The debate over the coming impact of the Internet on banking and a range of other businesses is over. It is clear that the Internet means new business models, growth opportunities, and the arrival of a whole new category of customer. The question now is: Are banks ready? Too often the answer is no. As many banks struggle to close the gap between what the Internet promises and what they can deliver, the initial focus has been on technology - not surprising, given that technology is often perceived as the first step in the e- business evolution. Many banks, however, remain stuck in this technology-only orientation at the expense of those who will be charged with using it to serve the customer. They are finding after the fact that even the most sophisticated and powerful systems have fallen short of their initial promise because they haven't laid the groundwork with the human part of the on-line equation. Often, they fail to ask and answer some pretty critical questions. For example: What is their strategy to communicate to the organization that e-business is a fundamental shift in how the business works? How will they staff an e-business effort with people who may be uncomfortable in a radically different environment? Have these organizations certified and requalified the skills and mind-sets of people who will make the overall system perform for customers? What technological tools will they need to meet the new expectations of a new kind of customer? Banks inevitably come face to face with these questions as they evolve through three stages of e-business development. The first is experimentation in which, generally, there is an awareness of the technologies but little business focus. There also tends to be little cohesive planning behind the spending, which is not tied to specific returns on investment. The second stage is infrastructure, which a company begins to develop to achieve operational efficiencies. This effort points to savings - instead of return on investment - as justification for a project because people are baffled as to how they quantify the benefits. Still, they move much closer to business reality. In the third stage, transformation, e-business is elevated to a strategic imperative. There is a pervasive brand strategy in place, and the organization begins to see some major business opportunities. The return on investment is clearly articulated and well integrated within the fabric of the business. It is impossible to move from stage two to three without factoring in people. The reason is simple: The technology infrastructure might be fine, but the service to customers will fall considerably short because people aren't equipped to provide it. The e-business customer who arrives looking for a new and improved banking experience on-line knows his or her way around the Web. These people have been to; they've bought some shares or tickets at an airline site, maybe even bought a car or researched a home. So they enter the door with expectations. They come with a sense of entitlement because they have taken the steps necessary to get there. They are, for these reasons, different from earlier customers. They don't wait in line, and they won't spend the time helping you iron out your organizational inconsistencies. They don't go from department to department to solve a problem, and they sure don't wait for answers to arrive by snail mail. They want every Web encounter to be as fast and easy as their best experience to date - because every breakthrough experience gives them a better understanding of the possibilities. That best experience, which to you and me means "best practices," becomes the hurdle for satisfying them. Any on-line model must clear those hurdles at all five stages of the customer engagement - sales, application, processing, fulfillment, and customer service. By now the needs at the sales and marketing stage are pretty clear - simple forms, automated acknowledgement, clearly set expectations of processing times, and similar steps. Here, the right technologies and systems can satisfy even the most demanding customer. As the customer moves deeper into the e-business model, though, human interaction becomes increasingly important. When there is a mismatch between what the initial contact promises and what the organization can ultimately deliver, it's an open invitation to frustration, and a frustrated customer is willing to click to the next-best competitor. The business cost of a frustrated customer is growing. There is an adage that a disappointed customer will tell 10 others. Now, if you disappoint one, they can tell 10,000. If you doubt that, spend some time on one of the hundreds of Web sites dedicated to trashing companies. To make sure the human factor is aligned with the organization's promise of a new and improved experience, a bank must take four crucial steps. It must engage the right leadership, decide how and whether people will be integrated into the system, create the needed flows of information, and hire people prepared to do the job. In the past, almost by definition, e-business leaders came from the technology area. Some would argue that technologists are best suited to take the lead in e- business development. Others say they tend to be too close to the engineering to see the broader context of the total business. I have seen that problem close up, and I have seen technology groups overcome it. The fact is, e-business leadership is not a matter of position, it is perspective. Good leaders can be former heads of information, law, marketing, even CEOs - as long as they have the right mix of skills. Looking back over the past few years, the first successful e-business leaders were entrepreneurs, visionaries, even dreamers - people unable to take no for an answer. Fast-forward to a mainstream business today. Leaders charged with building e- business capabilities within larger, more established companies need all of those traits. But they also need the operating skills to put a deadline on the dream and to turn a profit. In discussing the human element of an e-business initiative, the easy assumption is that people must be part of it. Some models may work best with a close integration of technology and people. One good example is the Charles Schwab system, where the customer can see seamless integration among the strategy, technology, and people. Other models may be built entirely separately from a main organization, with technology guiding customers from sales to application to processing to fulfillment to service without human interaction. There is no right or wrong approach. Typically the most significant problems arise when companies try to cobble together an ill-fitting combination of parts - a system energized with new technology but dragged down by old procedures and outmoded mind-sets. The result is a customer who is confused, frustrated, and with a compelling reason to go elsewhere. Applications may stream in from the Web only to languish on the desk of a processor whose systems are only able to handle paper. As a result, the so- called "Web-enabled" process can actually take longer than paper. Any company must decide what level of service interaction is demanded by their customers. Banking services would be at the higher end of the interaction scale - selecting a mortgage is going to require more human interaction than will, say, buying a set of Ginsu knives. It's a matter of making the decision early and then building a system around it. If customers move from the Web to the telephone, they must encounter people who are prepared to give the same kind of one-stop service and fast answers that the electronic engagement promised. The core demand is that the person answering the questions must have instant access to the full range of a customer's interaction with the bank. If a service representative is helping a customer set up a certificate of deposit and can't also transfer funds from a savings account to pay for it, it's not a red flag. It's a signal flare. Then customers have to wonder why they are even there. It is critical that an organization not force-feed an e-business with people ill-equipped to handle its demands. Any company moving to the Web must accept the fact that it will face some critical choices - upgrade, certify, or requalify people's skills, relocate them to another part of the organization, or where appropriate help them find opportunities in line with their desires. Fortunately, comfort with technology is not the hurdle it once was. Chances are good that most people will have some on-line experience themselves. Successful e-business employees will be able to grasp that their business line is not an adjunct or an experiment but a fundamental and enduring change. They must understand and empathize with the new expectations of an e-business customer and have the personal flexibility to meet these expectations. They must also be comfortable in a state of continuing evolution, as the capabilities of technology and demands on employees change with the growing system. Banks or any other organizations must approach people decisions the same way they do technological ones - with a clear plan leading to a clear set of objectives. People can't be viewed as a consideration to be addressed after the technologies are in place. Whether or not people are to be tightly integrated into the system, the decisions must come early in the process. And if people are to be part of the system, their selection and development must be viewed as an investment every bit as important to the e-business as the technologies that support it.

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