A Study of Customer Relationship Management


1

• A Study of Customer Relationship Management
• in
• Financial Services on the Web
• Dr. Dennis Anderson
• Dr. Jim Lawler
• Pace University
• New York City
• 2004

2

• Outline of Presentation
• Abstract
• Introduction
• Financial Services Market
• Characteristics of Financial Service Web Sites
• Research Methodology
• Analysis of Financial Service Sites
• Implications of the Study
• Conclusion

3

• Abstract
• Analysis of Study on Large Financial
  Businesses Indicates that These Businesses Enable
  Higher Commerce Content and Navigational
  Context but Lower and Generally Inadequate
  Communication Community Connection and
  Customization Design on Their Web Sites.
• Analysis Contributes Important Insight into
  Competitive Dynamics of Customer Relationship
  Management for Web Empowered Financial Service
  Businesses Servicing Affluent Market.

4

• Definition of Terms
• Customer Relationship Management strategy
  of optimizing processes of financial service
  businesses that enable the marketing sales and
  service of products through innovation of
  integrated customer channels including that of
  the functionality of the Web in order to effect
  customer loyalty and financial service
  profitability.

5

• Introduction
• Importance of Customer Relationship
  Management on the Web to
• Businesses in Financial Services Industry Is
  Unclear in the Research.
• Industry Is Highly Cautious about Investment
  in Relationship
• Management Due to Economic Constraints and
  Frequent Failure in Technological Implementation.
• NonAcademic Studies Indicate Caution Is
  Contributing to OnLine Functionality of Customer
  Relationship Management Inconsistent from
  OffLine.

6

• Introduction
• OnLine Channel of the Web Continues as an
  Important Factor in Interactivity Experienced by
  Customers.
• Experience on Web in Its Negative or
  Positive Impact Influences Future Relationship
  with Financial Service Business.
• Financial Service Businesses Are Clearly
  Challenged in Customer Relationship on the Web.

7

• Introduction
• Focus of Study Is to Analyze
  Effectiveness of Innovation in Customer
  Relationship Management on Web Sites in Financial
  Services Industry.
• Study Attempts to Demonstrate that Web Is
  Critical for Future of Financial Service
  Businesses that Compete for Affluent Customers.

8

• Financial Services Market
• 20 of All Large Intermediate and Small
  Financial Service Firms Have Commerce or
  Transactional Sites in USA vs. 40 in Finland and
  Norway 20 in UK and 10 in France Germany
  Italy and Sweden.

9

• Financial Services Market
• Studies Indicate Number of Financial Service
  Sites Domestically and Internationally Increasing
  Significantly in This Decade.
• 60 Million Consumers in Europe on the Web in
  2003 Increasing to 85 Million in 2007 US
  Banker Weekly Bulletin April 1 2003

10

• Financial Services Market
• Market for Affluent Consumers Consists of
  Customers in USA Having Investable Assets of 1
  Million or Higher that Includes AdvisorDirected
  20 Advisor / SelfDirected 50 and
  SelfDirected 30 Customers.

11

• Financial Services Market
• Only 50 of Customers Consider Web Sites of
  Financial Service Businesses Effective in
  Relationship Management.
• 25 Define Effective Sites in Advanced
  Customer Management Functionality that
  Facilitates Relationship.
• Most Customers Define Advisor Availability
  through the Sites as Important in Their
  Relationship with the Businesses.

12

• Financial Services Market
• Financial Service Businesses Are Focused on
  Older Affluent Customers but Indications of 20
  Billion in Revenue in the Decade from Emerging
  Younger Consumers Are Not to Be Ignored in the
  Market.

13

• Characteristics of Financial Service Web
  Sites
• 7 Constructs of Customer Interface on Web
• Context Content Communication Connection
  Community Customization and Commerce.

14

• Characteristics of Financial Service Web Sites
• Context Depth of Comfort and Ease of
  Navigation
• Content Depth and Quality of Information
• Communication Degree of Dialogue from and to
  Financial Advisor
• Connection Degree of Connecting to Affiliated
  Financial Services
• Community Degree of Interaction with Other
  Investors
• Customization Degree of Explicit and Implicit
  Personalization and
• Commerce Extent of Commercial Interaction.

15

• Characteristics of Financial Service Web Sites
• Context
• Foreign Language
• Help
• Hyperlink
• Search
• Real Time
• Single SignOn

16
Characteristics of Financial Service Web Sites

• Content
• Account Aggregation Detail
• Account Analysis
• Account Product Holding
• At a Glance Dashboard
• Document Imaging
• Frequently Asked Questions
• Glossary
• Household Summary

• Performance Reporting
• Planning Tutorials
• Portfolio Tools
• Publications
• Research
• Transaction History
• Watch List

17
Characteristics of Financial Service Web Sites

• Communication
• Alert
• Chat
• CoBrowsing
• Collaboration
• Conferencing
• Form and Screen Pushing

• EMail Links
• EMail Notification
• Instant Messaging
• Live Web Help
• Telephony
• Whiteboarding

18
Characteristics of Financial Service Web Sites

• Connection
• Market News and Quotes
• Business News
• Featured Domestic and International News
• Life Style News Syndicates
• Links to Preferred Merchants

19
Characteristics of Financial Service Web Sites

• Community
• Customer Bulletin Boards
• Continuing Education Forums
• Discussion Groups
• Event Sponsorships
• Expert Investment Seminars

20
Characteristics of Financial Service Web Sites

• Customization
• Account Preferred Dashboard
• Alert
• EMail Notification
• My Profile and Watch List
• Forums and Seminars
• Industry Life Style and Merchant Links
• Recommendations in Products and Services

21
Characteristics of Financial Service Web Sites

• Commerce
• Account and Fund Transfer
• Automatic Investment
• Bill Payment and Presentment
• Brokerage Services
• Confirmations
• Direct Deposits
• PreFilled Application Forms
• Privacy and Security Services
• Transactions on Wireless

22

• Characteristics of Financial Service Web
  Sites
• Constructs Include Highly Advanced and
  Fundamentally Basic Functionality that Facilitate
  Customer Relationship Management on the Web.

23

• Research Methodology
• Methodology Employed Sample of LargeSized
  Financial Service Businesses Consisting of
  Banks Brokerages Investment Banks and Mutual
  Fund Firms in 3 Iterative Stages of Analysis.

24

• Research Methodology
• Stage 1a 13 Financial Businesses in USA
  Were Selected as B2C Investor Sites Analyzed by
  Students for Their Effectiveness in 7 Constructs
  of Customer Interface Applying 3Point Scale of
  Low Intermediate or High Functionality in
  Technology and the Data Was Collected by the
  Author.
• Sites Included American Express Bank of
  America Citibank eTrade Fidelity Merrill
  Lynch JP Morgan Morgan Stanley Northern Trust
  Paine Webber Salomon Smith Barney Charles
  Schwab and Vanguard in USA.

25
Figure 1 Analysis of Financial Service Sites
Stages 1 and 2
26

• Research Methodology
• Stage 1b Financial Service Businesses in
  Europe Will Be Selected Observed and Analyzed
  Comparatively for Their Effectiveness in Similar
  Constructs and Application
• Stage 2 Data from Stage 1 Was Analyzed in
  SAS to Determine Construct Mean Scores and
  Statistical Significance and
• Stage 3 Domestic USA and European Sites
  Will Be Analyzed in a Survey of Customer
  Relationship Management Strategies of the
  Businesses.

27

• Analysis of Financial Service Sites
• From Stages 1and 2 Analysis Indicated Most
  of Sampled Sites Have Following
• Higher Context Content and Commerce
• Intermediate Communication Connection and
• Customization and
• Lower Community.

28
Table 1 Summary Analysis of Financial Service
Sites
n 51 Students x 13 Firms
29

• Analysis Confirms Practitioner Literature
  and Proposes Following
• Proposition 1. Large Financial Service
  Businesses Have Higher Context Interactivity
  Informational Content and Commerce Functionality
  on Their Web Sites Increasing Potential of
  Relationship Effectiveness.
• Proposition 2. Large Financial Service
  Businesses Have Only Intermediate and Lower
  Advisor Communication Affiliated Financial
  Connection Customized Feature and Investor
  Community Functionality on Their Sites
  Decreasing Potential of Relationship
  Effectiveness of Sites.

30

• Analysis of Financial Service Sites
• Managers of Sites Will Be Surveyed on
  Customer Relationship Strategies in Stage 3.
• Results of Study Will Not Be Final until
  Completion of Stage 3.

31

• Analysis of Financial Service Sites
• Results of Study Are Helpful in Initially
  Analyzing Financial Service Business Market.

32

• Implications of Study
• Results Confirmed NonAcademic Sources that
  Constructs of Customer Relationship Management on
  Financial Service Sites Are Higher in Commerce
  Content and Context but Lower in Communication
  Connection Community and Customization Functions
  that Facilitate Interaction on Web.

33

• Implications of Study
• Though Bulk of These Businesses Are Focused
  on Advisor Interaction in Offices Complementing
  Advisor Desirability Benefit of Effecting
  Increased Relationship in Customer Interaction
  from Sites Is Currently Elusive to the Businesses.

34

• Implications of Study
• Sensitivity to Affluent Customers
  Interfacing Concurrently or Alternately on the
  Web Channel Is Important to Not Only
  SelfDirected but also Advisor / and
  SelfDirected AdvisorDirected Customers.

35

• Implications of Study
• Functionality on the Analyzed Sites Is
  Inadequate in Both Advanced and Basic
  Interaction Despite Evolution in Web Innovation.
• Implied Interpretation Is that OnLine
  Financial Service Businesses Continue to Be
  Indistinguishable in Functionality of Customer
  Relationship Management.

36

• Implications of Study
• Financial Service Businesses that Initiate
  Innovation such as Merrill Lynch Will Focus on
  Advisor Friendly Wealth Management Technologies
  that Include Customer Relationship Management
  Tools.

37

• Implications of Study
• Those Businesses that Initiate
  Technological Transformation of Their Sites on
  the Web Will Have an Edge in Serving the Affluent
  Market an Imperative Implied in Study.

38

• Conclusion
• Large Financial Service Businesses in
  Affluent Market Are Currently Focused Less on
  Enhanced Communication Community Connection and
  Customization and More on Fundamental Commerce
  Content and Context Functionality of Customer
  Relationship Management on Their Web Sites.

39

• Thank You