Financial services organizations in the U.K. are failing to create a relationship with their online customers, despite spending millions on infrastructure and customer relationship management (CRM) systems.
This is the bleak conclusion from a new study carried out by the Henley Centre on behalf of CRM systems vendor AIT Ltd. and Microsoft. The report, dubbed "Net result-no relationship," surveyed 1,000 Internet users in the U.K. and examined their attitudes towards financial service providers.
The key result of the survey is that a mere 16% of respondents, including those enthusiastic about Internet use, believe the Web will be used by financial service providers to get closer to the customer.
"The Web has been with us for a long time, and a lot of people in the UK-44% of the adult population-are on the Net. It is now mainstream," says Sian Davies, managing director of the Henley Centre. "The research shows that consumers don't yet see the Net as a tool enabling companies to get closer to them. The relationship bit of CRM has yet to be delivered."
The survey segmented Internet users into four distinct groups: traditionalists, enthusiasts, and, of the rest, those willing or unwilling to pay for better service. The segments cut across normal socio-demographic lines, making it difficult for financial services firms to predict behavior and preferences based on traditional measures such as age and income. Net users are not a homogenous group any more.
"As new media reaches mass-market dimensions, consumers will adapt and use technology in ways that suit them and fit with their lives," comments Clive McNamara, marketing director of AIT. "The challenge facing financial service providers is how to recognize and accommodate these demands and how to change alongside them."
Despite the differences in attitude to the Internet, users in the U.K. are united on several issues, the survey found. All customer segments are big fans of multi-channel financial services. Telephone banking is a favorite, with 80% having telephoned the bank; 65% had face-to-face meetings, and 45% had visited the Web site. Also, 62% of all respondents said they would be happy to be contacted about a new offer by email.
The survey respondents like hearing from their bank. Eighty percent felt that regular contact between a financial services firm and its customers helps build a better relationship. And they are willing to offer personal information. More than 80% agreed that by knowing their needs and history, financial service providers can build better relationships with them.
But the survey spelled more bad news for Internet-only companies. All the groups of Internet users would prefer to deal with an established company than a new dotcom, and almost two thirds admitted to being nervous about doing business with an Internet-only financial service provider.
"The new dotcoms are suffering from a high level of mistrust, and this particularly applies to the financial sector. Three-quarters of the respondents agreed they would rather deal with an established company," says Davies. "Few transactions are completed online, and even avid Internet users are still using traditional channels. It is a complex multi-channel environment. Two in three Net users would still rather visit a branch than use the Net for finance," she continues.
Nevertheless, established financial services firms cannot afford to be complacent, as almost 25% of all respondents felt that their bank was not responsive to their needs.
The survey showed that U.K consumers do not yet see the Internet as a means of communication with the financial service provider, or for conducting transactions. However, consumers' attitudes and behavior are dynamic and certain to evolve. For the majority, AIT and Microsoft believe that this evolution will be towards greater use of the Net. They point to call centers as an example. Customers initially received this channel with some caution and even irritation, but consumers have warmed to phone banking, welcoming the ease of communication, flexibility and timesaving.
So what's the financial institutions' take on CRM issues? At a recent conference of more than 150 financial services managers in London, 29% said they believed customers want a single view of financial holdings across all channels.
But delivery still presents a barrier. The most significant difficulty seems to be the current organizational structure of financial services firms. This may indicate that parts of the CRM system are not integrated, operating in so-called information "silos," preventing synergy and obstructing a multi-channel strategy. Clarity of direction is also a concern, as is the difficulty of creating a single customer view.
Indeed, at the conference, not one respondent could affirm that CRM programs were meeting their strategic objectives. Most said CRM initiatives are only meeting some of their goals.
The opportunities are certainly there. Eighty-six percent of respondents to the Henley Centre consumer survey say that, when choosing a new provider, it is important that products are tailored to them personally. But the CRM programs that would enable financial service providers to do this still have a long way to go.