Banking Review

Channel surfing

Direct and self-serve online channels are likely to ride a crest
in the next three years, predict senior bank executives

BY SHU FHANG SOH

Three out of four Australians use Internet banking to manage their savings accounts, credit cards, transaction accounts and mortgages, according to the 2010 Datamonitor Australian Financial Services Survey.

The ongoing adoption of direct channels by Australians is driving greater investment by financial institutions.

In fact, research from Accenture recently found 63 per cent of bank executives believe there will be greater adoption of direct and self-service channels over the next one to three years, including online banking. This indicates a need for improvedfunctionality, communication and other strategies to drive and maintain growth in online uptake.

Locally, many financial institutions are already stepping up their efforts to enhance their online banking channel.

In recent months, we have seen institutions including NAB, Citibank and BankWest upgrade their online banking platforms. Credit unions and building societies are also enhancing their online offering.

Looking at examples that are not from the ‘big end of town’, Qantas Staff Credit Union and Victoria Teachers Credit Union have recently launched the real-time online verification of new applicants’ identities and addresses by integrating the online application process with online identity and address providers, eliminating the need to complete an ID check in-branch or have documents verified by a referee. This is similar to what is currently offered by the Commonwealth Bank, which allows customers to apply online to open a transaction account, savings account or credit card using electronic customer verification.

IMB has introduced faster application processes for home loans and the Maritime, Mining and Power Credit Union allows potential customers to save their incomplete application form to be completed later at a more convenient time. For forms abandoned without saving the details, the credit union is able to follow up with the potential customers and address any possible concerns.

New developments planned for the Commonwealth Bank and Bankwest will include the ability to increase credit card limits online and pre-populated credit card forms for faster applications.

Earlier this year, Greater Building Society introduced live chat to allow visitors to open a secure chat window to ask questions of a staff member in real-time, giving customers an alternate opportunity to contact the building society and get faster responses than those delivered via email.

This technology is commonly used in other industries such as online retail and travel agencies but used less often in banking. Greater sees Twitter and live chat as additional online platforms for customer service and customer engagement. The building society is also revamping its Internet banking application.

It joins NAB in communicating with customers on Twitter and YouTube as well as online chat. The aim is to reach customers in the time and place they find most convenient, rather than forcing customers to use a single contact method.

As technology evolves, online banking is no longer limited to desktop or laptop banking.

Smartphones connected with fast Internet access can drive the adoption of online banking, although many customers remain sceptical about using mobile banking. A number of financial institutions such as Community First Credit Union and Westpac have launched iPhone banking apps, allowing their customers to replicate most things that they do on PC such as checking balances, funds transfer, locating ATMs, making BPay payments and more.

Riding future waves
But what will the future online banking landscape look like?

The Commonwealth Bank’s 2013 vision sees the future of banking built around augmented reality, geolocation, and mobile payments through devices such as iPads and Microsoft’s Surface. It is an extreme online or virtual banking experience.

Online banking through mobile devices _ be they mini laptops, iPads or mobile phones _  continue to evolve as innovation develops.

Further improvements to mobile banking facilities are likely to continue through better security features, improvedfunctionality and greater ease of use. Even the types of devices that we use to conduct mobile banking will continue to emerge; you will never know what next ‘i’ will follow iPhones and iPads. After all, iPhones didn’t even exist three years ago.

Some observers also envisage the merging of payments and online banking on mobile phones. There are numerous pilots already underway.

Henry Ford said, if given a choice, people would ask for a faster horse. Instead, he invented cars to meet the need of faster transportation. It is the needs of your customers that will shape the future of online banking. Innovation usually happens to address those needs.

Shu Fhang Soh is a senior industry analyst with Abacus – Australian Mutuals Limited.