Excellent summary of the state of Online Banking, the things that are hot (live chat), and the pitfalls in implementing it badly.

Bradenton Herald | 07/09/2006 | Online banking is starting to get personal

Making online banking feel personal is the next step in the evolution of an industry marked by fits and starts. In the 1990s, online banking’s early promise fizzled for lack of a human touch and a physical place to do business. The next wave was to drop online fees, as banks tried to drive customers to use the Web to check balances, pay bills and transfer funds. Banks also began charging fees for basic transactions at the teller line, in a move to drive customers to low-cost ATMs, call centers and Web sites.

Now banks say the standard is making their online “branch” do all the things that a branch manager or a loan officer reached in person or on the phone could do.

Live chat has its pitfalls.

…because the primary appeal of live chats for banks is as a selling tool, customers may take umbrage at being pushed too hard.

Brad Strothkamp, a consulting analyst at Forrester Research Inc., which is based in Cambridge, Mass., said banks must be careful not to alienate online buyers, many of whom research online because they like the anonymity and lack of high-pressure sales pitches. His research shows customers are OK with a soft-sell invitation with one caveat: “As long as when you say no, they go away.”

But if done right, it can work.

Indeed, Bank of America credits its live-chat capabilities for helping to fuel an 800 percent jump in online sales of mortgages in the first quarter compared with a year earlier, while home-equity loan volume doubled.

Citigroup says 90 percent of customers who get advice online finish filling out a home-equity loan application, compared with about 50 percent for the banking industry overall. Online home-equity loans at Citigroup are expected to double this year to about $2 billion, says Alan Dakay, CEO of the company’s Citi Home Equity unit.

Relevance to Bankwatch:
While live chat may be a transitional strategy prior to more effective automation, it forms a significant next big thing, that will require re-architecting bank call centres. In the next generation, general telephone answering will reduce, and they will need to handle :

• live chat
• reviewing blog tags, for positive and negative commentary
• answering blog comments
• virtual customer relationship management, using sophisticated CRM tools, and secure email

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