Datamonitor report that Banks continue to treat internet as a service channel, and are failing to capitalise on soaring consumer adoption rates and convert online services to sales.[hat tip Finextra]
Karina Purang, financial services analyst at Datamonitor, says a big problem is that banks are struggling to integrate the Internet with other channels and where there is integration in many cases this remains confined to the transactional level, rather than in terms of integrated business processes and a single customer view across multiple channels. This has a negative impact on the customer experience, says Purang, and also prevents banks from gathering customer interaction data.
Source: Finextra: Banks struggling with online sales – Datamonitor
The report here outlines the Bank’s focus on service which (my take) is a result of Banks’ desire to move service transactions out of the branch.
For customers ease, convenience, and speed have been the key reasons for signing up to online services, while banks have seen the Internet as a new sales channel that is cheaper than the branch or contact centre. Datamonitor says it expects the online channel to continue to be a strategic focus for European banks and that IT spend for Web banking will increase at a sustained rate. For example spending on Web banking IT by UK banks is expected to grow 17.5% between 2006 and 2009, from US$600m to US$705m.
But despite the strong take-up and continuing investment, customers use the Internet as a servicing channel rather than a sales channel and switch to more traditional methods of banking when they need products. Therefore the potential of the Internet still remains unfulfilled by both providers and end-users, says Datamonitor.
Previous references in this blog, when in this Bank of the Future post.
Relevance to Bankwatch:
[Its been nearly 6 months since the Bank of the Future post, and time to re-visit and update – the graphic needs work] Bottom line – Banks are almost entirely focussed on moving service transactions, and are not addressing the emotional needs that would drive customer engagement within online banking.
Bankwatch 
Hey, Colin — wanna buy my house? Sell it to you for $700k. No, you can’t come take a look at it before buying — you can only look at pictures of it online. Oh, and you have to do everything regarding the purchase of the house online. Won’t buy, will you? So what’s the conclusion?
“Realtors Stuggling To Sell Houses Online!”
We don’t see that headline, do we? Cuz it’s ridiculous. As is Datamonitor’s claim.
What banks ARE struggling with is understanding exactly what role the Internet plays in influencing consumers’ choices of providers and products.
What also ticks me off about Datamonitor’s claim is that a few years analysts (yes, like me) were running around telling the banks there were TOO focused on trying to drive online product applications and should focus on driving transactions and service interactions out of higher cost channels. And so now Datamonitor is going to criticize banks for doing that? Ridiculous.
[I’ve have GOT to remember to have my morning cup of coffee BEFORE I read your blog]
Good morning Ron!! đ
I have only had one cup, but here goes; no doubt there is a touch and feel aspect required for many types of sale, but the fact remains many people want to do more online, particularly existing customers adding to their current products. And that online expectation will only increase. Banks will need to look at, not just how they interact with customers, but the design of the products will have to change too.
Now where is that next coffee …
No argument with what you said, Colin, but according to the Finextra piece:
“Datamonitor suggests banks are failing to capitalise on soaring consumer adoption rates and convert online services to sales”
Two things wrong here:
1) They misspelled “capitalise” (just kidding)
2) You don’t “convert” online services to online sales. The process a customer who has been interacting offline goes through in deciding to change behavior and do something online is specific to the transaction or interaction. Checking your balance is easy and has, generally low emotional involvement. A no-brainer for switching from offline to online. But deciding who to get your mortgage from? Very different thought process. High emotional involvement in a complicated process. Much harder to get consumers to change channel behavior.
I commend Datamonitor for gaining press attention, but continue to disagree with their premise and assertion.
Ron … Yeah … I must admit thats a headline grabbing statement not at all grounded in reality.