"Our watchful eyes should focus on the usage patterns of the youth..."
At the beginning of last year, I read an article somewhere on whether we should or should not take into account the age of our customers, since it is not a significant marker. Worked up, I began to collect some data and after consulting with colleagues we summarized a bank-sector wide inner internet bank penetration (how many of the customers of the given age-group has internet bank access relative to the sum of the number of customers of the given age-group).
I had a revelation upon the results - which can be described as "internet bank tsunami":
Why is this important?
Given only the results, it's not a big deal - we know, the youth uses the internet much more that the older onws - since they grew up on it. The problem emerges - from the banks' point of view - when we conclude, these people don't use any other channel. Nor call-center, nor the branch. Banks don't have any personal feedbacks, since there aren't any live contact. There's no administrator to turn to, when entering the transactions ("Please don't move your deposit to an other bank, we can figure out a better deal" - we've seen examples of desperate attempts to get back customers' deposit literally on the street, at the rush of the introduction of the interest-tax).
For the youth, the concept of the "bank" is reduced to the concept of the "internet bank". They are one-channel users: the product not existing on the internet bank does not exist at all. Only those products / services can be sold, which is accessible on the internet bank - the others are simply not usable for them. The MCM concept (multi-channel marketing) does not work with them.
The functionality enhancements, and their success rate measurement shows exactly this - some examples:
- "Postal cheque" shaped funds transfer: success story - a simple way to explain the postal cheques can be payed off by a simple funds transfer. The number of transactions has noticeably risen.
- Introduction of investment services: success story - the activity of the customers having investment accounts have risen, the profit made on the handling fees are soaring.
- Mobil top-up: success story - though the commission is not too much, but it generates income. It strengthens the message of "if there is money involved, you can handle it in your internet bank".
- Application for debit-, co-, and credit-card: success story - applications are starting to roll in from customers previously not interested in these products, earning commission and interest.
In spite of this, the internet bank can only utilize it's potential, if:
- by connecting CRM services (tailor-made offers) to the internet bank to display the marketing material of real, customer-accessible products / services, AND
- the internet bank works as a real "point-of-sale" - the given product / service can instantly bought by a single click(s).
What should we recommend to our customers on the internet bank?
If we started off by measuring the age of our customers, let's see a simplified sales-model:
- Age 17 - 23: higher education's years - student loan, debit card services, mobile top-up
- Age 23 - 27: first workplace - car-loan, mortgage, credit card, paying public utilities through funds transfer, managing collection orders
- Age 28 - 35: family orientation - co-cards, insurances, savings
- Age 35 - 50: helping children to start their own life - savings for house, investments, personal loans
- Age 50 - 65: preparing for the senior years - investments, savings for pension
We don't really have bank related financial activities (as customers) up until 18 years - not mentioning the pocket money and the baby-bonds. After the 65 years, the banks usually don't see us as valid customers (we are not loan-worthy). The banks have to make it sure, the in-between age group has access to the services.
What obstructs the process?
There aren't any technical reasons for a customer to start a loan application on their internet banks, posting (or electronically sending) the required papers, having the bank accept the application by opening the credit and the customer getting notified on the event in an SMS message. The only thing obstructing the process is the Legal Division.
Unfortunately, Hungary has a deep-rooted tradition to handle every application on paper - stamped, signed by blood having to do with transactions / contracts. The law for allowing deals to make electronically is far away from technology and life - this is why it is so under-used - and there aren't any changes on that from in sight.
Just one simple example: there isn't a way to process a simple, 100.000 HUF personal loan application on the internet bank (after having identified myself by username / password / SMS token, and signing the transaction the same way) without having to go to the branch office, but 10.000.000 HUF can be easily transferred with the same method... Just doesn't make sense.
How do we handle the problems?
It is clearly shown on the age-distribution, that as the demographics are slowly changing, but the case of internet penetration is a rather fast moving thing. The internet moves into everyone's life quite quickly, and this is why it is important to think about the introduction of new products / services to the internet bank. As the saying goes: who doesn't act (enhance the functionality) will be left out.