BofA to use adopt WebPay (P2P and eMail) in Q4. Maybe USPS is holding off on advertising until BofA has the Pay@Delivery capability too.
Noise
from AmericanBanker-
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Retail Delivery Supplement: B of A Raises the Bar for Tallying Web Customers
Tuesday, September 11, 2001
By Andrew Roth
Bank of America Corp., which has long claimed to have the most online subscribers of any U.S. banking company, is adopting a new way of counting its Web-banking customers — and it is challenging its competitors to do the same.
Instead of counting subscribers — which could include people who signed up for online banking at their bank branch but have never once clicked around the site — the company adopted a formula in mid-August to gauge the number of “active users.”
The Charlotte, N.C., company now defines “active user” as a customer who has used the site at least once within three months. This number stands at about 2.4 million — compared with the 3.7 million subscribers the company has claimed.
“If we manage our business based on subscribers, we’re heading in the wrong direction,” said John Rosenfeld, a senior vice president and consumer e-commerce executive at Bank of America Corp. Using the wrong measurements could mislead the company, he said.
For example, Bank of America had an inflated view of its online banking base because it was counting sign-ups for Internet banking as if each customer had actually logged on to the site, Mr. Rosenfeld said. As a result, the company “ended up with a ton of people who subscribed who never actually logged on,” he said.
Measuring active users will enable the company to keep better track of how successful it is in getting customers to actually bank online, according to Mr. Rosenfeld.
Bank of America has also redefined another common measure of online banking success: customer penetration.
It used to measure penetration by comparing the number of online banking subscribers with the number of people holding Bank of America checking accounts. That put the penetration rate at about 25%. The company now says it will measure the number of active users as a percentage of all consumer relationships, including, for example, credit card and mortgage customers. This would cut the penetration rate to about 8%.
Though the lower figures may seem dispiriting, they can help the company improve, Mr. Rosenfeld said, because they show “how many people truly are adopting this as a percentage of what our potential is.”
Observers say it is difficult to tell from published figures which banking company really has the most widely used online offering because different companies have different ways of measuring.
“Most banks are unwilling to come out and admit how successful or unsuccessful they are because the subscribers number hides that,” Mr. Rosenfeld said. “We are throwing down the gauntlet, saying, ‘Hey, we are defining a new way of measuring that is a heck of a lot more meaningful than anything that’s been going on.’ ”
The old BankAmerica Corp. started offering direct dial-up electronic banking in the early 1980s, long before NationsBank Corp. bought it in 1998. It started its first Web site in 1994, and in 1996 it was among the first companies to offer account balance information and funds transfers online.
Susan Baumann, the senior vice president of online banking product management, said Bank of America has been successful in signing up online banking users in part because it has “put a lot of emphasis on the internal education of our employees on the benefits of online banking.
“A large number of employees — about 43% — use the service themselves, so they feel comfortable using it and recommending it to customers,” she said.
Employees offer online banking to new customers when they open accounts and to current customers when they call for service, Ms. Baumann said. The high percentage of customers who have signed up for online banking speaks to the type of customer Bank of America attracts: “convenience-oriented” people who value multichannel service, she said.
Numbers aside, Bank of America has increased its stake in online banking by investing in the vendors of its Internet offerings. The company also plans to unveil an online banking portal for retail customers in the fourth quarter.
Erik L. Fine, Bank of America’s senior vice president of Internet strategy and development, said users will be able to set up a personal page called “My Bank of America,” where they will be able to get integrated account information, e-mail, news, research, and financial tools.
Customers will be able to “customize” their pages by picking the things they want to see and do, and Bank of America will, in turn, “personalize” the pages by sifting through its products and services, finding the ones it thinks a particular customer would want, and setting up the page so that they can be reached with fewer clicks, he said.
For example, customers who are interested in selling a house or getting a mortgage could highlight home solutions capabilities, and those interested in investments could set up a stock watch on the page, according to Mr. Fine.
Using technology from BroadVision Inc. of Redwood City, Calif., the company will also create “rules” based on “known Bank of America relationships” to tailor the portal for different customer segments, Mr. Fine said. “It’s a mix of what do we know about the customer through relationships they have and what have they told us.”
For example, “if a customer has a money manager account with the bank, it makes sense to present them something more relevant … like a premier relationship” in which the customer is assigned a relationship manager, he said. “A premier banking customer would see their relationship manager contact information on the page. A nonpremier customer would not see that.”
James Van Dyke, a senior analyst at Jupiter Media Metrix in New York, said that offering personalized information online is “important but it’s really difficult to execute it well.” In the late 1990s banking companies mostly stuck with the “financial supermarket” Web site model, a one-stop shop with all the products and services jammed on one page, without regard to the customers’ specific needs, he said.
“Stuffing the screen with aisles and aisles of financial services and products, consumers simply get too many irrelevant things,” Mr. Van Dyke said. “Banks that will be most successful in the next few years are those that don’t deliver irrelevant stuff because they are effectively using customization and personalization.”
Mr. Fine said that a major feature of the new Bank of America portal will be aggregated data from banking, brokerage, mortgage, credit card, and other accounts, which will be supplied through an agreement with the aggregation specialist Yodlee Inc. Customers will be able to use the data from Yodlee to “customize” their pages and to look at whatever account information they want, including e-mail, he said.
In July, Bank of America Corp. was the lead investor — of an undisclosed sum — in a new round of funding for the Redwood Shores, Calif., aggregation company.
CBS MarketWatch has agreed to offer news and research for the portal. Customers will be able to read the news, check on markets, and do company research from their customized pages.
Electronic bill presentment and payment is a popular feature of many Web banking sites, including Bank of America’s. Last October the company bought a 12% stake in CheckFree Corp., which will supply the service for the bank’s portal.
Bank of America has been offering EBPP through CheckFree of Norcoss, Ga., since February. In April the companies kicked off a combined two-year, $45 million marketing campaign to advertise the service.
The relationship has begun to pay off. Nearly one million customers have signed up for EBPP since it was started, and 1,500 more are signing up each day, the company says. In May a record 3.9 million bills, worth $1.3 billion, were paid through the service.
Customers who use EBPP are 75% less likely than others to switch banks, and they use the company’s call centers 34% less frequently, so it is less expensive to serve them, Bank of America says.
Though the company has yet to release data on the marketing agreement’s effect on EBPP sign-ups, in July more than 160,000 people signed up for the service, compared with about 130,000 in January.
“One of the benefits B of A has that other banks don’t is, because they look at us as an alliance partner, they share product planning strategies with us, which better enables us to adapt to meet their needs,” said Peter Sinisgalli, the president of CheckFree. “If we have a clear understanding of their market direction, we’d love nothing more than make sure our next-generation services accommodate their strategic directions.”
Because Bank of America has markets nationwide, it wants a wide range of regional billers beyond the large national billers that make up most of CheckFree’s base, Mr. Sinisgalli said. Since the bank is such an important customer — it presents more bills from more billers (more than a hundred) than any other major banking company — CheckFree has gone out of its way to sign up billers in the bank’s markets, he said.
When the Bank of America portal is launched, the Charlotte company will become one of the first to use WebPay, CheckFree’s latest Web-based electronic billing product.
The product is intended to enable Bank of America to present bills “scraped” from the sites of billers that have not signed up with CheckFree, to process person-to-person payments, and to send e-mail notifications and bill summaries, Mr. Sinisgalli said.
“B of A is moving more quickly than our other financial institutions” to roll out next-generation EBPP capabilities, he said. “There is not anything that Bank of America is doing that isn’t available to other financial clients, but they are moving more quickly to adopt them. They wish to be the market leader and are moving very aggressively to do that.”
Bank of America is a conspicuous absentee from the bank-owned EBPP consortium Spectrum LLC of Union, N.J., but the investment in CheckFree “does not preclude us from considering Spectrum,” Ms. Baumann said. “In order to maximize the value to our customers, if we need to consider looking at Spectrum’s services, we would.”
The company plans to begin offering check imaging for its online banking customers in September.
“The benefit of the Web is far greater in expanding the relationship and driving that with our customers,” Mr. Rosenfeld said. “Attrition numbers are far more significant than fees the bank could possibly charge for online services.”
The new online features are expected to produce substantial cost savings for Bank of America, he said. “Not only do we improve how quickly and how efficiently we serve customers, we also drive more efficient solutions through the bank,” he said.
For example, Bank of America used to get about 1,200 calls per day just to reset online banking passcodes, until it gave customers the ability to do this online in March. According to Bank of America, this cut the number of calls in half and saved the company $4,000 a day.
A new Web site may be a bit overdue at Bank of America, if you consider a biennial study of banking sites released in February by Gomez Advisors of Waltham, Mass.
Bank of America’s site was ranked 29th out of 30 banking companies’ sites. The site scored poorly in several major categories, including ease of use (25th), which measures how well it supports new customers and how easily users can navigate it, and customer confidence (24th), which measures the speed of the site and how often it fails to function properly.
By comparison, Wells Fargo & Co.’s site was ranked No. 3 and Citigroup Inc.’s No. 1.
Paul Jamieson, the research director at Gomez, said the NationsBank-BankAmerica merger tripped up the company.
“With two separate banking platforms, it is very difficult to provide a unified Web system that enables users to see all their information,” he said. “When going through a merger where resources are tight and you are trying to make your numbers — and you’ve got two nimble major competitors out there who really understand the Internet and are very focused — Wells and Citibank — it’s hard to have that focus.”
But Gomez’s study itself may be outdated. For instance, it said a major drawback of Bank of America’s site was that users could not view their mortgage information with the rest of their accounts. Ms. Baumann said that this was true in California when the study was released but users there now can view their mortgages with the rest of their accounts.
Mr. Rosenfeld attributed the low ranking to “gaps in communication” between Bank of America and Gomez — either the research company was unaware that a feature was available or the feature has since become available. Still, integrating the NationsBank and BankAmerica sites has been a challenge, he said.
Ms. Baumann said the Gomez study put too much emphasis on platforms and certain “bells and whistles” — technologies that Bank of America may not have offered but that customers may not have wanted anyway.
One way to judge a Web site is to ask the customers who use it.
Calvin Fleming, a customer of Bank of America and of the old BankAmerica since 1992 and an online banking customer for the past six years, said he started banking online while he was in college in order to check account balances and move money from savings into his checking account.
Back then, on his tight budget, he needed to make sure his checks had cleared, so he viewed his balances almost daily, Mr. Fleming said. Soon thereafter he also began using EBPP, he said.
Though he is not living paycheck to paycheck now, as he did in college, he still goes to Bank of America’s Web page three or four times a week, but “now it’s an obsessive-compulsive thing,” he said.
Mr. Fleming, who just opened an individual retirement account, said he likes the idea of a site with aggregated data, “since I want to know what’s going on with my money at all times, whether it’s good or bad.” He also pays all his bills online — except for the rent — and said he likes paying them from one page.
In addition, Mr. Fleming said, he likes the idea of aggregated e-mail, since he has several e-mail accounts. In fact, because Bank of America’s new site will offer news and e-mail, he would consider using it as his home base on the Internet, he said.
Online banking has definitely become “easier to work with and use,” Mr. Fleming said. |
