How to Choose Software Allies for the On-Line Marketing Wars

By Rosen, Bob | American Banker, July 8, 1996 | Go to article overview

How to Choose Software Allies for the On-Line Marketing Wars


Rosen, Bob, American Banker


Executives in virtually every industry are understandably concerned about how on-line marketing will affect their competitive dynamics. Few, however, have more reason to focus on these issues than bankers.

Having come through a decade of increasingly intense competition during which insurance giants, brokerage firms, mutual fund companies - and even retailing conglomerates - laid claim to their customers, many banks are finding that the virtual financial marketplace is perhaps the most compelling challenger yet.

No longer limited by the constraints of geography or time, bank customers can use the World Wide Web to visit competitors to gather information, compare products and services, and communicate with numerous advisers - in short, to take advantage of everything in cyberspace and very possibly overlook the players that aren't there.

To compete in this environment, banks must be prepared to enter it aggressively. To do so effectively will take a substantial investment in resources and a clear sense of purpose and direction.

As information has increasingly come to be regarded as a commodity, the ability to successfully differentiate among products, services, and even providers is increasingly hard-won. This blurring of differences can be blamed not only on the growing expectation of consumers that products and services be improved, be more personalized, and be more accessible than ever, but on the rush to meet these consumer expectations.

However, juxtaposed to this phenomenon is financial reality. Unwieldy institutions resulting from mergers, acquisitions, and even bad habits handed down from prior decades have been delivered an ultimatum by managements and shareholders: Clean up internally and operate profitably. The challenge of reducing the costs of serving customers while delivering enhanced value to them is considerable.

One of the resulting developments has been an increase in electronic service offerings, beginning with automated teller machines and now well into the next generation of electronic commerce, in which common banking transactions can be handled from home computers.

But if electronic commerce is not delivered in a way that meets or exceeds the growing expectations of customers, then one offering will surely be no better, nor more widely utilized, than the next.

The objective of an on-line banking solution should be to enable the institution to shift its focus from traditional mass-marketing to highly targeted, needs-based service and selling.

Cyberspace is well suited for this shift. Although a digitized medium would seem to decrease mutually satisfying customer connections, the almost endless possibilities for interactivity - if harnessed to mutual advantage - actually greatly enhance relationship opportunities.

At what other time has it been possible, for example, for customers to obtain information and personalized advice from their banking institutions, regardless of their work schedules or other constraints?

And when have the opportunities to gather real-time market data, which can be translated into immediate opportunities to tailor product and service offerings to specified needs (even to customize them to the individual's needs) been so readily at hand?

Though banks have been going on-line in record numbers, many treat the Internet as a mere repository for static marketing material. But their most successful, mainly nonbank, competitors continue to make headway with elaborate programs that allow customers to download prospectuses, compile portfolios, and even make investment decisions.

Along with such customer "captivity" comes increased opportunities for cementing relationships through value-added services and cross-selling, much of it at lower cost to the institution.

A multitude of options face banks preparing to launch or reinvent their Web sites. Meanwhile, banks need to be prepared to compete with the largest among their brethren, some of them teaming up to create powerful joint ventures. …

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