Financial Firms Pinpoint Online Customer Experience as Priority for Boosting Growth
11 January 2006
Keane Study Shows Two-Thirds of Financial Services Firms Rate Online Services as Key to Working with Customers in Future; But Big Technology Barriers Stand
in the Way
BOSTON, Jan. 9 -- The business impact of investing in online customer experience initiatives can be substantial for financial services firms. But technology barriers loom large for firms eager to improve their customers' Web experiences. These are two major conclusions from a study conducted by Keane, Inc. (NYSE: KEA), a leading business process and information technology (IT) services firm.
(Photo: http://www.newscom.com/cgi-bin/prnh/20060109/NEM024 )
Financial firms' satisfaction with their rates of revenue growth correlates very closely with their investments in online customer experience, according to the Keane study. Of the retail brokerages, banks, insurers, and other providers of financial services that are most satisfied with their organic growth, more than 70% defined themselves as innovators in the development of online products and services. And two-thirds (66%) of respondents said online services are a top priority for working with customers in the future.
However, many financial institutions state that they are facing constraints in implementing online customer experience programs. Nearly half (49%) of all respondents cited existing technology platforms as the primary obstacles to faster improvements in online customer experience.
"Providers of retail financial services know they must provide better integrated customer experiences if they are to outpace the rapid commoditization of their products and services. Our survey shows that many are eager to do so. But financial services firms are under no illusions about the obstacles they face," said Laurence Shaw, senior vice president of international operations at Keane. "The Online Services Maturity Model at the heart of this study provides a snapshot of how firms assess their current capabilities. As they invest for the future their challenge is two-fold: they must ensure that their online offerings align with customers' needs and they must ensure that their online offerings mesh with their other channels, thereby creating a truly integrated customer experience. This is key to driving differentiation and, ultimately, growth."
The study, which surveyed 106 senior business and IT executives at regional, national, and international retail banks, insurers, and brokerages in October and November 2005, found clear business drivers for more aggressive investment in superior online customer experience. 94% of respondents cite customer retention as part of their business case, with cross-selling listed by 86% and 77% naming customer acquisition.
A New Way to Gauge Online Services Maturity
To better understand the business benefits of online services, Keane has created the "Online Services Maturity Model" that provides a framework for companies to assess their ability to deliver on the factors most critical to online services. The model spans four key categories, from basic projects that improve the presentation of online information to comprehensive portal initiatives that give access to information and services extending beyond core financial services. (See diagram for definitions and ratings at each level).
The Keane study shows a marked distinction in respondent ratings between retail financial institutions that lead the way in online customer experience capabilities (labeled the Innovators) and those that are doing just enough to stay competitive (labeled the Contenders). Highlights include:
* Innovator firms are stronger in all areas of the model, and are making
strong investments to improve the online customer experience and
develop unique products and services.
* Contender firms -- those that have made only limited online initiatives
to date -- are now feeling the effects of having fallen behind, and are
making their online services investments a higher corporate priority
than in the past. They are investing most heavily to improve
capabilities in the basic presentation, transaction and data
integration layers.
Making a side-by-side comparison between the Innovator firms -- the firms that value product and service differentiation and which demonstrate the highest levels of maturity -- and the Contenders, the study found a significant gap: 68% of Innovators were satisfied with their organic revenue growth and 67% were happy with their online customer experience versus 52% and 49% respectively for the Contenders.
Most Firms at Low Levels of Online Customer Experience Maturity
A key finding is that few financial firms have attained consistently high maturity levels. However, there are marked differences between industry sectors. The breakdown by level is:
* Portal -- only 29% of financial firms say they are effective at
providing access to information and services that extend beyond core
capabilities and integrated links with financial partners. Brokerages
are in the vanguard; insurers lag the most.
* Advisory & Planning -- only 36% believe they do a good job of
customizing the customer interaction based on a customized profile.
* Transactions & Data integration -- a slight majority -- 51% -- say they
share information across multiple channels and can enable their
customers to view balances, transfer money, and make payments.
Although insurers excel at providing online tools, they are weak at
offering personal financial data and transactions.
* Presentation -- more than half of financial firms -- 53% -- say they
competently provide basic product and service information online.
The study shows that the most active investors in online experiences are financial services providers such as brokerages and mortgage lenders; more than 70% consider themselves Innovators compared to 52% for banks and 43% for insurance firms. "Yes, Innovators are investing at higher layers of the maturity model," said Jason Price, vice president of solutions at Keane. "As a next step, financial firms must make the customer experience the heart of their strategy if they expect to break out of the pack. This includes taking a look at the experiences their customers are having outside the financial services industry and redesigning products and services that map to the way customers want to interact with service providers."
Technology Plans -- and Traps
Nearly 50% of all respondents cited existing legacy technology platforms as the number one obstacle to improving the online customer experience. Asked to identify specific areas for investment to improve the online customer experience, close to 80% of the firms surveyed identified real-time database technology along with enterprise data management and integration as their "top two" priorities. Interestingly, differentiating technology areas such as Service Oriented Architecture (SOA) and rich customer interfaces were significantly lower on the spending priorities list. And tools for helping senior managers to evaluate risk fell even further behind.
"Because most firms are at low levels of online customer experience maturity, they must play catch-up from a technology perspective if they are to improve their customers' online experiences," said Price. "The Innovators are positioned to leapfrog the competition and differentiate themselves by making investments at the higher levels of the maturity model. Investing in technologies such as SOA and rich customer interfaces to provide superior online experiences will, in turn, fuel the integrated customer experience. SOA gives financial firms the flexibility to migrate away from their existing legacy technology platforms at a speed that parallels the business investment cycle. The innovators recognize that a browser-driven interface is no longer adequate. Multimedia authoring tools such as Macromedia Flash and Flex platforms make a graphically rich and more useful customer experience. These tools provide power not available in standard HTML Web sites."
To request a copy of Keane's research report, "Pulling Ahead: Improving Growth with Richer Online Customer Experiences," visit URL http://www.keane.com/whitepapers/pullingahead. The report will be available late January.
About Keane
In business since 1965, Keane, Inc. (NYSE: KEA) is a leading business process and IT services firm. Keane delivers Application and Business Process Services to help clients transform their business and IT operations to achieve demonstrable, measurable, and sustainable business benefit. As a trusted advisor and partner for its clients, Keane solves real business issues through the development and implementation of cost-effective, change-oriented, industry-specific solutions.
Specifically, Keane delivers highly synergistic Application and Business Process Services, including Application Outsourcing, Application Development and Integration, Strategic Staffing, and Testing, as well as Business Process Improvement and Business Process Outsourcing. Keane believes that business and IT improvements are best realized by streamlining and optimizing business and IT processes, implementing rigorous management disciplines, and fostering a culture of accountability through meaningful performance metrics. Keane, based in Boston, Mass., delivers its services through an integrated network of regional offices in the United States, Australia, Canada, India, and the United Kingdom, and via SEI CMMI Level 5 evaluated Advanced Development Centers (ADCs) in Canada and India. Information on Keane is available on the Internet at http://www.keane.com.
Source: Keane Research Report, "Pulling Ahead: Improving Growth with Richer Online Customer Experiences," January 2006
Contact:
Veronica Zanellato Kido
Keane Inc.
617-517-1390
Chrissy Campbell
Porter Novelli
617-897-8200 x265
Source: prnewswire
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