In Europe, Spain’s BBVA now offers a personal financial management tool (called Tú cuentas, or “You count”) that aggregates account balances and transactions in one place, categorizes the transactions, and automatically generates special offers keyed to customers’ financial needs. Since the tool’s introduction, the amount of time customers spend on the bank’s website has doubled. And Fidor Bank, a German startup, relies heavily on technologies, using blogs, forums, and an active presence on social networking sites to communicate with customers. Fidor also offers them such services as e-wallets, which enable fast and secure account access and electronic transactions, and a bonus program for those who participate actively in its community functions.
The benefits of such efforts will have an impact on both the top and bottom lines. Revenue growth will be enhanced as increased transparency, trust, and convenience encourage customers to engage online and compare, evaluate, and discuss different products and offers. Banks will also benefit by using the direct, unfiltered feedback they receive from their customers to further develop and improve their services.
2. Reducing costs. By closing the online communication gap, banks could make real gains in efficiency and effectiveness, since shifting communication to the Web has the potential to drive down the frequency of more costly methods of communication. The most innovative banks will find ways not just to communicate with customers, but to use these new channels to boost loyalty and develop cross-selling and up-selling opportunities.
The classic approach to channel management aligns the complexity of a product with the cost of selling it over a particular channel. Typically, for example, banks try to sell low-margin products through low-cost channels. Web 2.0, however, offers banks the opportunity to change this dynamic, by using the inherent low cost of online channels to sell complex, high-margin products.
Banks can leverage a variety of technologies to reduce the cost of sales. Online forums that bring customers together to discuss various products and explain them to one another can reduce reluctance among buyers. Blogs can be set up to target particular customer segments, introducing them to relevant products and using case examples to help explain those products. Both Deutsche Bank and BBVA already let customers speak directly to bankers and financial advisors through video chat, providing greater convenience at a significantly lower cost than a branch setting.
3. Restoring confidence. Given the turmoil in the financial-services industry over the past several years, it should come as no surprise that consumers have lost confidence in their banks and bankers. The cause isn’t just lack of faith; dealing with banks remains inconvenient, and products are often overly complex. The “I love my bank” marketing campaign and “straight talk” blog of U.S. online entrant Ally Bank symbolize the industry’s eagerness to win back skeptical consumers.
Web 2.0 technologies can play a major role in building customers’ confidence in their banks, simplifying the process of conducting transactions and finding information, and helping customers understand complex financial products. One recent survey indicated that growing numbers of consumers are turning to online advice from peers as a source of valued financial information. Banks could also produce video clips for their websites to explain products and offer access to financial advisors through video calls. And they could host online communities and finance-related forums on their websites that would enable customers to discuss financial products with one another and with bank representatives.
One U.S. bank set to launch in 2011, BankSimple, sees its competitive advantage in providing straightforward, transparent banking services online. Its home page proclaims, “We’re not a bank. We’re better.” It says it will offer free online bill payment, free online and telephone support, and even the ability to deposit checks through a smartphone, and it promises that there will be no hidden fees. Online account information and transactions are designed to be as simple as possible, and the bank has a blog that already boasts a lively assortment of comments.