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Maximizing Internet Channel Profitability: Trends, Optimization, and Integration

Explore consumer adoption trends, revenue sources, and strategies to optimize your internet channel for increased profitability and customer engagement. Learn about the importance of integration, adapting to consumer segmentation, and leveraging data effectively. Discover key factors for a successful online banking and bill pay experience to drive revenue growth.

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Maximizing Internet Channel Profitability: Trends, Optimization, and Integration

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  1. Optimizing Your Internet Channel Ron Bergamesca EVP and General Manager Community Bank & Credit Union Services

  2. Agenda • Consumer Update • Internet Channel Profitability • Where is the Revenue? • Integration—A Path to Optimization

  3. Consumer Update

  4. Adoption of Online Banking and Bill Pay Continues to Grow Consumer Update: Adoption Trends Rate of Transaction Adoption is Unchanged Source: Javelin Strategy & Research

  5. Adoption at Top 10 Banks Continues to Grow Consumer Update: Adoption Trends Source: comScore

  6. Consumer Update: Segmentation is Maturing Mobile PFM 7x24 Member Care Check Metaphor Risk-Based BP Trans Source: McKinsey & Company

  7. Consumer Update: Segmentation is Maturing Implications • One Size Fits All is Becoming a Liability • “Cohortization” of: • Information—Home Page is Key • Navigation—Quick Links Facilitate • Transactions: Simple or Complete—Give Choice • Increased Marketing Opportunities—Consumers are Self Segmenting

  8. Consumer Update: Attributes of an Optimal Experience • Immediacy – when you want it • Personalization – what works for you • Interpretation – meaning making - relevance • Authenticity – real deal or knockoff? • Accessibility – easily stored and found • Embodiment – real experiences • Findability – navigation help Source: Kevin Kelly, The Technium: What technology wants from us. Compliments of Pew Internet and American Life Project

  9. Internet Channel Profitability

  10. Profitability Increased 31% Internet Channel Profitability:Bill Payers Are More Profitable Source: Bank of America 2002 time series analysis compared offline customers with online customers. Groups matched with 40 ‘pre-online’ characteristics (e.g. age, income, account balance, transaction activity, VRU/CSR usage). Analysis spanned 31 months and included over 300,000 customers

  11. Profitability Increased 31% Internet Channel Profitability:Bill Payers Are More Profitable Source: Bank of America 2002 time series analysis compared offline customers with online customers. Groups matched with 40 ‘pre-online’ characteristics (e.g. age, income, account balance, transaction activity, VRU/CSR usage). Analysis spanned 31 months and included over 300,000 customers

  12. Profitability Increased 40% Internet Channel Profitability:Bill Payers Are More Profitable Source: Boston Consulting Group, 2003

  13. Churn Index Profitability Index Internet Channel Profitability: Lower Churn/Higher Profits Source: Aspen Analytics classified all customers of a Top 10 Financial Institution as of 11/30/07, and then measured their subsequent churn probability and profitability over the subsequent 6 months.

  14. Where is the Revenue?

  15. Where Is the Revenue: Acquiring New Accounts What is Your Cost of Acquisition? Source: Forrester Research, February 2008

  16. Where Is the Revenue: Acquiring New Accounts What is Your Cost of Acquisition? Source: Forrester Research, February 2008

  17. Where Is the Revenue:Fee Income Opportunities • Need To Be High Value • Expedited Payments • Next Day Transfers • Enhanced Mobile Experience (Downloaded Application)?? • Security Tokens?? • Quid Pro Quo Rewards—Twist on Relationship Pricing • High Yield Interest, if you pay 5 bills online • Three Next Day transfers, if you have 10 debit trans • And so on…

  18. Where Is the Revenue:Leveraging The Data

  19. Where Is the Revenue:Leveraging The Data

  20. Where Is the Revenue:Leveraging The Data

  21. Where Is the Revenue:Leveraging The Data

  22. Where Is the Revenue:Leveraging The Data React To Bill Payments—Both Online and Offline

  23. Where Is the Revenue:Leveraging The Data One Individual Line of Statement Has Value $ave

  24. Integration—A Path To Optimization

  25. Integration: The Channel Has Gotten Complex Service Acquire Retain 25|

  26. Integration: From The Member’s Perspective

  27. Integration: From The Member’s Perspective

  28. Integration: From Your Prospective

  29. Balance Vendors’ Value Proposition vs. Your Needs Integration: Key Purchase Decision Factors

  30. Integration: Key Purchase Decision Factors What You Need To Look For In Your Vendors • Scale and Flexibility • Scale Drives Costs • Flexibility Drives Responsiveness and Innovation • Integration as a Skill Set • This Will Become Increasingly Important Because No Provider Can Do It All • Focus • Where Does the Vendor Invest Its R&D Dollars • Is the Vendor Too Broad/Narrow • Relationship with Your Core Processor

  31. Summary • Consumer Adoption Continues at a Good Clip • Consumer Segmentation is Maturing • Causal Effect of Online Bill Pay on Profitability is Proven (again) • Leverage Your Online Activity and Transaction Data • Understand the Importance of Integration from • Your Members’ Perspective—Richer and More Seamless Experience • Your Perspective—Increased Control and Lower Costs

  32. Optimizing Your Internet Channel Ron Bergamesca, EVP/GM, Credit Union Services Dave Benning, VP, Strategic Integration

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