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2
Vol.l,No. March1997
Banks Report Problems With
Electronic Banking Products
Despitepromisingforecastsofadditional Banksandvendorsaidingthemdonotalways
revenueandnewbusinessfromhome(orPC) conductsufficientcustomerresearchortests
banking,smartcardsandotherelectronic ofnewservicesbeforeintroducingelectronic
products,anumberofbanksreportthatthey ordigitalmoneyproducts. Vendorsmusthelp
haveencounteredmoreproblemsthan banksbymakingsurethatallaspectsofa
anticipatedwiththeseproducts,asillustrated newproductareconsidered.
inExhibit1. •Thepricingstrategyforhomebanking,for
Exhibit1 example,mayhavetobecheckedthrougha
ProblemsEncounteredwithSelected prialtohteerfftohratnijnuvsotlvaisnkgitnhgecsuaslteoomfertsheasbeoruvtice,
RetailElectronicProducts possibleprices,tomakesurepricingwillnot
ElectronicBanking ProblemsReportedby discouragecustomersforsigningupforthe
Products Banks service.
HomeorPCBanking Pricingwasnot •Vendorsshouldensurethatbanks
analyzed. Costof understandthesupportandcostsinvolved
supportishigh. Should withanewservice. Banksunderestimate
haveselectedother thecostofrunningsupportdesks.
products.
•Vendorsmustadvisebanksonalternatives
SmartCards(with Useisbelowforecast. availabletomeetretailelectronicbanking
storedvaluecapability) Profitabilityisin objectivessothatcustomerrequirements
question. aresatisfied.
sIentrevrinceetsbased vFnooerlweucmaacesctaonubdnutsnsiunhemasbssernootf bItainskisnitnhveesvteingdaotre’sthientseurietsatbimliatkyeofspurroedutchtast,
beenachieved. sincethey(thevendors)willincurcostsand
Source:INPUT changesifdifficultiesareencountered.
Vendorsaswellasbanksmustkeepinmind
thatthesuccessfuluseoftheseproductsis
©1997byINPUT.Reproductionprohibited. EPRB2
INPUTResearchBulletin
importantsinceitwillhaveasignificanteffect • AsoneISexecutiveinabankstated,the
uponfuturelending,savings,investmentand assumptionofhisbankwasthatnew
otherbankingbusinessandrevenues. technologywouldovercomethedifficulties
encounteredinsigningupcustomersfor
Examplesofproblemsthatwerereportedto electronicservicesatotherbanks.
INPUTduringrecentresearchonelectronic
bankinginclude: • Severalvendorsreportedthatthe
•hBealnpkedcutostuosmee“rtsriwahl”ohwoemreebeannckoiunrgagseydstaenmds wdeiixfptfehirchiuleotnmiceeessbebanencioknuignntgeenwrceeorduenitnseiprmaeisldtawrviettnohtubraensk
becameannoyedwithdeficienciesincurrent customerstoday.
featuresandtransferredaccountstobanks
thathadmoreattractivesystems. Asaresultofcurrentexperience,banks
•Sfoormheobmaenbkasniknitnrgodsuycsetdempsritchiantghstardategies rlraeeuccnoocmmhmmbeeennddmsotrthehaatitnrtveeesnensadirovcreh.spiIrniNvooPrlUvtoeTdprinoduct
supposedlybeenresearchedbutwhichdrove supportingbanksmakesurethatstepsare
customers(togetherwiththeircheckingand takentobothanalyzeandtesttheinterests
savingsaccounts)tootherbanks. andneedsofpresentcustomersandto
•Banksfoundthatthecostsofsupportand investigateexperienceelsewhereasshownin
administrationforelectronicbanking Exhibit2.
vmeandteurtehseiwreerleechtirgohneicrbtahnaknipnlganpnreodd,ucatnsdthis Exhibit2
unprofitable. WhatShouldbeDoneBeforeLaunching
ElectronicBankingServices
•Theslowgrowthofcustomersforsome
smartcardorInternetservicesmadesome StepRecommendedfor Ratingof
banksquestionwhethertheyhadselected PlanningRetailElectronic Importance
therightservicesoranticipatedwhatwas Services (low=1;high=5)
involvedinstartup. Researchandtestneedsand 4.4
interestsofcustomersmore
•Banksalsoreportthattheyhadnot deeply
anticipatedtheimpactofnewproductson Obtaininformationontests 4.2
existingorothernewproducts. For anduseofelectronic
instance,anewapproachtocallcenter productsatotherbanks
bankinghadanimpactontheuseofhome Conductmeaningfultestsor 4.2
bankingatonebank. pilotswithcustomers
Manybanksreport,inhindsight,thatmore Modelimpactofnew 3.5
researchshouldhavebeenundertakenbefore aprnodduoctthseropnropdruecstesntbebiunsginess
theylaunchednewretailelectronicbanking planned %•
services. Source:INPUT
Anadditionalonerousaspectofthese
situations,accordingtobanks,isthe
additionaltimeandexpenditureswhichmust
bespentonreviewingandadjustingor
changingplansafteranewproduct
encountersdifficulties.
2 ©1997byINPUT.Reproductionprohibited.
INPUTResearchBulletin
Needsofcustomersmust—notonlybe toseebusinessshifttothenewsubsidiary
researchedandanalyzed theymustbe overtime.
tested.
Itisimportantforbanksandthevendors
• Customersmayindicateastronginterest aidingthemtostayabreastofdevelopments
innewproducts,butnotaccuratelyspecify incustomerinterestsandinnewideasin
whattheyfeelismostnecessaryforsucha electronicordigitalmoneyproducts. Theuse
serviceorhowtheywillrespondto oftheseproductswilldrivebankingbusiness
differencesinprice. inthefuture,asshowninExhibit3.
• Citibankhasfoundthattheirpricing Exhibit3
scltireanttesgyin(tnhoecNhaYrgCei)thyaasrewao.nanumberof ImpactoBfanEkleicntgroBnuisciBnaensksibnyg2S0e0r2viceson
• Somebankcustomershavesurprisedtheir AreaofBanking EstimateofImpactby
banksbyswitchingservicetoanother BusinessImpactedby 2002
bankinordertousehomebanking ElectronicBanking
availablewithInternetornetwork Services
servicesbasedofferingsorapersonal
financialsoftwareproduct. Incrementalvolumeof $1Trillion
lendingbusinessdrivenby
Banksmayfindtheservicesofvendors feolrecctursontiocmebrasnkingservices
helpfulinanalyzingtheattractionofservices
availableinthemarket. Butbanksmustalso Increaseinuseof Increasefrom45%of
becognizantofthefactthatchangesare electronictransactionsin transactionsin1996
happeningrapidlyinelectronicbanking,and banking to95%in2002
thevendorworkingwiththemmayhavea
productthatislaggingmorerecent Uprsoeduocfteslescutcrhoniacsm“ohonmeey” Morethaunsedoublein
introductionsofothervendors. bankingandsmartcards
Banksmayalsofindoutthatelectronic Source:INPUT
bankingproductscauseconflictswithother
existingbankingproductsinseveralways. Theincreasingimportanceofelectronic
• Theymaycauseadecreaseinuseofother banking,andtheneedtoplanandlaunch
productsbybeingsubstitutedforthem. belaencktsrotnoicdebvaenlkoipngplsaenrsvircaepsi,dlisy.caAusniungmbmearnyof
• Theymayalsocauseadecreaseinuseof banksfeelthattheywillnotbesufficiently
existingproductsbycreatingaconfusing convertedtoelectronicbankingproductstobe
imageofthebankforcustomers. preparedforcompetitionby2002.
OnevendoraidedaGermanbanktoattack AndersenConsultingfeelsthatmostbanks
theabovementionedproblemofproduct arenotpreparedfortheconversionofbanking
conflictbyhelpingtosetupasubsidiarythat businesstoelectronicproducts,anditis
usesasetofnewelectronicproductsand providingafacility,theFinancialIdeas
allowsthemainbankinginstitutiontoretain Exchange,wherebankscantryoutnew
animageofolderproducts. Thebankexpects electronicbankingtechnology.
3 ©1997byINPUT.Reproductionprohibited.
INPUTResearchBulletin
Vendorsmustrecognizethatbankshavetobe cananalyzebanksituationsandprovide
preparedtomeetcompetitioninoffering aidtobanks.
electronicbankingproductsby2002,ifnot
sooner. However,vendorsmustalsorecognize • Ifvendorsdonotgainsufficientfamiliarity
thatsufficientresearchintotherequirements withthemarket,theymayseesalescycles
ofbankcustomersaswellastestingof lengthenastheygainknowledgeonthe
productsmusttakeplacebeforeproductsare jobwhilehelpingbanksdevelopaplanand
launched. implementproductsolutions.
• ThismeansthatITvendorsservingbanks Whilethisadditionalstepintheproduct
havetoobtainsufficientresearchon launchprocessmaylengthenthetimeto
experienceinintroducingandusing market,itwillquicklypayforitselfin
electronicbankingproductssothatthey increasedsalesandcustomersatisfaction.
ThisResearchBulletinisissuedaspartofINPUT'SElectronicProcessPractice. Ifyouhavequestionsor
commentsonthisbulletin,pleasecallyourlocalINPUTorganizationorJohnMcGannatINPUT,400
FrankW.BurrBlvd.,Teaneck,NJ07666,(201)801-0050.
4 ©1997byINPUT.Reproductionprohibited.
