BOSTON - There is a "looming measurement crisis" in online banking, according to a new study. The study, from Aite Group, said its analysis has found that banks report that sales is the most important business goal for online banking, and that proving ROI is critical to rolling out new online banking features, yet few banks can tie account profitability to these features.
Specifically, the study found:
* Generating sales was the most important online banking goal for 55% of the respondents.
* Increasing customer satisfaction and retention was ranked as the highest priority by 41%, while reducing customer service costs was cited as the most important by 5% of respondents.
* Return on investment is an important criterion for rolling out new online banking features/functionality, according to 68% of the banks surveyed.
* 73% of banks have not been able to establish a correlation between performance/profitability and the introduction of some online services or tools.
"This doesn't add up to good news for online banking executives," said the study's authors. "While these execs might think that they're already under the gun to show bottom-line results, Aite Group believes that online banking executives will face even greater scrutiny into their channel's performance over the next few years."
The reasons for that, according to Aite Group, are:
* Overall customer satisfaction is influenced by a variety of factors. Banks with an online banking goal to "increase customer satisfaction" will find it hard to prove that the online channel was the cause of any increase in satisfaction because: 1) Very few (if any) bank customers are online-only customers, and 2) Attributing a rise in satisfaction to the online channel is anecdotal at best, and unlikely to be agreed with by the heads of the other customer touchpoints.
The online channel is taking credit for sales generated offline. There's a big difference between "generating the sale" and "taking the order. Just because a customer applied for a product online doesn't mean that direct mail, mass media advertising, branches or the call center didn't play a role in influencing a customer's decision."
* Database marketers are adopting net measurement techniques. "Direct marketers are among a number of bank departments facing budget pressures. They're being asked to prove not just the ROI of their channel's investments, but the incremental ROI; in other words, what portion of overall marketing ROI is attributable solely to the direct mail channel. Why does this impact online banking? It won't be long before the direct marketers make noise that they're being held to a higher standard of ROI than online banking."
* Financial services firms want to be integrated marketers. According to a study by Epsilon, 83% of financial services firms have made a decision to integrate marketing campaigns across channels.
As these firms adopt new measurement approaches to determine the impact cross-channel campaigns, the online channel will come under the microscope, particularly as firms strive to determine each channel's contribution to results.
There are some bright spots for online channel executives, though, according to the study. As the online channel is increasingly used by consumers to research products, its influence on offline sales will help bolster their channel's ROI. And with the interactivity of the online channel, the richness of information available online and the increasing deployment of online product selectors and configurators, it may very well turn out that the online channel is a major influencer of sales-regardless of which channel the application is taken in.
But online channel execs won't be able to make their case without implementing more sophisticated testing methods. "In our opinion, many of the web analytics groups that exist in financial services firms today are focused primarily on Web reporting-not customer or marketing analytics," the authors stated.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
