By Mohan, Madan; Kalmadi, Kiran; Gurnani, Rajat
Global Finance , Vol. 25, No. 8
Best Practices, Key Challenges and the Way Forward
* Banks view internet banking as an important channel for growth and retaining customers.
* There is a gradual shift in the consumer internet banking model from "Customer Service" to "Customer Engagement."
* Banks are leveraging Web 2.0 tools to implement their internet banking strategy.
Internet Banking Has Evolved from merely providing information about banking products to offering a complete financial marketplace for its online customers. Over the years, the online banking model has transformed from providing customer service to promoting customer engagement. Today banks treat internet banking as one of the most important channels for growth and retaining customers.
Evolution of the Consumer Online Banking Model
The early years of online banking included information- and transaction-based services providing features like banks' products and services information, account activity information and money transfer to serve customer's information and transaction needs. However with changing consumer internet usage patterns and the advancement ofWeb 2.0 technologies, the internet has started playing an important role as an online social medium. To leverage growing internet capabilities, banks started offering advisory, engagement and other advanced financial services on their online banking menu. The shift from "Customer Service Model" to "Customer Engagement Model" brought about a radical change in consumer internet banking.
Customer Service Model
Historically banks were viewed as a provider of financial services and therefore focused on offering the best customer service possible. The same model was adopted for consumer internet banking and many of the initial online banking initiatives - like online transactions and account monitoring - were intended to improve customer service. Over time, technological advancements improved these services drastically. A description of the online banking service offerings and innovations in each of the segments is explained below.
* Information Services: These services are used by banks to educate and disseminate information to online customers. Once static pages displaying information about a bank's products and services, banking websites can now provide online demonstrations of their service offerings. Information services include:
* Balance Inquiry, Statement and Transaction History - Customers can access their historical transactions with real-time balances.
* Consolidated View of all Financial Accounts - Customers can view their bank, credit card and loan accounts (with the same bank) through a single user ID. Many banks have provided the capability of viewing and managing credit account transactions across banks.
* Mailbox Feature - Customers can send emails directly and securely to the bank while the bank can maintain constant communication and promote its products and services to its customers.
* Transaction Services: Beginning with basic transactions like funds transfer and loan payments, banks are now conducting more and more transactions online. Several banks now offer straight-through processing capabilities on over 90% of online transactions like funds transfer and bill payment. This helps to achieve millions of dollars in annual savings, increased customer satisfaction and greater transparency. Transaction services include:
* Online Funds Transfer - Customers can transfer funds to any account, intra-bank or inter-bank. Many banks offer ordine customers the ability to send money to any person or organization.
* Account-to- Card Fund Transfer - Customers can transfer money from their bank account to any other debit or credit card.
* Online Bill Payment - Customers can pay bills of utility services like phone and energy. Customers can also pay credit card bills and issue checks online. …