Archive for September, 2008

Technologies Without Tradeoffs

Thursday, September 25th, 2008

Technology can contribute to achievement of business goals and alleviation of business pain areas in industries like banking, retail and telecom.

Let’s take a look at the key business goals and pain areas in these industries:

Banking
Increase customer intimacy and loyalty
Reduce operational inefficiencies and operating costs
Compress time-to-market for new products and services
Maintain compliance with government and industry regulations

Retail
Reduce inventory carrying costs across the supply chain
Meet rapidly changing customer tastes
Increase share of customer’s wallet
Reduce operating costs

Telecom
Sustain growth in emerging markets
Reduce customer churn by improving customer satisfaction and loyalty
Reduce costs

While business goals and pain areas might vary from one industry to another, “increasing customer satisfaction / revenues” and “reducing inefficiencies / costs” seem to be fairly common goals applicable across most industries.

The contribution of technology in reducing inefficiencies / costs cannot be in doubt. Internet banking, self-checkout, and online bill payment technologies have helped banks, retailers and telcos cut costs over the past decade of their deployment.

However, while technologies are busy reducing costs, are they helping companies improve customer satisfaction and revenues at the same time? This question is all the more important in the present challenging times where companies cannot afford to lose customers while cutting costs.

The track record of various technologies is mixed on this count.

Whereas some technologies like internet banking, self-checkout and online bill payment seemed to have faired well, some others like cheque deposit systems and call center phone trees appear to have failed. 

In my blog post “Cheque Deposit Systems – Are They Really Worth It?”, I’d talked about the disadvantages of this technology in the context of how it made it more cumbersome for the customer to drop a cheque: apart from having to spend more time to complete this transaction, the customer could no longer use concierge services to get it done. As a result, there’s no escaping the conclusion that, while cheque deposit technology might have reduced operating costs, it is doing so only by compromising the bank’s goal to improve customer satisfaction.

The notoriously circuitous phone trees used in call centers is another example of a technology gone awry. By reducing the number of calls going through to live operators, phone trees save employee costs, which explains their popularity amongst adopters in banking, telecom and a few other industries. On the other hand, I’ve lately come across many services (such as phonolo, Bringo! and iPhone Direct Line) that help callers bypass phone menus altogether and connect them directly to a human being on the other side – “Deep Dialing” as phonolo calls this. Judging by their increasing popularity, it is evident that phone tree technology hasn’t improved customer satisfaction. I won’t be too surprised if somebody told me that it has actually led to higher customer churn!

With the threat of recession looming over many developed economies, banks, retailers, telcos (and many others, for that matter) are going to be able to justify their ever-increasing technology spends only if their service providers and technology partners can come up with newer technologies, alternative value propositions and innovative implementation approaches that do not force them into a tradeoff between one business goal and another.

How Usability Can Increase Adoption of Internet Banking

Thursday, September 4th, 2008

Internet penetration, reliability of connection and security concerns are commonly cited as key inhibitors of wider spread of Internet Banking among retail customers. Admittedly, banks cannot do much about the first two factors; and whatever they are doing about the third factor unfortunately comes with its own trade-offs because many measures to improve security inevitably cause greater transaction fraction and risk alienating customers many of whom do not wish to sacrifice convenience for additional security.

My personal experience suggests that usability improvement is a low-hanging fruit that can be leveraged to significantly increase the adoption of Retail Internet Banking without any adverse side effects.

In all my years of banking with a Top 5 high-street bank in UK, I never once used its website to pay my house rent or utility bill. Let me explain why.

My apartment’s letting agent wanted rent payments to be made in favor of “MCS MERIDIAN CLIENT ACCOUNT”. Unfortunately, the money transfer screen of my bank’s website did not accept this name owing to some field length limitations in their software. When I inquired, the bank’s branch personnel told me that I should try and abbreviate the beneficiary name to “MCS MERIDIAN CLTAC” or something like that so that it would fit into this field. When I asked them what’s the guarantee that the money does not end up in someone else’s account, they told me that they were reasonably sure all will be fine as long as I used the correct beneficiary account number but they couldn’t provide any guarantees. Even when I told them that I knew of at least one other bank where such a problem didn’t exist, their response didn’t change. Added to this, I discovered that the reference / narration field couldn’t accommodate the basic level of information I’d need to convey to the beneficiary (e.g. “House Rent 98 Meridian Place Jun 2008”). This led me to wonder whether my letting agent would be able to figure out what the payment was for, even if it did reach them.

Had the website contained some simple text like “in case of space constraint, you can abbreviate the beneficiary name as long as you’re entering the correct account number”, I might have been adequately assured and used the electronic money transfer facility on the bank’s website.

Without such explanatory text and due to the wishy-washy statements of the branch personnel, I adopted a more usable option to pay my house rent every month: write a check, put it in an envelope, affix a stamp, and post it to the letting agent. This worked very fine – I had no problems writing out MCS MERIDIAN CLIENT ACCOUNT in full on the check. My bank lost one e-transaction every month.

In the case of my utility bill, even though I could enter the full and correct name of the utility company on the money transfer screen, my bank did not permit this transaction, instead directing me to use the bill payment feature on its website. When I went there, I had to select the beneficiary name from a drop down list. What was the problem with this, you may ask. Isn’t the website being more usable by offering me a list of names to choose from, instead of asking me to enter the beneficiary name? Well, the problem was, none of the available names in the drop down list matched my utility company’s name (“EDF ENERGY”)!

What options did I find in the drop down list? There was EDF ENERGY ELEC and EDF ENERG LONDON. Well, I was living in LONDON and was trying to pay my ELECTRICTY bill, so do I select EDF ENERGY ELEC or EDF ENERG LONDON? Since I didn’t have an answer to this question and didn’t want to risk paying one company for the electricity supplied by another, I gave up on the website and resorted to my utility company’s telephone payment facility which had excellent usability. Well, my bank lost another e-transaction.

Now, after recently returning to India, I learned that it was possible to use the Visa Money Transfer feature on the website of my bank (amongst the Top 3 private sector banks in India) to pay my credit card bill. My credit card is from another bank, let’s call it CCBANK. It was easy to figure out how to use the feature to transfer money to someone else’s Visa card account. However, when it came to paying my own credit card bill, there was no clue whose name I should use for beneficiary. Should it be my own name? Or, should I say “CCBANK A/c No. xxxx xxxx xxxx xxxx”, which was the name I’d need to to use if I was paying by check? A simple example placed right next to the beneficiary name field explaining what payee name I should select, would’ve given me some sense of security that the money would go to the right place. The blame for this ambiguity equally goes to CCBANK for not clarifying this in their leaflet that tipped me off to Visa Money Transfer. 

What puzzles me is how the website misses out such basic information that would help the customer but doesn’t fail to include lines and lines of disclaimer viz. we are not responsible if you send money to a wrong person; retrieval of wrongly sent payment is outside our purview, blah blah blah.

Another bank (also amongst the Top 3 private sector banks in India) uses “out-of-band” authentication via mobile phone every time I try to create a new payee to whom I wish to transfer money online. A good security measure, you might say. I’d agree. But, the problem is, I have multiple accounts with this bank and only one mobile phone. When I register a payee from my first account, I enter my mobile phone number. All’s well so far.

But, when I try to register a payee from my second account and enter my (one and only) mobile phone number, I’m blocked by an error message saying the mobile phone number is already used by another account. This might be a good security feature but it’s hardly of any use to me when the website (1) is not intelligent enough to realize that the other account also belongs to me, and (2) doesn’t tell me how to proceed under the circumstance. I was stuck and was forced to abandon the transaction.

Luckily, through contacts in this bank, I was able to find out quickly that, if I linked all my accounts under a single logon (that is, a single username and password combination), I wouldn’t face this problem.

If only a message could come up on the website – e.g. “to proceed, please link all your accounts” alongside the error message blocking the transaction, that would enable others facing a similar problem to proceed with their transaction even if they didn’t have the right contacts inside the bank from whom they could elicit a speedy clarification.

I could give other examples but it shouldn’t take a lot for banks to recognize that even slight improvements in usability can increase adoption of Internet Banking significantly and help them save the higher costs of servicing alternative channels like branch walk-in and checks.

Sooner or later, I’m sure banks will start taking notice of the importance of usabilityin their Internet Banking systems when Web 2.0 financial services companies with excellent usability like Mint, Wesabe, Prosper, Covestor and several others start luring their customers away.