What’s a poor bank to do when the Internet is teaching its customers new tricks - and not just its personal banking customers but also its merchant customers?
What’s a poor bank to do when the Internet is teaching its
customers new tricks - and not just its personal banking customers but
also its merchant customers?
In the physical world, banks are central to the settling of most
transactions that don’t involve cash. If you’re a retailer, you need
your bank to take the checks and credit card payments that your
customers present to you, and go and get the money for you. Online,
however, the job could be done just as easily by an IBM, a KPMG or even
Microsoft. Banks are being forced to think of ways not only to retain
their retail customers but also to position themselves at the center of
the online economy.
Some banks have chosen to run online shopping malls, with varying
degrees of success. The British bank Natwest, however, has opted to
launch a service called Cybuy (www.cybuy.com). Cybuy enables web
shoppers to buy things by going through a series of windows that pop up
when they click on a banner ad or link on a web site. At no point is the
purchaser taken away from the original web site. Typically, a Cybuy
banner ad will offer a certain product at a particular price - say
’Mulan, DVD/VHS, dollars 19.98’ - with an invitation to the web user to
’Cybuy it now.’ Subsequent screens enable the shopper to refine their
choice, for instance by choosing the size and color of a garment, or to
specify a particular shipping option, before confirming the purchase.
Cybuy is particularly suited to impulse sales - promotions, gifts,
flowers, hot sellers and so on - and it is not particularly good for
comparison shopping or considered purchases.
It works just as well in contextual links on sites as in banners.
What it also means is that the company doing the selling doesn’t even
need to have a web site. Unlike other ’buy-in-the-banner’ systems, Cybuy
doesn’t require the retailer to have any online transaction handling
capability of its own. Cybuy generates the order from the consumer,
sends the details to the shipping company, even if that is not the
retailer itself, handles the dialogue with the credit card or other
payment company and settles the payment across the supply chain. It also
operates a call center for any shoppers who might have queries or
problems about their Cybuy purchases, and will respond to inquiries by
phone or e-mail.
Although Natwest is a British bank, it has chosen to launch the Cybuy
service in the US, which has the most developed e-commerce market.
Natwest believes Cybuy will be able to generate online sales far more
cost-efficiently than retailers could manage on their own. One reason is
that by signing up many retailers, it will be able to buy online media
space very cost-effectively. The other reason is that Cybuy is using
Engage (www.engage.com), a global database of web users’ interests,
profiles and behavior, to target each offer at the people most likely to
respond to them. This is no different from the goal of most advertising,
although Engage is a very Internet-particular way of achieving it. The
theory, although it has yet to be proven, is that this will dramatically
push up the response rate to banners, and therefore the retailer’s
return on their investment.
Cybuy is a perfect use of the Internet. It exploits the unique
capabilities of the medium far more fully than sticking to the
’old-world’ metaphor of the shopping mall. But the really interesting
thing about Cybuy is that it was not done by an IBM or a Microsoft, but
by one of those ’old’ banks that are supposed to be on their way out.
Maybe there’s life in them yet.
