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Forrester Research: Forrester Retail Insights Financial Services First Look: Research & Event Highlights From Forrester

11 Mar. 2003

The Unvarnished Truth

	Thirty percent of North American consumers consider a large bank their primary financial provider. Credit unions gained ground in 2002, matching small local banks' 16% share.

	Many European brands -- from Albert Heijn to Volvo -- offer financial products, but only 9% of Europeans buy from nonfinancial firms. Those who do are confident financial consumers, more active online and more self-directed.

Mark Your Calendars

	May 5-7 in New York: The 2003 Forrester Finance Forum, "Winning the Next Financial Services Consumer," features 2002 Nobel Laureate Daniel Kahneman, Sun Microsystems Chairman Scott G. McNealy, Edward Jones Managing Partner John W. Bachmann, and other financial services industry leaders. See the full agenda, or call +1 888/343-6786.

	March 25 in our San Francisco office: How do online financial consumers use different channels for service? Join Catherine Graeber and Bruce Temkin for a workshop on making cross-channel service work in your organization. See the overview, or email financeresearch@forrester.com.

	June 9-10 in San Francisco: Catherine Graeber co-chairs The American Banker Conference on electronic billing, payment, presentment, and invoices.

How Do You Stack Up?
Our Online Financial Services Benchmark enables banks to measure their online banking metrics, including bill pay, aggregation, and small business, against competitors. To learn more, please email us at financeresearch@forrester.com

European Online Finance's Quiet Boom

Service With A Virtual Smile: Banks Labor To Retain Customers North American bankers agree on one thing: Retention is key in 2003. We surveyed 250 executives about their banks' strategic priorities -- and all but five said that retaining customers is a high priority this year.
How do they intend to raise retention rates? By improving customer satisfaction. Customer service functionality is at the top of banks' priority lists for online development this year. There's just one problem: Banks aren't giving consumers good reasons to abandon ingrained behavior and switch to new electronic channels for service. In fact, 75% of the consumers who are receptive to banking online don't yet do it. Why? Steven Wright has one answer: "I saw a bank that said '24-hour banking.' But I don't have that much time." Forrester believes that banks must do more to persuade customers to use the right channels for interactions. This strategy, which we call right-channeling, has already improved the quality and lowered the cost of service at leading banks: First Tennessee offers online check images free to customers who serve themselves online. Satisfaction is up and costs are down. Charter One waives standard account fees and minimum balances, provides electronic statements and check images, and reimburses foreign ATM charges to customers willing to give up human tellers and paper statements. Citibank embeds online credit card bills with reverse lookup of merchants and direct links for fee disputes. Interactive bills like Citibank's have another virtue: They move customers a step closer to paying bills online at the bank. Banks need the help: Bill pay adoption at bank sites has stagnated, and new customers are going directly to biller sites. That's not good, because online bill payers are just what today's banker wants: They are easier to retain, cost less to serve, and -- hold onto your hats -- pile up higher balances and more accounts than otherwise identical offline customers. Smart firms will follow Bank of America's lead and make bill pay free to get more customers to pay bills at their sites. While Americans buy more from the bank at which they pay bills, Europeans are just plain buying more: In the past two years, Europeans' online focus has shifted from account lookups and stock trading to researching and buying simple products like bank accounts and credit cards. That's good news for the US, too, where we see the same kind of quiet, steady growth for online banking in 2003. We'll take a hard look at the reality of cross-selling by banks in a report later this month. You can view a list of other upcoming titles on the Financial Services page of our site. Is there some other topic you'd like to see covered? Just send a reply to this email. I'd love to hear from you. Bill Doyle Financial Services Research Director P.S. Are there other people in your organization who should receive the Financial Services First Look? They can subscribe via the link to our email subscriptions page below. Or just send an email address in a reply to this message, and I'll be sure to add it to the distribution list. Thanks. EMAIL: Email this issue to a colleague. PRINT: View a printer-friendly version of this issue. VIEW ARCHIVE: View past issues of First Look. TECHNICAL SUPPORT: Call the Client Resource Center 1 866/FORRESTER (1 866/367-7378) or +1 617/613-5730 UNSUBSCRIBE: We hope you like First Look. But if you want to unsubscribe, please go to our email subscriptions page.

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