Consumers Still Not Getting the Online Services they Need From Banks

Banks are failing to use their Web sites to tap a rich market opportunity: the customers who want to actively plan their financial futures but aren’t getting the planning and advisory help they need from their primary financial institutions’ sites. That is the major finding from a new study by Keane, Inc., a leading business process and information technology (IT) services firm.

Coupled with Keane’s recent research into financial services firms’ views of their own online offerings, the new consumer-focused study exposes a large perception gap between what financial firms believe they are offering and what customers are actually using. While the institutions believe their online advisory and planning services are roughly equal in quality to their presentation and transaction capabilities (3.2 rating to 3.9 rating respectively), their customers do not agree. They rate banks’ advisory and planning services much lower. It is largely because of this disconnect that few customers are actively using the Web-based advisory and planning services the banks say they provide.

At first glance, the new study, which involved a 69-question online survey of more than 1,800 consumers in the US, UK, and Canada, indicates that customers appear satisfied with their financial providers’ online services. However, further questioning reveals the extent of the fault lines:

* Most customers do not strongly agree that their financial institution’s Web site helps them with their financial planning needs

* Less than 20% of customers value the online advice given by their financial institutions

* Only a little more than 50% of customers strongly agree that their primary institution’s site is targeted to their needs

Respondents were asked to categorize themselves by their levels of planning capability. The 35% of banking customers who answered “I do all of my financial planning” were labeled the “Super Planners.” The 61% who answered “I know I need to plan but I need help” were termed the “Aspiring Planners.” Many of the Aspiring Planners are intimidated by the planning process, are not ready to face the challenges and complexities of planning, or are scared off by a combination of the two. The remaining fraction (4%) declared that they have no interest in financial planning.

“The message is clear. Banks are missing a major opportunity by not using their Web sites to properly appeal to this important group of customers,” said Imran Sayeed, vice president of financial services at Keane. “The positive here is that these are existing customers. The negative is that, according to our earlier survey of the financial firms themselves, most banks think they’re doing a great job online. This new research shows just how wide the perception gap is.”

Identifying the “Sweet Spot” Among Existing Customers

The Keane study discovered that many customers want to improve their financial planning but they need – and say they are willing to use – online help from their financial institutions. 80% of Aspiring Planners said they would be likely to use expert advice and online guidance on financial matters and more than 60% would use an online diagnostic planning tool to help them understand the type of financial person they area. Despite their apparent willingness to use these features if available, Aspiring Planners are not satisfied with how their financial institution’s Web site helps their planning process or with the advice given on the site. Only 26% agreed that their primary financial institutions’ sites are helpful to their planning activities.

When asked about their comfort with financial planning, respondents uncovered a sizable and underutilized opportunity for financial services firms. 65% of Aspiring Planners consider themselves to have moderate or strong planning skills and capabilities, but admit that they still need help with the process. “Here lies the sweet spot for financial services firms to grow a mass-market wealth management business,” noted Jason Price, vice president of solutions at Keane. “It’s clear that these customers are eager for help with the financial planning process; it is also clear that they want better guidance and tools from their banks. This data is a call to action for banks to invest in the areas of planning and advisory if they are serious about retaining and growing their customer base.”

The perception gap is prominent in other areas as well. Interestingly, some of the online features popularly considered valuable by financial firms have poor standings with Aspiring Planners. For example, online presentations of financial topics scored only a mean of 6.6 on a scale of 1-10, with 10 meaning “would definitely use.”

“The upshot of these findings is that banks and other financial firms must redouble their efforts to ensure that their online offerings are in sync with customers’ needs,” noted Keane’s Imran Sayeed. “But they can’t stop there; they also must make sure that their online offerings mesh with their other channels so they can create a truly integrated customer experience.”

Survey Background

The Keane study of banking customers was conducted in late-December 2005 and early January 2006. More than 95% of the respondents are between the ages of 25 and 59. Nearly three-quarters are married and 77% own a home. Almost four-fifths have a bachelor’s degree or post-graduate degree. About 43% are in technical professions, with a third in professional jobs and a further 17% describing their jobs as “management.”

To request a copy of Keane’s research report, “Customers vs. Banks: Bridging the Online Customer Experience Gap,” visit http://www.keane.com/whitepapers/bridgingthegap . To obtain a copy of “Pulling Ahead: Improving Growth with Richer Online Customer Experiences,” Keane’s research report regarding online customer experience from the perspective of the financial institutions, go to: http://www.keane.com/whitepapers/pullingahead .