Can you imagine how a bank would fare if it couldn’t provide its customers with access to ATMs, or refused to let its customers conduct transactions over the phone? The lack of such facilities may have been alright in the 1950s, but if any such banks still remain in the ’90s, the majority of their customers will have fled them long ago in favor of more accessible competitors.
Can you imagine how a bank would fare if it couldn’t provide its
customers with access to ATMs, or refused to let its customers conduct
transactions over the phone? The lack of such facilities may have been
alright in the 1950s, but if any such banks still remain in the ’90s,
the majority of their customers will have fled them long ago in favor of
more accessible competitors.
The same is now happening to banks that refuse or are slow to adopt
Internet banking for their customers. The full viewing and downloading
of account details, transaction histories, bill payment, setting up
recurring payments, fund transfers and a host of other services - all
provided over the Internet - are fast coming to be regarded as part of
the minimum you’d expect from your bank.
Wells Fargo (www.wellsfargo.com) and Citibank (www.citibank.com) are
good examples. They do all these things and more. I haven’t banked with
either of them, so I can only comment as an observer, but I particularly
like the Wells Fargo site’s absolutely clear, no-nonsense design. From
the moment you click through to the Wells Fargo Online section,
everything is designed to convey the message ’This customer service
channel is just as important to us as if it were a physical branch.’
Wells Fargo also lets you do your banking on your TV set, using the
Microsoft WebTV service. And if you’re not on the Internet, Wells Fargo
will sort that out for you too, by way of a deal that lets you have a
20% discount off Pacific Bell’s regular dollars 19.95 monthly
subscription rate. It makes perfect sense for a bank to do this. One
reason is that it can be one of many means a bank can use to retain
customer loyalty. Although banks are traditionally one of the
’stickiest’ of all services, with many people staying with the same bank
all their lives, that is changing. These days, customers will change
banks more readily than they ever did before, and one of the main
reasons is that the Internet enables rivals to make it much easier to
switch banks.
Another reason for banks to offer Internet access to their customers is
cost. Each telephone transaction by a customer costs the bank a fifth to
a 10th of what it would have cost had the person decided to go to a
branch and do their business over the counter. Internet transactions are
in turn an order of magnitude cheaper for the bank than telephone
transactions.
In Britain and other European countries, it is now not unusual for banks
themselves to be the providers of branded Internet access. It would even
pay for a bank to subsidize Internet access for its customers. As long
as it can deliver a decent online banking service, that is. If they get
it wrong, the consequences will be enormous.
Few businesses are as dependent on reputation and trust as banking, and
the worst thing that could happen to a bank in the Internet era is an
online security breach that becomes well publicized by that most
merciless of media - Internet word of mouth.
That is why, while most online banks talk about how tight their security
is, Well Fargo promises guarantees. ’You never have to worry about
losing any funds as a result of using our secure Online Banking
service,’ says its site. ’When you bank online with Wells Fargo, we
guarantee that you will be covered 100% for any funds improperly removed
from your accounts, while we are handling your transactions.’
Only such boldness will keep banks ahead in one of the most competitive
periods they have ever faced.
