innovators will offer instant credit approval with just a few clicks of the mouse. E-mail rate update services will be as common as payment calculators are today.

Throughout 1998 we expect to see aggressive moves online by mortgage brokers, finance companies, non-banks, and the direct banking divisions of major commercial banks. We’ll see pitches for all types of credit products, from credit cards, to personal loans, to home financing. There will be banner ads galore, sweepstakes, low-low rates, free computer premiums, and instant credit approval. The most concerted efforts will be in the lucrative home equity market with the large line sizes, lower credit losses, and insatiable consumer appetite in areas where home prices have appreciated.

But the big players aren’t going after these loans yet. In fact, during our recent test of five search engines, we found only one where a financial services ad popped up when searching on the term “home equity loan,” and that was a financial planning message from John Hancock. However, First USA is showing a home equity loan banner on “personal loan” at InfoSeek and Bottomline Mortgage is advertising home improvement loans on “refinance” at AltaVista.

Even more surprising is how few total hits we got on the term “home equity loans” (the parenthesis are important at some search engines). Only four in Yahoo’s directory and only 1,800 in AltaVista’s simple search. Evidently, most financial institutions aren’t even using that term on their Web sites. That’s something you can correct during the next five minutes. Send the following e-mail to your Webmaster now.

Bottom line: you still have time (9 to 15 months we’d estimate) to protect your turf by building your own cyberloan offerings. All else being equal, your customers are going to borrow from you. But increasingly the “all else” is going to include online loan services along with rate, line size and a convenient application.

Business customers may be your best prospects for online services. But they may be the most difficult to please. And you’ll have to compete with everyone from American Express to the Money Store for their loyalty.

Most banks have invested the bulk of their Web site budgets on the consumer side…and it shows. We have searched high and low and have found a surprising lack of creativity in the banking sites geared towards small businesses. Many banks would be better off removing the boilerplate brochures and simply listing the names, phone numbers, e-mail addresses, and specialties of their commercial loan officers. At least a small business prospect would feel they gained something from their visit.

In an effort to provide inspiration for your business banking efforts, we have outlined potential online strategies and tactics to help you:

• reinforce the overall marketing message that you care about small business customers
• attract new business customers
• provide better service to your existing business customers
• book more small business loans

Even though 60% or more of small businesses have a modem, that doesn’t mean the Internet has become the most convenient way to send and retrieve information for everyone. For many, the by-now ubiquitous fax machine is still the tool of choice for fast “online” communications.

As you build out your online content, consider putting all the Web-based information on a fax-on-demand server for easy retrieval by the Web-challenged. The additional cost to port your forms and documents to a fax edition is minimal compared to the incremental business potential of the business market.

Along the same lines, many business executives are daily e-mail users, but only casual Web users. Consider “e-mail versions” of appropriate documents. For example, a small business owner interested in your loans could send an e-mail to loans@yourbank.com and automatically receive loan information and an applications via e-mail.

Finally, don’t neglect e-mail/Web/fax hybrids for the mobile professional who may not always have a fax machine, printer, or Web browser nearby when needing information. For example, a traveling executive accessing your Web site from his/her hotel room might want to print a report by sending it to the hotel’s fax machine. Or a business owner using the company’s
e-mail system might want to send you a message requesting a faxed loan application. The cost of putting these communication technologies in place could be returned in just one or two incremental business loans.

Commercial Lending Services

Make sure the lending portion of your Web is done right before moving on to other content areas. This is where you’ll make the money to fund the rest of it.

Payment Services (consumer-to-business)

After lending services, the next most likely reason a potential business client will seek you out on the Web is for payment acceptance services (e.g. Visa/MasterCard) for goods and services sold on and off-line. Again, make it easy to find this part of your Web site. Even if you don’t offer merchant services, refer users to reputable firms that do.

Payment Services (business-to-business)

While payment acceptance is a vital area for retailers, the automation of accounts payable (e.g. bill payment) is something that could benefit each and every one of the 22 million businesses in the United States.

Internal Payment Services (to employees)

The last area of payment services, business-to-employee, has received little attention from the bill payment players such as Checkfree, MSFDC, and American Express. Though medium and large business payroll needs are well met by ADP and others, we believe payroll services for very small businesses and expense account services for all size businesses (cash advance/reimbursement funds transfer and tracking) could be a profitable value-added service especially when integrated with a revolving business credit card product.

E-Commerce Services

Even though they may be money-losers today, providing a broad range of E-commerce (EC) services could be the best way to show potential business clients that you intend to support whatever new payment mechanisms lay ahead in the next century. There is so much fear, uncertainty and doubt (FUD) in the EC arena that anyone who can provide real-world advice and assistance could quickly gain market share among the growing number of businesses wanting to use the Net for financial transactions.

Virtual Shipping Center

This has nothing to do with banking, but it’s a way to add value to your Web site with little investment. Become the one-stop-shop for package shipping/ tracking information in your market. You could very well gain bookmark status on the browsers of potential clients big and small.

;

Virtual Research Services

According to FIND/SVP, the number one use of the Internet, used by 81% of small businesses, is online research (see table on next page). But with the glut of information available on the Web, even power users can become overwhelmed. Help your clients help themselves by creating a Virtual Research Center with links to the major search engines (see chart below) with brief explanations and examples of how to use.

Be sure to “localize” your Research Center by including directories developed by companies in your area. (You may want to subcontract the entire area out to one of these companies.) Also tell users how to use the national search engines to find local information, e.g. when searching for local computer rental stores type “computer rental” (in quotes) and “yourtown.”

Virtual Professional Services Center

Who would be better than the local business banker to sponsor a directory of professional service firms? You could opt to include everyone in town, just your customers, or some other criteria. Just make sure you clearly disclose it up front.

• Directory of accountants
• Directory of tax advisors
• Directory of commercial real estate agents
• Directory of financial planners
• Links to other general business resources (IRS, SBA, AMA, etc.)
• Directory of consultants
• Speakers bureau

Virtual Customer Network

Along the same lines as the Professional Services Network, provide an area where clients can place links to their businesses as Franklin Bank has done below.

The Franklin Customer Network at www.franklinbank.com/network .

Franklin Bank (Southfield, MI; $486 million) developed the Franklin Customer Network listing e-mail addresses and Web sites of its customers. There were 29 entries (Sep. 17), about half listing just an e-mail address, the other half with just a Web address (no e-mail). The bank should expand the listing to allow a phone number, fax number, and both an e-mail and Web address.

Contact: Rebecca Christian is SVP Communications and Marketing, 810.358.4710.

Virtual Business Concierge

The Virtual Concierge extends the Professional Services Center (left) concept to include personnel, facilities and entertainment resources. If you have positioned your financial institution as a service leader that goes the extra mile for your clients, here are some services you could offer in cyberspace to reinforce that positioning. 8

• Directory of travel agents/providers
• Directory of temp agencies
• Directory of temporary office facilities
• Directory of government agencies
• Directory of meeting venues
• Entertainment schedules with links to ticket brokers
• Schedules of sporting events with links to ticket brokers
• Directory of caterers
• Directory of restaurants
• Directory of business equipment rental services
• Directory of office equipment/supply retailers and manufacturers
• Links to area traffic reports, weather
• Directory of volunteer opportunities/agencies

Overall, the Web-based banking services geared towards the 22 million U.S. small businesses are anemic at best. (Know a good one? e-mail bizsites@netbanker.com ). But the situation is changing. Banks and others are beginning to put together respectable small business-oriented Webs with UK’s NatWest leading the pack. But the best work is still coming from non-banks such as American Express (on the Web at www.americanexpress.com/smallbusiness  or on American Online at keyword ExpressNet), which has integrated its financial services with travel services and general small business.

Opportunities Abound

Does anyone smell an opportunity here?

1. More than 70% of small businesses already manage their finances by computer (see chart above). QuickBook users alone number more than 1.5 million according to Intuit.

2. Small businesses are big purchasers of financial services, spending an average of $14,000 per year according to the recent McKinsey/BAI study, Unlocking Winning Strategies to Serve Small Businesses (see table below).

3. Small businesses are ready for online banking. Although current usage has been pegged at only 8%, a new study by Booz, Allen & Hamilton found that 33% of small businesses and 39% of larger ones expect to be banking on the Internet within three years.

4. Small businesses, unlike consumers, will actually pay extra for operational efficiencies realized through banking online.

There is a large gap between the 71% of small businesses managing their finances by computer and the 8% using online banking. We believe this 63% gap will be rapidly filled during the next 3-5 years by banks and non-banks who offer businesses a compelling package of online services and commercial loans/lines of credit. We project that small business usage of online banking will surpass 50% by year-end 2000.

While the current lackluster state of small business Web banking is bad news for the businesses themselves, it’s great news for banks looking to increase share in this lucrative market.

Even if you aren’t quite ready to provide online account access, you can still differentiate yourself with innovative online services. Small business banking Web sites today are where consumer sites were a year ago — at the electronic brochure stage. A relatively small Web investment in late ’97 or early ’98 could position you as a business-banking pioneer for years to come. Perhaps insulating your earnings against the ebb and flow of the fickle consumer market.

Canada Trust
www.canadatrust.com

• 
  Canada Trust uses E-Courier to “push”
  e-mail price and rate updates.

Canada Trust (Toronto, Ontario; $30 billion USD) continues its pioneering ways with two important additions to its online services:

• Microsoft Active Statement allows EasyWeb users to download data directly into Microsoft Money 97. Canada Trust is the second major North American bank to offer the feature. Wells Fargo (below) has had it since Feb. Canadian banks, CIBC and Toronto-Dominion are also planning to offer ActiveStatements.
• E-Courier, is a free outbound e-mail (push) service that provides mutual fund price alerts at user-defined price points, rate updates, and news commentaries.

Contacts: Bertrand Labelle is Manager Electronic Commerce at Microsoft Canada. Chuck Hounsell is VP Distribution Development at Canada Trust, 519.663.2548.

Wells offers a “download” option from its Web. Users select date range and file format: ASCII/spreadsheet, Quicken, Money, or Money 97 Active Statement.

Being the numbers junkies we are, our favorite part of industry conference are the various statistics scattered amongst the hyperbole. Faulkner & Gray’s well-attended Home Banking Forum had its share of new numbers to add to the glut of data available these days. Here are some of our favorites:

Financial services marketers are working on innovative ways to deliver information right to your desktop.

Meca Software is getting pushy, and wants to bring banks along for the ride. The bank-owned publisher of Managing Your Money is using technology from push leader Marimba Inc. to develop an Internet-based broadcast network called ebranch that will let banks transmit account information, transactions, investment news, advertising and other information to customers’ PCs.

he service, slated to be ready for consumer consumption by Q4, is one of the first announced marriages of banking services with push technology, which delivers information to Internet users rather than make them hunt for it on the Web. It’s also the latest sign that personal financial management tools are moving from the desktop to the Internet.

Meca is not the only one looking to build push functions into its software. Microsoft and Intuit are expected to build some push functions into their next version of Quicken and Money. But Meca has been the most vocal about its plans, and may be in the best position to pull it off given the benefits a pushed-to-the-desktop bank channel could have for its mega-bank owners, BankAmerica, NationsBank, First Bank System, Fleet Financial, Royal Bank of Canada and The New England. Partnering with Marimba helps Meca keep up technology-wise with Microsoft and Intuit.

Subscribers of “pushed” financial services will be greeted by a synopsis of their financial position as soon as they turn on their computer.

Though ebranch is still in the early testing stages, analysts are already giving Meca high marks for turning to the Net. “The company’s given up the ghost in ever trying to beat Quicken and Money and doing the most with what it’s got,” said Karen Epper, an analyst with Forrester Research in Cambridge, Mass.

In ebranch, Meca is building an interactive broadcast medium it will sell to banks and other financial institutions, which are expected to incorporate it with other Internet and PC banking offerings and customize it to fit their needs.

Meca intends to begin testing ebranch by late May with an unnamed financial institution – not one of its bank owners – and add one or two more pilot partners before commercial rollout, said Meca President Paul Harrison.

The service will be built on Marimba’s Castanet family of push products. The Java-based products include a server called a transmitter that plugs into an HTTP server and acts as an information distribution engine, and client software called a tuner, which users program to search multiple transmitters and download information or software applications and upgrades.

Once up and running at a bank, a customer could configure ebranch “so at 6 a.m. it delivers your bank balances, quotes on four stocks you’re interested in and the company news on those stocks and the day’s Wall Street Journal. When you’d turn on your PC it would have everything you’re expecting,” Harrison said.

Banks will deliver the ebranch tuner to customers on a floppy disk or direct them to download it from the institution’s Web site. Better yet, the tuner is expected to be incorporated into future browsers. Netscape has said it plans to include Marimba’s tuner in its upcoming Netcaster (formerly called Constellation) browser. Once installed, the tuner becomes the customer’s interface with the bank, replacing a Web browser or serving as a customized browser.

Meca hasn’t determined what it will charge banks for ebranch, but expects financial institutions to offer the tuner software for free. Marimba also gives away the tuner; Castanet transmitters start at $15,000 for unlimited use and $995 for a license that permits 100 user connections an hour.

Meca is one of the first, but not the only financial services company working with Marimba. The Palo Alto, CA, venture, started with much fanfare last year by four members of Sun Microsystems’ original Java development team, is also partnering with Schwab, Morgan, Lehman Brothers, CNNfn and other financial services businesses Marimba officials won’t name.

Banking and investment services and push technology are a good fit, said Dave Cope, Marimba’s Marketing VP. In addition to the ability to deliver an application and content, Marimba offers reporting tools banks can use to track what services their customers use or don't use. Another bonus: banks can customize channels of information to deliver anything they please.

“So if a financial institution decides they have five types of customers – heavy traders, light traders and so on – they can automatically provide a different look and feel for each one. The Castanet transmitter has software plug-ins that provide for personalization,” Cope said.

CNNfn, the cable giant’s financial news Web site, may soon join the Webcasting frenzy with a financial channel. It will only be a matter of time before bank partner(s) ride on CNNfn’s coattails and add account data to the info stream.

Such customization means banks can deliver specific advertising to specific customers as well, added MECA’s Harrison. That’s an important selling point for banks that want to replace brick-and-mortar branches but don’t want to lose cross-selling opportunities, he said.

Contacts: Dave Cope is VP Marketing at Marimba, 415.328.5282, cope@marimba.com. Paul Harrison is President at Meca, 203.452.2608.

-------------------Michelle V. Rafter

Contributing editor Michelle V. Rafter covers the Internet for Reuters, the Chicago Tribune, WebWeek and others. Reach her at mvrafter@deltanet.com

Following is a summary of the ideas presented in this two-month series for part 1) on building customized financial services. We have grouped the more promising tactics in categories based on approximate budget hit. Cost estimates are very rough and provided for relative ranking only. Next Month: More on the business case for online financial services.

Financial institutions already have access to vast amounts of data on their customer’s financial situation. Add to that what could be learned from tracking customer preferences on a Web site and the possibilities are mind-boggling. Avoid analysis paralysis and focus on using just a few data elements to target high-revenue products.

For example, match users of your auto financing calculator against checking account deposit size (as a proxy for household income) and pitch appropriate auto-financing specials through e-mail.

In-House Data

SIGNATURE CARD DATA

• Complete name and social security number
• Age
• Marital status
• Employer
• Address and phone numbers
• Other demographics
• Beneficiaries

• Deposit history
• Check writing transaction history
• Funds transfer history
• ATM usage
• POS debit payees and transaction history
• Direct deposit originator and transaction history
• Preauthorized debit payees and transaction history
• Bill payment payees and transaction history
• Off-line debit payees and transaction history

CREDIT APPLICATION DATA

• Employer(s)
• Salary(ies)
• Vehicles owned and ages
• Assets
• Insurance
• Other creditors
• Other financial obligations
• Credit bureau information

CREDIT CARD DATA

• Credit card payees and transaction history
• Payment history (minimum vs. revolving)
• History of transaction disputes

OTHER ACCOUNT DATA

• IRAs
• Savings
• Joint accounts
• Investments
• Mortgages
• Installment loans and home equity
• Other revolving credit
• Insurance

Data Gathered from the Web

PREFERENCES/USAGE

• The importance of fees
• The importance of rates
• How often user checks balance/transactions
• Use of credit
• Use of computer for managing finances
• Financial services purchased from other providers

ATTITUDE/INTERESTS

• Concerns about fraud and financial privacy
• Loyalty to the bank
• Impression of bank
• Risk tolerance for investments
• Interest in general and/or financial news
• Interest in tracking financial markets and/or individual securities
• Interest in mutual funds
• Frequency of balancing checkbook (if at all)
• Interest/use of household budgeting
• Small business ownership/interest

SATISFACTION

• Rating of services/bank
• Suggestions for improvement
• Likelihood of remaining a customer

GOALS/NEEDS

• Savings/retirement goals
• Tax-planning needs
• Home purchase intent (first-time or trade-up)

WEB HABITS/USAGE

• Areas of the Web most frequented
• Length of time spent in each area
• Repeat visits to individual areas
• Type of questions posed to customer service
• Financial calculator usage

Bank of America
www.bankamerica.com

Bank of America’s Build Your Own Bank, was the industry’s first personalized Web site back in late 1995. After logging-in, users are greeted with “Welcome to the Bank of username.” I had not logged in for over a year and was greeted with 16 pages of messages and news.

Fleet Financial
www.fleet.com

Fleet’s Personal Navigator has been around for more than a year now. Fleet is still using the same five profiling questions which cover age, family status, home ownership, financial wherewithal, and preferences in cars. No word as to what, if anything, they are doing with this data. I haven’t ever been contacted by the bank, despite having been in the database for over a year. Of course, I have an out-of-area zip code.

Deposit Guaranty
www.dgb.com

We really like Deposit Guaranty’s Express Menu. Rather than employing pesky cookies, or requiring users to memorize users IDs and passwords, the bank creates personalized menus on the fly. It only takes a few seconds to check the boxes. One improvement, in our view, would be the ability to bookmark the personalized menu for future reference. The ill-fated First Interstate site used this technique.

PNC Bank
www.pncbank.com

PNC Bank is the latest with a customized Web page called, what else, Customized Banking. It includes both a Personal Profile and an Entrepreneur’s Profile.

See also: Summit Bank www.summitbank.com profiled last month.

There is no proven way to build a custom financial information service; it’s too new. Nor can you buy one off the shelf, though Quadravision www.quadravision.com, builder of Fleet’s Personal Navigator (p.5) and Summit Bank’s Your File , is as far along as anyone.

But don’t worry. Microsoft and Netscape are making it easy for you to take small, or large, strides in the direction of custom information delivery. The two Internet powerhouses have already equipped the client-side (browser) with numerous features for customizing the Web experience (push, Java, ActiveX, cookies).

The challenge for Web publishers (that’s you) isn’t technology, it’s marketing. What content and info services should you develop (balance alerts, rate updates, portfolio monitoring)? How should it be delivered (e-mail, Web site, Webcast)? How should it be promoted (banners, Web partnerships, print ads)? How should it be priced (pay per view, subscription, bundled with other services)?

Here are the building blocks for a custom-information delivery program:

1. Web Site Registration: To provide relevant, customized financial services, you need to know when specific users are at your Web site. While it’s true that Web surfing is usually an anonymous activity, Web users will trade their anonymity for valuable services. Financial institutions have the perfect bargaining chip to entice users to identify themselves…account access.

Once users have identified themselves the first time, you can use cookies to monitor subsequent visits. Cookies are identifying bits of information passed from the user’s browser to your server automatically. (Note: Users have the ability to disable this function.)

Keep the initial profile brief, no more than one computer screen, so as not to scare away users. You will have plenty of opportunities in subsequent visits to ask additional questions. Fleet does a great job in this regard. And don’t ask for a bunch of detail you already have on file, except as necessary to positively ID the user. Here are a couple data points to gather during the initial profiling session:

• name, address, phone (to match against your file)
• e-mail addresses (ask for more than one)
• marital status
• children/ages
• homeowner status

Intuit’s QFN site www.qfn.com uses cookies to automatically identify Web visitors that previously completed a short profile. Note: (1) Schwab ad on top.(2) Stock quotes for up to five of your favorites.

2. Activation: Your first goal is to get your customer in the habit of using your online services. This will be a whole lot easier if you provide account access. You could instead build news and stock info services to gain repeat visitors, but you will be competing with the likes of Microsoft, CNN, US Today, and The New York Times. Another technique is to build a rich set of links to local content. But again you’ll be up against a slew of competitors.

Let’s assume you offer account access. Establish an account activation plan to ensure that initial registrants begin using your online services. For instance, if two weeks go by and a new user has yet to log-in to see their data, send an e-mail reminder. Reiterate the benefits and procedures and probe for concerns and questions. If another two weeks pass, escalate the communication with an e-mail and phone call (or snail mail). Continue the e-mails every two weeks until the user activates or opts out (always provide instructions in each e-mail on how to stop the flow of electronic communications). A similar program could be used for those who stop using your online services after a few sessions. You might want to try activation/usage incentives such as contests and freebies.

3. Begin an Online Dialogue (Feedback Loop): Once you are past the initial learning curve, engage your customers in an ongoing dialogue designed to help you deliver customized, relevant services to each user. Start by pointing out valuable services that match what you know about your customer. For example, tell homeowners about your refinance services. Users can do what-if calculations on your refi calculator or fill out an online form to request an evaluation by one of your mortgage lenders. Let users choose whether they prefer to be contacted by e-mail or phone.

Since you are creating a dialogue with customers (which means listening not just telling), you’ll want to include a feedback mechanism in every communication. Ask the homeowners what they think of your refi tools. Were they helpful? Should they be changed or improved?

You’ll also want to track the closure rate of your financial advisory services. How many users visited your refi calculator after hearing about it in an e-mail? What types of calculations were performed? Where did they go next? Did they apply for a loan? Did it close?

Warning: You have the ability to record and store individual user inputs to your financial calculators and worksheets. We advice against doing so unless you disclose it ahead of time and provide an opt-out. Privacy issues on the Web are top-of-mind right now and you don’t want to be flogged in the media for a perceived infraction. Position data storage as a benefit, “saves time doing future calculations”, and you will get plenty of takers.

4. Offer Customized Advice/Solutions. To boost your share of customer, recommend solutions targeted directly to the individual user, incorporating everything you know about them. And make it easy to accept your advice (see 5 below).

For example, don’t just promote home equity loans to homeowners as a group. Develop specific debt-reduction plans centered around home equity. Propose actual loan amounts that would work within the bounds of the user’s estimated available home equity. Show how the user’s total after-tax monthly payment would decrease. And allow users to play around with the loan size/term/rate to develop the optimal solution.

5. Ask for the Sale: The Web is a great place for consultative selling. But don’t forget the selling part. It’s easy to get so caught up in providing valuable services to that you neglect the close. We’ve seen hundreds of loan calculators on the Web. But how many make us want to buy? Even a simple “apply for this loan now” button would be an improvement. Even better, a little hard-sell to get some action, “apply today and receive a new Iomega Zip drive,” for example

Here are some options to present users after they use an online calculator, complete an online worksheet, or otherwise indicate an interest in your loan products:

• apply now online
• apply now by printing the application and completing it by hand (mail or fax back)
• apply now by phone (have someone call)
• apply now in person (have someone call to set up an appointment)
• apply later online and save my inputs
• put me on your homeowners mail list to keep me informed of any new developments (lower rates, bank specials, etc.)
• let me know when rates hit xx% so that I can consider a refi at that time
• I am interested but have the following question, please e-mail/phone to discuss
• I am not ready to apply today, contact me at a later date (provide choices for next contact)
• I don’t want to tie a loan to my home equity, what other options do you offer
• I know someone else looking for a loan, contact them at this e-mail/phone number
• thanks for the info but I am not interested for the following reasons (provide a checklist of reasons)
• please don’t contact me

Here is one vision of your future interactions with a fictitious travel service, CyberTravel Inc. The first time you visit CyberTravel’s Web site you’ll complete a short profile indicating your preferences for airline, seat assignments, airports, payment methods, frequent flyer numbers, etc. For an example check out Microsoft’s Expedia travel service www.expedia.msn.com. But that’s just the beginning.

Over time you’ll tell CyberTravel what cities you frequent either for business or pleasure. You’ll rate the trips you’ve been on, the accommodations you’ve liked or hated, the hotel amenities you’ve used, the activities you enjoyed on the road, and how your travel companions rate these same subjects. Eventually the travel service will know more about your travel habits than you do, and will start to make highly relevant, customized travel recommendations.

For example, CyberTravel knows you visit Boston every couple months on business, and sometimes your spouse accompanies you for a weekend stayover. So you’ll be notified, via e-mail or Webcast, when the Boston Hilton (one of your favorites) is offering a weekend package. Or when American is offering free companion tickets to Boston.

Once you’ve fed it enough data, CyberTravel will even anticipate your upcoming needs to help you save money or avoid problems. For example, knowing that you are due for a trip to Boston, you might receive a message suggesting you book a flight this week to take advantage of an expiring airfare discount program. The travel pioneers are already implementing these concepts. Expedia offers Fare Tracker, a free e-mail service that sends information on discounts available on your frequently traveled routes. Outtahere from Worldview Systems and Internet Travel Network www.outtahere.com provides a low-fare ticker that runs in a separate window.

The possibilities are endless. And provided CyberTravel offers high-quality service and competitive prices, you’ll be hooked, and far less likely to respond to a $99 weekend package from a no-name company unaware of your requirements for a data port and exercise room while traveling.

Furthermore, CyberTravel doesn’t have to waste money advertising loss-leader specials in the hopes of luring in new, often transitory, customers. CyberTravel can focus its resources on providing solid advice and recommenda-tions to its loyal customer base. (CyberTravel could also set up a profitable side-business selling aggregated user-preference data to resorts, airlines, and hotel chains.)

Sometimes it’s easier to see the opportunities of a new tool by visualizing how it might be used in a different industry. The same techniques used by CyberTravel to engender long-term loyalty and repeat purchases can be used by a bank. In fact, because of the nature of your business, you already know more about your customers than the travel agent will ever know about theirs. You’ve got a credit application on file, you’ve got purchasing habits, savings habits, etc. And while financial services may not be as sexy as travel services, on a day-to-day basis they are much more relevant.

Relevancy is often the missing ingredient in today’s Web-connected world. Many (most?) Web users lack the time and/or patience to master the myriad little tricks necessary to become an efficient user of the Web. FIND/SVP’s latest research report indicates that 51% of the 27 million adult Internet users have searched for local information within the past three months. I bet most were disappointed with the results.

While it’s easy to find specs online for the latest generation server, or a brochure for the latest sedan out of Detroit or Tokyo, how do you quickly find relevant information on hotels in Boston? It’s still far easier to pick up the phone and call your travel agent than to research and book the accommodations online. But give the medium another five years and we bet you’ll never call a travel agent again, on the phone that is. Why? There will be no reason to. Your agent will anticipate your needs and deliver highly relevant alternatives right to your computer desktop. All you have to do is select the best option and hit enter.

Banks will automate personal finance tasks in much the same way travel agents automate travel bookings. Customers won’t come to you for balance info. You’ll deliver it directly to their computer desktops each morning along with the previous day’s transactions. Customers won’t need to write a check for the electric bill. You’ll pay it for them based on pre-defined preferences. Customers won’t have to visit your Web site to see how their retirement savings are progressing. Each day you’ll recalculate the value of their entire portfolio and e-mail a summary. And once a month or so you’ll include advice on making up any shortfalls against the plan. Finally, customers won’t have to lose sleep worrying about fraud and identity theft. Whenever suspicious activity occurs (based on previous usage) in an account or credit bureau file, you’ll send an immediate e-mail and/or voice message.

Ideas for adding value to online banking subscriber services:

Web-based services:

• tips and advice based on user profile and actual usage patterns
• set/edit user preferences

E-mail/push services:

• notification of service glitches/downtime
• notification if you have not been online for a predetermined length of time
• confirmation of all online session activity
• notification of suspicious account access based on prior usage patterns (e.g. access in the middle of the night when previously you’ve been an 8-to-5 user)