|Online banking—it’s so 1998|
June 14, 2011
By John Ginovsky, contributing editor
Online banking, once state of the art, has failed to keep up with the times. Banks in general are missing out on new revenue and cost-cutting opportunities, concludes a recent report from Celent Inc.
“The online banking space has stagnated for far too long. The evolution of the internet has provided consumers with rich and interactive experiences online. Unfortunately, the banking industry has not kept pace with the evolution of the internet, and customers have started to demand that their banks keep up with the times,” says the report, “Top Trends in Retail Online Banking.”
If banks don’t act swiftly, the report concludes, they put critical customer relationships and revenue at risk.
“`Swift,’ in this instance means immediately,” said Jacob Jegher, author of the report, in an interview. “However, for large banks, these overhaul projects will be a good three-year affair.”
Specifically, he said, in order for banks to offer state-of-the-art online banking, they are going to have to:
1. Fund large projects to completely overhaul online banking.
Banks have to be committed to catching up to consumer expectations online, and have plans to regularly refresh their online banking channel.
2. Recognize that personal financial management is the cornerstone.
Instead of just bolting on PFM software to existing channels, banks will have to accept that PFM is an integral part of online banking and that it will eventually become the cornerstone of the solution.
3. Hire from the outside.
Fresh thinking is required to take things to the next level. Banks should consider retaining user-experience professionals, developers, executives, and social media and marketing professionals from other industries.
4. Prioritize user experience, solution integration, and the online banking dashboard.
Banks need to shift their attitude toward online banking from mere functionality to user experience. They should work on how customers interact with the functionality to provide a pleasing and easy-to-use experience.
Regarding this last point, the report notes that “the user experience provided by online banking looks like it was built in 1998. For the most part, this is because it was built in 1998 and has received few updates.”
Opportunities abound to both increase revenue and cut costs, the report says. For example, new revenue streams based on cross-selling, increasing the number of products per household, and customer retention, could be a byproduct of the ability to extract and analyze the data obtained through offering integrated personal financial management. Cost cutting could be achieved through emphasizing self-service opportunities. However, both these approaches, the report emphasizes, must make the customer experience easy, quick, and effective.
“Financial institutions need to determine customer pain points and act swiftly to alleviate them,” Jegher told Tech Topics. “Pain points in this case refer to user experience and functionality. Find out what’s not working online with regard to how the user interacts and works with the solution.”
“It’s easy to get caught up in the array of sexy tools and devices on the market, but at the end of the day it’s the customers and their experience that matter most,” the report concludes.
For information about obtaining the full report, go to http://www.celent.com/reports/top-trends-retail-online-banking
| TechTopics Plus