Table Of Content

— . Fnlfillment/PrintingforINPUT Dat* / ' ' '- By ‘'"i,y— ProgramCode Proj.ectCode— ' TtD ^ INPUTP.0.tt 0 ’ BACRef,g -tie* 4 * P^1C pReports ExecutiveQV Report Fulfillment Fulfill. .^ResearchBulletin Stock Stock Profiles TUPkg Newsletter Total Total Reprints Other ResearchBulletin Newsletter Fulfillment / Fulfill. Fulfillment-Pleaseprintlisttoordercovers» US'SivcX' %Pc TO: GBC Date/FedXGBC CoversOrder DateDueINPUT Date DateRec.INPUT Quantity Color Size • P.0.Number Date GBCControlNumber PLEASEPRINT labels packingslips To:BAC TOBRADFORDADAMS Folder Disk HardCopy BlueForm Dates GBCCover ForSetUp/Proof ProofrtntoINPUT _ FinalproofrtntoBA_ ScheduledtoShip OtherInformation/Notes Instructions: % WindowCover 3 HotStrip 3-HoleDrill ^ Staple ;/KnL ShrinkWra'p Other ^ 'ReturntoINPUT ShipDate. \M/d4uji£r^L**' OFroirgSitnoaclks:/DiskinfRoPlder _0V. RB— PR InternalsforDistribution (y^L- p-v i n Internationalformailing/DHL INPUTaddstockquantitytoinventoryreport 2 Vol.l,No. March1997 Banks Report Problems With Electronic Banking Products Despitepromisingforecastsofadditional Banksandvendorsaidingthemdonotalways revenueandnewbusinessfromhome(orPC) conductsufficientcustomerresearchortests banking,smartcardsandotherelectronic ofnewservicesbeforeintroducingelectronic products,anumberofbanksreportthatthey ordigitalmoneyproducts. Vendorsmusthelp haveencounteredmoreproblemsthan banksbymakingsurethatallaspectsofa anticipatedwiththeseproducts,asillustrated newproductareconsidered. inExhibit1. •Thepricingstrategyforhomebanking,for Exhibit1 example,mayhavetobecheckedthrougha ProblemsEncounteredwithSelected prialtohteerfftohratnijnuvsotlvaisnkgitnhgecsuaslteoomfertsheasbeoruvtice, RetailElectronicProducts possibleprices,tomakesurepricingwillnot ElectronicBanking ProblemsReportedby discouragecustomersforsigningupforthe Products Banks service. HomeorPCBanking Pricingwasnot •Vendorsshouldensurethatbanks analyzed. Costof understandthesupportandcostsinvolved supportishigh. Should withanewservice. Banksunderestimate haveselectedother thecostofrunningsupportdesks. products. •Vendorsmustadvisebanksonalternatives SmartCards(with Useisbelowforecast. availabletomeetretailelectronicbanking storedvaluecapability) Profitabilityisin objectivessothatcustomerrequirements question. aresatisfied. sIentrevrinceetsbased vFnooerlweucmaacesctaonubdnutsnsiunhemasbssernootf bItainskisnitnhveesvteingdaotre’sthientseurietsatbimliatkyeofspurroedutchtast, beenachieved. sincethey(thevendors)willincurcostsand Source:INPUT changesifdifficultiesareencountered. Vendorsaswellasbanksmustkeepinmind thatthesuccessfuluseoftheseproductsis ©1997byINPUT.Reproductionprohibited. EPRB2 INPUTResearchBulletin importantsinceitwillhaveasignificanteffect • AsoneISexecutiveinabankstated,the uponfuturelending,savings,investmentand assumptionofhisbankwasthatnew otherbankingbusinessandrevenues. technologywouldovercomethedifficulties encounteredinsigningupcustomersfor Examplesofproblemsthatwerereportedto electronicservicesatotherbanks. INPUTduringrecentresearchonelectronic bankinginclude: • Severalvendorsreportedthatthe •hBealnpkedcutostuosmee“rtsriwahl”ohwoemreebeannckoiunrgagseydstaenmds wdeiixfptfehirchiuleotnmiceeessbebanencioknuignntgeenwrceeorduenitnseiprmaeisldtawrviettnohtubraensk becameannoyedwithdeficienciesincurrent customerstoday. featuresandtransferredaccountstobanks thathadmoreattractivesystems. Asaresultofcurrentexperience,banks •Sfoormheobmaenbkasniknitnrgodsuycsetdempsritchiantghstardategies rlraeeuccnoocmmhmmbeeennddmsotrthehaatitnrtveeesnensadirovcreh.spiIrniNvooPrlUvtoeTdprinoduct supposedlybeenresearchedbutwhichdrove supportingbanksmakesurethatstepsare customers(togetherwiththeircheckingand takentobothanalyzeandtesttheinterests savingsaccounts)tootherbanks. andneedsofpresentcustomersandto •Banksfoundthatthecostsofsupportand investigateexperienceelsewhereasshownin administrationforelectronicbanking Exhibit2. vmeandteurtehseiwreerleechtirgohneicrbtahnaknipnlganpnreodd,ucatnsdthis Exhibit2 unprofitable. WhatShouldbeDoneBeforeLaunching ElectronicBankingServices •Theslowgrowthofcustomersforsome smartcardorInternetservicesmadesome StepRecommendedfor Ratingof banksquestionwhethertheyhadselected PlanningRetailElectronic Importance therightservicesoranticipatedwhatwas Services (low=1;high=5) involvedinstartup. Researchandtestneedsand 4.4 interestsofcustomersmore •Banksalsoreportthattheyhadnot deeply anticipatedtheimpactofnewproductson Obtaininformationontests 4.2 existingorothernewproducts. For anduseofelectronic instance,anewapproachtocallcenter productsatotherbanks bankinghadanimpactontheuseofhome Conductmeaningfultestsor 4.2 bankingatonebank. pilotswithcustomers Manybanksreport,inhindsight,thatmore Modelimpactofnew 3.5 researchshouldhavebeenundertakenbefore aprnodduoctthseropnropdruecstesntbebiunsginess theylaunchednewretailelectronicbanking planned %• services. Source:INPUT Anadditionalonerousaspectofthese situations,accordingtobanks,isthe additionaltimeandexpenditureswhichmust bespentonreviewingandadjustingor changingplansafteranewproduct encountersdifficulties. 2 ©1997byINPUT.Reproductionprohibited. INPUTResearchBulletin Needsofcustomersmust—notonlybe toseebusinessshifttothenewsubsidiary researchedandanalyzed theymustbe overtime. tested. Itisimportantforbanksandthevendors • Customersmayindicateastronginterest aidingthemtostayabreastofdevelopments innewproducts,butnotaccuratelyspecify incustomerinterestsandinnewideasin whattheyfeelismostnecessaryforsucha electronicordigitalmoneyproducts. Theuse serviceorhowtheywillrespondto oftheseproductswilldrivebankingbusiness differencesinprice. inthefuture,asshowninExhibit3. • Citibankhasfoundthattheirpricing Exhibit3 scltireanttesgyin(tnhoecNhaYrgCei)thyaasrewao.nanumberof ImpactoBfanEkleicntgroBnuisciBnaensksibnyg2S0e0r2viceson • Somebankcustomershavesurprisedtheir AreaofBanking EstimateofImpactby banksbyswitchingservicetoanother BusinessImpactedby 2002 bankinordertousehomebanking ElectronicBanking availablewithInternetornetwork Services servicesbasedofferingsorapersonal financialsoftwareproduct. Incrementalvolumeof $1Trillion lendingbusinessdrivenby Banksmayfindtheservicesofvendors feolrecctursontiocmebrasnkingservices helpfulinanalyzingtheattractionofservices availableinthemarket. Butbanksmustalso Increaseinuseof Increasefrom45%of becognizantofthefactthatchangesare electronictransactionsin transactionsin1996 happeningrapidlyinelectronicbanking,and banking to95%in2002 thevendorworkingwiththemmayhavea productthatislaggingmorerecent Uprsoeduocfteslescutcrhoniacsm“ohonmeey” Morethaunsedoublein introductionsofothervendors. bankingandsmartcards Banksmayalsofindoutthatelectronic Source:INPUT bankingproductscauseconflictswithother existingbankingproductsinseveralways. Theincreasingimportanceofelectronic • Theymaycauseadecreaseinuseofother banking,andtheneedtoplanandlaunch productsbybeingsubstitutedforthem. belaencktsrotnoicdebvaenlkoipngplsaenrsvircaepsi,dlisy.caAusniungmbmearnyof • Theymayalsocauseadecreaseinuseof banksfeelthattheywillnotbesufficiently existingproductsbycreatingaconfusing convertedtoelectronicbankingproductstobe imageofthebankforcustomers. preparedforcompetitionby2002. OnevendoraidedaGermanbanktoattack AndersenConsultingfeelsthatmostbanks theabovementionedproblemofproduct arenotpreparedfortheconversionofbanking conflictbyhelpingtosetupasubsidiarythat businesstoelectronicproducts,anditis usesasetofnewelectronicproductsand providingafacility,theFinancialIdeas allowsthemainbankinginstitutiontoretain Exchange,wherebankscantryoutnew animageofolderproducts. Thebankexpects electronicbankingtechnology. 3 ©1997byINPUT.Reproductionprohibited. INPUTResearchBulletin Vendorsmustrecognizethatbankshavetobe cananalyzebanksituationsandprovide preparedtomeetcompetitioninoffering aidtobanks. electronicbankingproductsby2002,ifnot sooner. However,vendorsmustalsorecognize • Ifvendorsdonotgainsufficientfamiliarity thatsufficientresearchintotherequirements withthemarket,theymayseesalescycles ofbankcustomersaswellastestingof lengthenastheygainknowledgeonthe productsmusttakeplacebeforeproductsare jobwhilehelpingbanksdevelopaplanand launched. implementproductsolutions. • ThismeansthatITvendorsservingbanks Whilethisadditionalstepintheproduct havetoobtainsufficientresearchon launchprocessmaylengthenthetimeto experienceinintroducingandusing market,itwillquicklypayforitselfin electronicbankingproductssothatthey increasedsalesandcustomersatisfaction. ThisResearchBulletinisissuedaspartofINPUT'SElectronicProcessPractice. Ifyouhavequestionsor commentsonthisbulletin,pleasecallyourlocalINPUTorganizationorJohnMcGannatINPUT,400 FrankW.BurrBlvd.,Teaneck,NJ07666,(201)801-0050. 4 ©1997byINPUT.Reproductionprohibited.