As banks have increased the presence and the sophistication of the services they offer on the Web, banking executives have trumpeted the benefits of each in helping to acquire new customers while also enriching the banking experience of those customers Web-based banking has helped retain.

Now, a study from Forrester Research Inc., a Cambridge, MA-based consulting firm that, among other things, analyzes Internet technology trends, calls into question some of the conventional wisdom about bank Web sites. Forrester recently took a close look at whether today's online financial sites, both those used by banks and by brokerage houses, satisfy customers and whether bankers and brokerage executives fully understand what they should be doing with emerging technologies.

"Today's customers aren't overjoyed with the user experience on bank and brokerage sites," according to the study, which was written by Forrester's Randy Souza. "To satisfy them-and an evolving customer base-firms will build next- generation sites that weave together contextualized guidance, intelligent transactions and preemptive support."

Souza's theory is that early sites from financial institutions such as Charles Schwab & Co. were once seen as shining examples of leading design for the user experience. But in recent years, the industry's design objectives have evolved, as has the customer base for financial Web sites. To understand that evolution, Forrester interviewed executives responsible for Web strategy and design at 30 banks and brokerages. The firms were chosen from Forrester PowerRanking, a consumer survey (

The survey found that Web strategies are dictated largely by business goals, such as the retention of existing customers, and by efforts to enrich the online experience at the sites, both to aid in customer retention and to attract new business. But, banks and brokerages often measure the success of their Web initiatives not by business metrics-say, customer acquisition or account activation rates-but, rather, criteria such as the number of page hits, responses from focus groups and usability tests.

Of the financial services companies surveyed, the highest number, 53%, listed "enriching existing customers" as a goal of their financial sites. The second-highest response was the 40% that listed "acquiring new customers" as a goal.

But, when asked how a site's success was measured, by far the largest number-67% of those surveyed-chose "site traffic." Sixty percent also cited either "usability testing" or "focus groups," or both.

The survey reports, too, that despite the large sums that continue to be spent on financial site design, many banks and brokerages remain dissatisfied with the result.

"The Internet is a continually evolving medium," says Tom Kelly, a spokesman for Bank One, a Chicago-based bank with $270 billion in assets. "We know it is going to be very important to our customers. But we're not sure, just as no one else is sure, exactly what that means."

For example, when asked about their design imperatives, most of those surveyed cited "usability" as their No. 1 priority, rating it at 4.8 on a scale of 1 to 5. Yet, when asked how well their sites met customer expectations in the "usability" area, those respondents graded themselves at 3.8 on the same scale.

Among Souza's conclusions is that those interviewed are that their sites fall short in critical areas.

"Usability, customer service and personalization are the most important elements of their sites' design; yet, they feel their sites need improvement to meet customer expectations," he writes. "The executives we interviewed believe that their sites fall short in areas critical to online success. Their customers agree."

Mike Higgins, manager of e-business for Private Advisory Services, the individual investor area of U.S. Bancorp Piper Jaffray, says, "Certainly one of the things that tended to happen (with financial Web sites) is they threw a lot of content at the client and considered it a complete site. Sometimes it's overwhelming."

Forrester surveyed more than 2,600 people in North America who have access to their bank or brokerage accounts online and asked about their level of satisfaction. What they found: today's online experience barely meets customer expectations.

Among the most frequent customer complaints was that neither the tools nor advice available online was useful or relevant. For example, Souza writes, "The low marks are easy to understand: Bank of America's confusing mortgage calculator...asks consumers about terms like discount points paid at closing without providing any explanation."

Higgins observes: "Part of the reason was speed to market. Certain firms that were leading the way, particularly some of the discount brokerage firms, were pushing the issue and some of the big firms responded by throwing whatever information they had out there."

Suffering Through So-So Sites

The result has been financial sites that are characterized by what Souza calls "broken customer experiences."

"Online financial customers aren't overjoyed because today's sites ignore differences between customer segments and appear oblivious to the goals different users have when visiting the site," he writes.

Among the major shortcomings of the sites found by the survey are:

- Overwhelming content and scattered tools

An example is that, while Fleet lists dozens of articles from sources like SmartMoney on its Web site, it gives no help to financial novices wishing to determine which are appropriate for them.

- Isolated transactions

While most banks offer online transfers and bill paying, few integrate those capabilities with the rest of their site. And some, like First Union, go so far as to make customers use a different interface for bill payment and basic account access.

- Fragmented customer service

Customers unfamiliar with financial jargon often have trouble getting understandable answers from the sites.

Another concern is that as more and more customers, some not as savvy about the Internet as the early adopters, begin banking and trading online, they will bring with them new demands and higher expectations.

"Barely meeting the expectations of current online customers is a warning sign," Souza writes. "Today's users are active, self-directed early adopters of online finance, willing to stumble through fragmented sites in exchange for autonomy and low rates. But growth rates for these customers have peaked."

Sona Chawla, a senior vice president at Wells Fargo, a San Francisco- based bank with $272 billion in assets, says her company sees the early adopters as a sort of pioneer group that can tell them how to direct and decision their coming Web-based services.

"I think our philosophy is very much to test our line before we roll it out to a mass market," she says. "We were the first bank to introduce wireless banking. We introduced it this year on a limited basis and it is geared to the early adopters. Now we have a fairly sizable population on wireless."

She adds, "Our focus is on keeping up with the new technology. We have to keep testing and learning."

The Forrester report predicts that over the next three years the growth in online activity for both banks and brokerages will come from a new customer segment with more-and more specific-demands.

Among the demands will be:

- Higher levels of guidance and advice

These consumers will be "older, less self-directed, and less comfortable with technology," requiring more guidance and support than is usually available today.

- Real-time online transactions

Over the next decade, as young people grow to become prime financial customers, they will rely heavily on the Web to research and purchase all types of financial products. For example, of young consumers with credit cards, more than half applied online, compared with 12% of adults.

The survey also indicates these young consumers consider technology companies, such as Microsoft or IBM, as viable alternatives to traditional banks for money management.

- Seamless channel integration

Millionaires are already 30% more likely than other consumer groups to go online to manage their money. But their propensity to use the Web does not make them easy to serve. More than half of all millionaires have a financial adviser, and they are also more apt to make heavy use of all financial channels. The result is an expectation that all points of online contact can share data, something not widely available now.

"We definitely are seeing that the mass market is coming on (to Internet banking) right now," says Wells Fargo's Chawla. "We have had the early adopters. Now we are seeing the mass market."

Eyeing The Next Level

The answer to current consumer dissatisfaction, Souza writes, is building "next-generation sites" that are relevant, wide in scope, useful, easy to use and personalized.

"What will really differentiate firms is an ability to provide a superior customer experience across channels-and the first to get there will lock in the customer for good," Souza writes.

Bruce Luecke, a senior vice president with Bank One, says his company is "making a good bit of investment in infrastructure" to do what Souza suggests: build the Internet experience across channels.

"I think we will be constantly tweaking and refining," says Luecke. "We think about the Internet in different ways. One is as a channel and one is as an enabler.

"We can now create one profile of a customer and use the same tools and processes across all our channels. It is an enabling tool that not only lures the customer, but keeps down the cost of doing business."

Smart firms, Souza reports, will make the Internet a lead channel and then build next-generation sites offering contextual guidance and advice, intelligent transactions and preemptive support. Tomorrow's customers will need financial sites that are aware of their personal situations and which have the ability to guide them through what is sometimes a bewildering array of decisions.

Contextual guidance and advice will:

- Simplify the decision making process

For example, Schwab's "Account Selection Assistant" asks prospects to answer five simple questions and then recommends the ideal account.

- Suggest relevant tools organized by customer goals rather than by product lines.

PNC Bank's Learning link, for example, organizes articles and calculators by financial topic and the consumer's life stage, letting the users choose the view that works best for them.

- Replace jargon with the customer's language

- Integrate advice from multiple sources

Paine Webber already lets advisers add content and commentary to the personal pages of high-net-worth clients. Meanwhile, E*Trade and Ernst & Young are developing a joint site, called eAdvisor, which brings advice from Ernst & Young's financial advisers to E*Trade customers via the Web.

Intelligent Transactions

Leading sites will also incorporate customers' profiles, data and preferences as they initiate transactions, making it easier and more appealing to use low-cost channels such as the Web.

"Today, if you walk into one of our banking centers as a new customer, we will profile you," says Bank One's Luecke. "The profile now goes into the file of that banker. Before, it just sat there. We didn't use that profile to do anything else. Now we can take that profile information and use it in other channels.

He adds, "But, how do we take what we do well at a banking center and duplicate it on the Web? That's the hard part. We can talk about adding an application and all that, but the hard part is, it all has to come together."

Souza's answer is that "intelligent" sites will allow:

- Customers to act from any point

Fidelity now allows users to transact business from multiple areas, placing a "trade" link almost any place a user sees an equity or fund, including in watch lists and alongside research reports.

- An ease in doing business

The transaction process will become easier and automated, removing from the customer the burden of having to enter information repeatedly.

"One way we can make everything we do work across channels ... is to rely on hard data," says Luecke. "The second is to make that data work for the customer."

For example, he says, Bank One uses E.piphany, a customer relationship management type of service, as a "common tool" to reach customers with applications that fulfill their needs.

"We have business rules created around how we use the (customer) information we gather and send a common message to that customer, no matter what channel they are in," he says.

Souza's report predicts that on "next-generation" financial Web sites, customer problems will be solved preemptively, often before the customer knows they exist.

Solutions will be offered by:

- Weaving answers into the interface

Sites that are well designed will describe solutions to common problems directly on the pages in question, saving the customer a click and handling potential problems before they happen.

- Drawing insight from multiple sources

Online service managers will discover new support needs by tying together data from multiple providers. One creative example is Wachovia, which combines more than 500 common support queries with optimal search capabilities to ensure effective answers are returned.

- Incorporating human assistance

Even the best preemptive support can leave questions unanswered. For those instances, the best sites will enhance Web service options like FAQs and knowledge bases with new tools integrating a human voice.

"Our goal is to be so efficient in anticipating customers' needs and complaints that we don't have anyone contact us," Luecke says. "First, the customer probably didn't want to call, and secondly, there's costs."

To that end, Bank One regularly updates its site, with a constant eye toward making it simpler to use. "A couple of months ago," says Luecke, "we changed the way customers pay bills online. We kept hearing, 'It takes too long. Can't you make it easier?' Now, you can pay all your bills on one page and they are done in a couple of minutes. You have to continually work at that. How do you become simpler in delivering your service?"

Introducing Scenario Design

As a means of bringing their sites to the "next generation," Souza recommends banks embrace "scenario design," a strategy based on a deep understanding of users, their goals and behavior.

In order to implement scenario design, companies must:

- Segment customers by behavior

Many financial institutions segment customers by demographics or products owned. In addition, they should segment based on the underlying motivation of the user. Are customers self-directed or do they take a hands-off approach to their financial lives?

To understand such behaviour, it's necessary to conduct in-depth interviews with customers to find out how they approach their finances and what they want from a financial institution.

- Replace focus groups with direct observation

Customers are rarely forthcoming in focus groups, particularly where their finances are concerned. To discover customers' true goals, it is necessary to observe them as they interact with your institution through all its channels.

- Integrate offline and online customer data

Demographics, product ownership and site-activity data such as page views and clickstreams do not, in and of themselves, provide the level of understanding necessary for scenario design. But, if researchers can get a picture of customer activity across delivery channels and over time, they can form a foundation for future use.

"We are constantly gathering information," says Wells' Chawla. "We have a customer profile that integrates offline and online data. We know that customers come with different needs. We know that one size does not necessarily fit all."

- Create a scenario design team

A team should be staffed with experts from e-commerce groups, marketing research and product development. The team should be charged with defining meaningful customer segments, discovering user goals and understanding the tasks that define success for these goals. The team should be bolstered with others, such as call-center representatives and advisers, who routinely have hands- on contact with customers.

What It Means

Souza expects that "stand-alone commerce groups will become extinct."

"The Web will take the lead as financial institutions work to deliver great customer experiences," he writes. "But these experiences must incorporate all channels and product lines, so companies that created an independent business unit to bring them online will quickly find the stand-alone group is a barrier."

Souza also anticipates that:

- If a problem arises, next-generation financial sites will alert customers via phone, email or pager. With such security, the paradox becomes that the customer spends less time on financial sites but is happier overall.

- To tailor content and tools to individuals, banks and brokerages will be forced to carve today's articles and applications into flexible pieces that can be distributed on the fly. Meanwhile, volumes of regulations insist firms keep entire documents intact and display lengthy terms and conditions before giving customers advice.

Next-generation financial sites will require banks and brokerages to educate and enlist consumers in revising regulations to fit an electronic world.

- Online guidance and advice is as much about teaching a customer as it is about the application code driving a recommendation. Vendors, such as Cognitive Arts, will shift from training call-center reps on how complex financial questions should be answered to enhancing the user interface of guidance and advice tools.

Raad Cawthon is a freelance writer in Pensacola, FL.

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