Transcript A Study of Customer Relationship Management in Financial Services on the Web

A Study of Customer Relationship Management
in
Financial Services on the Web
Dr. Dennis Anderson
Dr. Jim Lawler
Pace University
New York City
2004
Outline of Presentation
Abstract
Introduction
Financial Services Market
Characteristics of Financial Service Web Sites
Research Methodology
Analysis of Financial Service Sites
Implications of the Study
Conclusion
Abstract
Analysis of Study on Large Financial Businesses Indicates that
These Businesses Enable Higher Commerce, Content and
Navigational Context, but Lower and Generally Inadequate
Communication, Community, Connection and Customization
Design on Their Web Sites.
Analysis Contributes Important Insight into Competitive
Dynamics of Customer Relationship Management for Web
Empowered Financial Service Businesses Servicing Affluent
Market.
Definition of Terms
Customer Relationship Management – strategy of
optimizing processes of financial service businesses, that
enable the marketing, sales and service of products, through
innovation of integrated customer channels, including that of
the functionality of the Web, in order to effect customer loyalty
and financial service profitability.
Introduction
Importance of Customer Relationship Management on the Web to
Businesses in Financial Services Industry Is Unclear in the Research.
Industry Is Highly Cautious about Investment in Relationship
Management, Due to Economic Constraints and Frequent Failure in
Technological Implementation.
Non-Academic Studies Indicate Caution Is Contributing to On-Line
Functionality of Customer Relationship Management Inconsistent from
Off-Line.
Introduction
On-Line Channel of the Web Continues as an Important Factor in
Interactivity Experienced by Customers.
Experience on Web in Its Negative or Positive Impact Influences Future
Relationship with Financial Service Business.
Financial Service Businesses Are Clearly Challenged in Customer
Relationship on the Web.
Introduction
Focus of Study Is to Analyze Effectiveness of Innovation in Customer
Relationship Management on Web Sites in Financial Services Industry.
Study Attempts to Demonstrate that Web Is Critical for Future of
Financial Service Businesses that Compete for Affluent Customers.
Financial Services Market
20% of All Large, Intermediate and Small Financial
Service Firms Have Commerce or Transactional Sites in
USA vs. 40% in Finland and Norway, 20% in UK and
10% in France, Germany, Italy and Sweden.
Financial Services Market
Studies Indicate Number of Financial Service Sites Domestically and
Internationally Increasing Significantly in This Decade.
60 Million Consumers in Europe on the Web in 2003, Increasing to 85
Million in 2007 – US Banker Weekly Bulletin, April 1, 2003
Financial Services Market
Market for Affluent Consumers Consists of Customers in
USA Having Investable Assets of $1 Million or Higher, that
Includes Advisor-Directed (20%), Advisor / Self-Directed
(50%), and Self-Directed (30%) Customers.
Financial Services Market
Only 50% of Customers Consider Web Sites of Financial
Service Businesses Effective in Relationship Management.
25% Define Effective Sites in Advanced Customer
Management Functionality that Facilitates Relationship.
Most Customers Define Advisor Availability through the
Sites as Important in Their Relationship with the Businesses.
Financial Services Market
Financial Service Businesses Are Focused on Older Affluent
Customers, but Indications of $20 Billion in Revenue in the Decade
from Emerging Younger Consumers Are Not to Be Ignored in the
Market.
Characteristics of Financial Service Web Sites
7 Constructs of Customer Interface on Web:
Context, Content, Communication, Connection, Community,
Customization and Commerce.
Characteristics of Financial Service Web Sites
Context - Depth of Comfort and Ease of Navigation;
Content – Depth and Quality of Information;
Communication – Degree of Dialogue from and to Financial Advisor;
Connection – Degree of Connecting to Affiliated Financial Services;
Community- Degree of Interaction with Other Investors;
Customization – Degree of Explicit and Implicit Personalization; and
Commerce – Extent of Commercial Interaction.
Characteristics of Financial Service Web Sites
Context
-
Foreign Language
-
Help
-
Hyperlink
-
Search
-
Real Time
-
Single Sign-On
Characteristics of Financial Service Web Sites
Content
-
Account Aggregation Detail
-
Performance Reporting
-
Account Analysis
-
Planning Tutorials
-
Account Product Holding
-
Portfolio Tools
-
At a Glance Dashboard
-
Publications
-
Document Imaging
-
Research
-
Frequently Asked Questions
-
Transaction History
-
Glossary
-
Watch List
-
Household Summary
Characteristics of Financial Service Web Sites
Communication
-
Alert
-
E-Mail Links
-
Chat
-
E-Mail Notification
-
Co-Browsing
-
Instant Messaging
-
Collaboration
-
Live Web Help
-
Conferencing
-
Telephony
-
Form and Screen Pushing
-
Whiteboarding
Characteristics of Financial Service Web Sites
Connection
-
Market News and Quotes
-
Business News
-
Featured Domestic and International News
-
Life Style News Syndicates
-
Links to Preferred Merchants
Characteristics of Financial Service Web Sites
Community
-
Customer Bulletin Boards
-
Continuing Education Forums
-
Discussion Groups
-
Event Sponsorships
-
Expert Investment Seminars
Characteristics of Financial Service Web Sites
Customization
-
Account Preferred Dashboard
-
Alert
-
E-Mail Notification
-
My Profile and Watch List
-
Forums and Seminars
-
Industry, Life Style and Merchant Links
-
Recommendations in Products and Services
Characteristics of Financial Service Web Sites
Commerce
-
Account and Fund Transfer
-
Automatic Investment
-
Bill Payment and Presentment
-
Brokerage Services
-
Confirmations
-
Direct Deposits
-
Pre-Filled Application Forms
-
Privacy and Security Services
-
Transactions on Wireless
Characteristics of Financial Service Web Sites
Constructs Include Highly Advanced and Fundamentally Basic
Functionality that Facilitate Customer Relationship Management on
the Web.
Research Methodology
Methodology Employed Sample of Large-Sized Financial Service
Businesses, Consisting of Banks, Brokerages, Investment Banks and
Mutual Fund Firms, in 3 Iterative Stages of Analysis.
Research Methodology
Stage 1a: 13 Financial Businesses in USA Were Selected as B2C
Investor Sites, Analyzed by Students for Their Effectiveness in 7
Constructs of Customer Interface, Applying 3-Point Scale of Low,
Intermediate or High Functionality in Technology, and the Data Was
Collected by the Author.
(Sites Included American Express, Bank of America, Citibank, eTrade, Fidelity, Merrill Lynch, JP Morgan, Morgan Stanley, Northern
Trust, Paine Webber, Salomon Smith Barney, Charles Schwab and
Vanguard in USA.)
Financial Service Sites
Consumer Students
Spring Semester
Summer Semester
Winter Semester
2003
American Express
Bank of America
Citibank
E*Trade
Fidelity
Merrill Lynch
J.P. Morgan
Northern Trust
Paine Webber
Salomon Smith Barney
US Trust
Vanguard
Wells Fargo
Constructs
of
Customer Interface
Context
Content
Communication
Community
Functionality of Sites
Low
Intermediate
High
Connection
Customization
Commerce
Content Analysis
Statistical Analysis
Figure 1: Analysis of Financial Service Sites
- Stages 1 and 2
Relationship
Effectiveness of
Financial Service
Sites
Research Methodology
(Stage 1b: Financial Service Businesses in Europe Will Be Selected,
Observed and Analyzed Comparatively for Their Effectiveness in
Similar Constructs and Application);
Stage 2: Data from Stage 1 Was Analyzed in SAS to Determine
Construct Mean Scores and Statistical Significance; and
Stage 3: Domestic USA (and European) Sites Will Be Analyzed in a
Survey of Customer Relationship Management Strategies of the
Businesses.
Analysis of Financial Service Sites
From Stages 1and 2, Analysis Indicated Most of Sampled Sites Have
Following:
- Higher Context, Content and Commerce;
- Intermediate Communication, Connection and
Customization ; and
- Lower Community.
Table 1: Summary Analysis of Financial Service Sites
Financial Service Firms
Average Score
High
Functionality
Frequency *
Score 3
Intermediate
Functionality
Frequency *
Score 2
Low Functionality
Frequency *
Score 1
Context
2.6
413
242
8
Content
2.4
309
316
38
Commerce
2.2
264
269
130
Communication
1.7
63
307
293
Customization
1.7
56
350
257
Connections
1.6
35
311
317
Community
1.2
7
102
554
Constructs
* n = 51 Students x 13 Firms
Analysis Confirms Practitioner Literature and Proposes
Following:
Proposition 1. Large Financial Service Businesses Have Higher
Context Interactivity, Informational Content and Commerce
Functionality on Their Web Sites, Increasing Potential of Relationship
Effectiveness.
Proposition 2. Large Financial Service Businesses Have Only
Intermediate and Lower Advisor Communication, Affiliated Financial
Connection, Customized Feature and Investor Community
Functionality on Their Sites, Decreasing Potential of Relationship
Effectiveness of Sites.
Analysis of Financial Service Sites
Managers of Sites Will Be Surveyed on Customer Relationship
Strategies in Stage 3.
Results of Study Will Not Be Final until Completion of Stage 3.
Analysis of Financial Service Sites
Results of Study Are Helpful in Initially Analyzing Financial Service
Business Market.
Implications of Study
Results Confirmed Non-Academic Sources that Constructs of
Customer Relationship Management on Financial Service Sites Are
Higher in Commerce, Content and Context, but Lower in
Communication, Connection, Community and Customization
Functions that Facilitate Interaction on Web.
Implications of Study
Though Bulk of These Businesses Are Focused on Advisor Interaction
in Offices, Complementing Advisor Desirability, Benefit of Effecting
Increased Relationship in Customer Interaction from Sites Is Currently
Elusive to the Businesses.
Implications of Study
Sensitivity to Affluent Customers Interfacing Concurrently or
Alternately on the Web Channel Is Important to Not Only SelfDirected but also Advisor / and Self-Directed Advisor-Directed
Customers.
Implications of Study
Functionality on the Analyzed Sites Is Inadequate in Both Advanced
and Basic Interaction, Despite Evolution in Web Innovation.
Implied Interpretation Is that On-Line Financial Service Businesses
Continue to Be Indistinguishable in Functionality of Customer
Relationship Management.
Implications of Study
Financial Service Businesses that Initiate Innovation, such as Merrill
Lynch, Will Focus on Advisor Friendly Wealth Management
Technologies, that Include Customer Relationship Management Tools.
Implications of Study
Those Businesses that Initiate Technological Transformation of Their
Sites on the Web Will Have an Edge in Serving the Affluent Market, an
Imperative Implied in Study.
Conclusion
Large Financial Service Businesses in Affluent Market Are Currently
Focused Less on Enhanced Communication, Community, Connection
and Customization, and More on Fundamental Commerce, Content
and Context Functionality of Customer Relationship Management on
Their Web Sites.
Thank You!