An On-Line Survey Can Be the Key to Understanding Whether and How a

Build it and they will come? Maybe, maybe not.

For some but not all banks, the Internet can help reduce costs, enhance customer retention, and extend geographic reach. But even banks that can benefit from a site on the World Wide Web need to hone options to meet the needs of specific customer segments - their preferences, tastes, and price sensitivities.

Banks considering building interactive functionality or adding it to Web sites must understand exactly which (if any) services customers will use and, in some cases, be willing to pay a premium for. Failing to gauge customer interest and preferences accurately will doom Internet banking to the same fate as nearly all previous home banking services. The way to this understanding is a valid Web-based survey. The relatively low costs of on- line surveys can help banks avoid the high cost of building and maintaining ill-conceived Web strategies.

First, a few words of caution.

Surveys of consumer interest in emerging technologies must be assessed extremely carefully, as Xerox learned when its early research about copying machines referred to then-familiar mimeograph machines. Biases must be avoided that may taint results or steer banks toward unnecessary expenditures and unrealistic expectations.

Samplings are best conducted by impartial third parties, especially when the results will influence significant resource allocations that are subject to internal politics.

Surveys can be used to reach satisfied and unsatisfied, current and potential customers, probing their technical proficiencies, current and projected hardware, and connectivity capabilities. Surveys can also target those who are the best candidates for using a Web site.

Perhaps most important, surveys can help pinpoint Web-based service options, thereby reducing the risk and costs associated with building unnecessary interactivity and security into services that few customers will want or use.

There are many options for delivering surveys - telephone, paper, floppy disk, or Web-based. Responses can be returned via traditional mail or E-mail. While paper-based methods can help determine whether or not to implement a site, on-line surveys can be invaluable for guidance on what products and services to offer. Typically provided via the Web, an on-line survey can be answered at the user's convenience. The electronic responses can be processed immediately.

Among their advantages, on-line surveys can reach vast numbers of prospective, not just current, customers, and complex survey types are implemented more easily by computer than on paper.

There are a number of relevant categories of information that surveys can provide:

Web site usage - the number of current customers who will use a bank's site. Customers' technical proficiency and their hardware and connectivity resources are strong determining factors.

Hardware resources and connectivity. By 2005 it is likely that at least one member in most U.S. households will be gaining access to the Internet, whether via a general purpose or Internet-specific personal computer, palmtop computer, interactive television, or other device. But in the short run, banks need to know how many of their customers currently have access to the Web in general and how many actually use the Web for expense or investment management.

Technical proficiency and Internet awareness. Customers with a high level of technical proficiency will be able to grapple with the (currently) inevitable difficulties associated with connecting to the Internet. A computer-literate customer base will result in lower customer service and support expenses.

Interest in technology. How many customers have PCs or comparable hardware, modems, multimedia capabilities, individual and family computer literacy, and Internet awareness. These data can indicate current and projected usage.

Obviously, traditional paper-based surveys can show whether customers desire to perform banking activities over the World Wide Web. But surveys can also be used for in-depth analyses of customer needs, preferences, and price sensitivities. Once a bank has a basic, or read- only, site running, it should query customers as to what they would like to see there and the general direction the bank should take.

Offering on-line information is frequently the least expensive way to establish a Web presence. General bank information (branch and ATM locations, annual report, community action, etc.) can be offered without tapping into the bank's internal systems.

More advanced services may require access to internal systems and therefore require strong security measures. Banks should identify customers' interest in and prioritization of information that includes but is not limited to: product information, pricing, rates, account balances, loan balances, stock quotations, economic reports and forecasts, stock analyses, government statistics, news, bank or merchant coupons, computer- based applications (for example, on-line mortgage calculators), regional information (for example, farm output, weather forecasts), and Internet- specific resources, including downloadable software and instructions.

Determining which Internet-based services to offer depends on both a bank's strategic goals (cost reduction, geographic expansion, enhancing trust relationships, etc.) and customer needs. Surveys can be used to pinpoint effectively the most important services for a Web site.

Banks should identify customers' interest in and prioritization of services, including but not limited to: account opening, account transfers, on-line bill payments, stock trades, CD redemptions, stop payments, loan applications.

Understanding where customers stand can help the bank identify the order in which services should be introduced.

Surveys, particularly forced-choice surveys, are an effective tool to determine customer price sensitivities. Although banks will not likely be able to charge for most Internet-related services, many additional fee- generating services - including brokerage, stock analyses, or bill payments - may produce revenue. Forced-choice surveys identify price points through an iterative process of comparisons that can be particularly effective and economical relative to paper-based methods.

Although much of the above can (and frequently should) be gathered through traditional paper-based methods, it should be noted that on-line respondents are much more likely to be representative of a bank's potential Web users.

On-line surveys are relatively inexpensive to design, print, and process. Due to their electronic form, they can be easily updated to provide additional information and refine earlier results. And they can be generated "on the fly" to home in efficiently and systematically on specific customer needs and preferences.

If publicized properly, on-line surveys can capture responses from potential customers and therefore may help the bank later acquire Internet customers. And they can assist in analyzing whether a bank's targeted customer segments are well represented on the Internet.

The main disadvantage of Internet surveys is that they cannot reach non-Internet users. In addition, a bank seeking on-line responses must have at least a minimal Web site with some visitor traffic. Therefore, paper- based surveys would be needed during initial development of a Web strategy.

Unfortunately, in-house surveys frequently contain unintended biases (within the design of a survey as well as the analysis) that result from political pressures within a financial institution. People working on the project may not have the necessary objectivity. Third parties, in addition to design and analysis, can assist by hosting surveys on their own Web servers, which could be more effective than doing so on a bank's site.

Depending on the bandwidth, or capacity, of the bank's connection and the speed of the Web server, a large volume of survey responses may cause congestion and slow server response. Furthermore, the survey design may require custom programming that could weaken the security of the bank's site. Using an outside provider reduces security risks. Using an outside party can be as easy as placing a hyperlink on a page of the bank's site.

For banks that have not yet constructed a site, it may be helpful to establish a temporary presence at an off-site third party until the in- house infrastructure is in place. This provider can also assist in the survey as the bank decides which features it wants to put in place.

The value of a survey is in identifying whether the bank's customer base will be attracted to a Web site. It can also help the bank understand which products and services should be offered and at what price. Computer- based and on-line (traditional and conjoint) surveys can do this in a cost- effective, rapid, and flexible manner.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER