Having successfully launched a business to promote its Internet banking services through grocery store brands, Canadian Imperial Bank of Commerce is turning its attention back to its own brand and Web site.
The Toronto company is at the beginning of an 18-month effort to get its online banking customer rolls to 2.6 million. That would be twice what it has now and 25% of its customer base, a percentage widely considered to constitute critical mass.
Corinne Charette, senior vice president of CIBCs Internet channel, retail, and small-business banking, said this massive enhancing and rebuilding program is to include various new online services such as account aggregation, person-to-person payments, and improved sales capabilities.
Were hoping to really leapfrog the competition, she said.
CIBC has spent the last few years building up its Amicus Financial division, which aims to attract customers through Internet banking pavilions set up in popular grocery stores. Customers sign up for electronic banking services provided by CIBC but branded with the stores private labels.
Amicus runs Safeway Select Bank in Safeway stores in the West, Marketplace Bank in Winn-Dixie supermarkets in the Southeast, and Presidents Choice Financial in Canadas Loblaw chain. It has acquired about 800,000 customers through 350 banking pavilions and adds more than 30,000 each month.
CIBC began investing in Amicus in 1997 after early success in Internet banking convinced it that it had skills it could apply elsewhere, Ms. Charette said. For the next two years it focused much of its talent and resources on Amicus without investing so much in cibc.com, she said.
Now, she said, it is in the midst of an aggressive investment program to ramp up its Web strengths as quickly as possible.
CIBC hired Ms. Charette from the management consulting firm KPMG Consulting almost a year ago to help oversee the initiative. She began by getting the support of senior management, and over the summer started a hiring spree that tripled CIBCs Internet-channel team to 62 members.
In the fall CIBC restructured its retail bank to put oversight of its remote channels the Internet, call center, and automated teller machines and its branch network under one executive, Jill Denham. As senior executive vice president of retail and small-business banking, Ms. Denham, who had previously presided over the venture capital unit that invests in dot-com companies, now has additional responsibility for the branch network and other channels. Ms. Charette reports to Ms. Denham.
KeyCorp made a nearly identical managerial change in January, when it promoted Patrick J. Swanick, who had been head of the Cleveland companys remote channels, to retail bank president, a position in which he also supervises the branch network. In an online-banking update released Monday, KeyCorp said it had had continued impressive growth in key.com, and that one out of every four checking account customers now banks by Internet. Paul Ayres, senior vice president of Key Electronic Services, said: One of the axioms in the industry is that banks lose up to 20% of their checking account customers every year. With online banking, were seeing a 99% retention rate.
Mr. Swanick said the success of Web banking at Key combined with call centers and ATMs has let Keys branches take on more sales and relationship-building, and increased their product breadth.
Ron Shevlin, a research director at Forrester Research, said he believes that the trend of centralizing management of distribution channels under one executive is only beginning. Were going to see a lot more of that, he said.
Even banks that continue to maintain separate management units for Internet activities will carve out a part of those groups to spearhead channel-integration efforts, Mr. Shevlin said. He predicted that Bank of America will fall into that category.
Centralized management leads to smarter allocation of development money, Mr. Shevlin said. When each channel makes its own investment decisions, banks are more apt to duplicate efforts, he said. A centralized structure can avoid that, while helping banks reach their overarching goal of getting customers to use the channels that are cheapest for the bank, he said.
With its Internet team in place and its channel management centralized, CIBC kicked off its Web site upgrading just before Christmas. On Feb. 1 it announced that it had begun pilot-testing an account aggregation service provided by New York-based CashEdge Inc.
In the spring it plans to begin offering person-to-person payments through CertaPay Inc., a Toronto company that is also working with Bank of Montreal, Scotiabank, and Toronto-Dominions TD Canada Trust. CertaPays system will be offered as an integrated service on CIBCs Web site, a feature that some say may make it more inviting to the public.
Consumers like to work with banks for payments, said Jeanne Capachin, a research director at Meridien Research. CertaPay is taking a back seat to the banks. It is looking at being a private network versus a public brand name like PayPal, the frontrunner in person-to-person payments.
Also on tap for CIBC is expanded online sales. Web visitors can already get a credit card or line of credit online, and CIBC wants to extend that capability to cover other types of products, such as mortgages and mutual funds. Its ability to accept digital signatures will help it authenticate new clients right away.
The goal is for new customers to arrive online, establish a relationship, acquire a core product, and transact immediately, Ms. Charette said.
Steering people to self-service applications on the Internet is a good value proposition, she said. It helps CIBCs most scarce resource competent people spend more time advising customers in branches, she said.
Said Mr. Shevlin, Smart banks are making the transition from the Internet as an acquisition channel to a service channel.
Because it diverted a lot of its resources to Amicus at a time when other banks were boosting their online customer bases, CIBC is really pursuing a dual strategy of bringing in customers and fine-tuning self-service through cibc.com.
We do have a lot to build, deploy, refine, and roll out, Ms. Charette said.
