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Fibreline Workshop Consultant Session V3'2 July 02


Joint venture between Wells Fargo, First Union, and Chase Manhattan ... US online banking consumers (2000-2005) Source: eMarket; various, as noted, 2001. 24 ... – PowerPoint PPT presentation

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Title: Fibreline Workshop Consultant Session V3'2 July 02

Case StudyEncirq Protecting Privacy on the Web
Team 3Brian ChenClarence TsuiMonica
MakRaymond WongTommy Lo
Executive Summary
  • Background
  • This report outlines the evaluation of external
    environment of EBPP Market to Encirqs product
    Illuminated Statement
  • EBPP (electronic bill presentment payment)
    allow user to view and pay bill online
  • Illuminated Statement allows online payment with
    very targeted Ad but no leakage of personal
  • Analysis
  • What marketing-oriented values?
  • How Encirq to capitalize on social and
    technological changes?
  • Legal factors affect the adoption acceptance?
  • Encirq acts in socially responsible manner?

  • Marketing-Oriented Value???

  • Company
  • founded in March 1998
  • online marketing services company delivering
    personalization and other electronic commerce
  • A provider of extremely compact, standards-based
    and modular database technology
  • Investor GE Equity, Charter Ventures, Technology
    Partners, Access Technology Partners, an
    affiliate of JP Morgan Partners, Financial
    Technology Ventures and industry luminaries from
    technology, law, advertising, consumer packaged
    goods, and financial services

  • Product
  • Illuminated Statement
  • Improves typical online credit card statement
  • Solve Internet privacy problem
  • Technology
  • By deploy mini-database on personal computer
  • Create data-rich profile of each customer
  • Merchant logos and links are added
  • Use dynamic profile to request merchant message
    tailored to the consumers interests

Typical Online statement
Merchant logos
Targeted Ad
Detail statement
  • Free to corporate on getting up and running
  • Free to End-user

  • Market Profile

US Economy
War in Afghanistan
911 terrorist attacks
Enron accounting scandals
Global Crossing, WorldCom, Xerox Restatement of
  • Collapse in confidence
  • Weaker consumer spending
  • Slowdown economy recovery process

Sources Bureau of Economic Analysis
Corporate defer capital spending
U.S Retail E-commerce sales
  • Still keep growing!!!

Sources U.S. Census Bureau
Regulatory on Privacy
  • Legislative Protections in US
  • Privacy of Communications
  • Privacy of Financial information
  • Privacy of government collections
  • Privacy of other personal records
  • Regulating online Privacy
  • Federal Trade Commission (FTC)
  • Office of Management and Budget (OMB)
  • National Telecommunications information
    Administration (NTIA)

Regulatory on Privacy
  • International
  • Organization for Economic Cooperation
    Development (OECD)
  • EU Data Protection Directive
  • Industry Self-Regulation
  • Web Site Design, Privacy policies, Seals of
  • TRUe, BBBOnLine, Online Privacy Alliance, Network
    Advertisers Initiative (NAI)

Technology Development on Internet Privacy
  • Internet Privacy
  • New browser based on P3P
  • New generation of Web-browsing software designed
    to give users more control over their personal
    information online.
  • Third party proxies Anonymizer
  • Allow you to browse the Internet using an
  • Firewalls
  • A personal firewalls to block all cookies from
    certain domain.
  • Boosting speed on Broadband service
  • 3G/ Blue Tooth / 802.11a (WLAN)

Competitor Profile
Major Competitor in EBPP
  • Checkfree
  • Company background
  • 20 years experience. Owned by Bank of America.
  • A Market leader in EBPP.
  • Bought its nearest competitor TransPoint.
  • Customer Base
  • 850 U.S. customers for electronic billing, 350
    with private-label home-banking services. E.g.
    ABN AMRO, ATT, State Farm Insurance, California
    Cities Water Company
  • Deliver more than 260 electronic bills over the
    Internet at an amazing rate of 15 million e-bills
    per year
  • Tariff
  • Cost corporate about 50,000 to get up and
  • Revenue is generated through a fee for each bill
  • Free of charge for end-user

Other Competitive Forces
  • Group 1 - DOC1 Digital
  • A leading provider of CRM software solution
  • Charges Corporate for installation and each bill
    aggregator. The transaction fee is required
  • PayMyBills
  • No Ad in Bill
  • Charge end-user of 12.95 or 4.95/month
  • Strong financially backed
  • Mobius
  • Web based document solutions for more than 1200
    major organizations worldwide.

Potential Competitor
  • Spectrum
  • Joint venture between Wells Fargo, First Union,
    and Chase Manhattan
  • Aims to supports an open system
  • Implication
  • Checkfree already has huge customer base
  • More new entrants are expected
  • Strong financial support and partnership

Customer Profile - Corporate Customer
Online billing major industries
  • Finance
  • Bank of America
  • Wells Fargo Bank
  • Bank of Hawaii (Encirq user)
  • Telecommunications
  • ATT Wireless
  • SBC Communications Inc.
  • Insurance
  • State Farm
  • American Family Mutual Insurance
  • Utilities
  • San Antonio Water Power
  • Consolidated Edison (Checkfree user)

Number of Banks and Credit Unions Offering Online
Source International Data Corporation
What are their expectations from E-billing?
  • Cost reductions
  • Customer retention tool
  • Ability to up-sell and cross-sell
  • Improve cash-flow
  • Control over customer data
  • Provide better service
  • Reliable delivery mechanism for both presentment
    and payment
  • Broad distribution
  • Source 4Q/2001, Economic Perspectives

Why particular US banks offer or plan to offer
Source size 135 banks, source Gartner, Jan
2002 American Banker, Aug 2002
US consumers using an online bill payment service
Source size 1,000, source American
Banker/Gallup Organization, Jul 2002
Customer Profile - End User
  • End user US consumers using the Internet for
    email, bill payments, online purchasing, etc

No of internet users is growing !!!
US online banking consumers (2000-2005)
Source eMarketer, December 2001
Source eMarket various, as noted, 2001
  • US research agencies predict the wide adoption of
    EBPP by US consumers
  • About 11 percent of all transaction lines
    traditional credit card statements result in a
    call to the bank because recipient could not
    figure out what the transaction was. (by Encirq)

What are their expectations from E-billing?
  • Convenience
  • Time/cost savings
  • Control over payments
  • Universal payment mechanisms
  • Privacy and security
  • Reliability

Why US consumers would consider paying bills
Note based on 32 of respondents to survey who
said their vies about paying bills online had
changed since Sep 11 2001. Source Dove
Consulting, 2001 Bank Technology News, Jan 2002
What are the major consumers concerns towards
  • Security of payments
  • Afraid of leakage of personal information via
    online payment
  • 71 of Internet purchasers are concerned with
    privacy of personal information (source
    Barriers and Inhibitors to the Widespread
    Adoption of Internet Commerce, CommerceNet, 1998)
  • 66 of Web users fear sending personal
    information over the Web (source Electronic
    Commerce Barriers Survey, Ernst Young and The
    Information Technology Association of America,
  • Lack of privacy policy
  • almost 60 of Internet users would be more
    likely to provide basic demographic information
    to a Web site if the site had both a privacy
    policy and a seal of approval (source Beyond
    Concern Understanding Net Users Attitudes About
    Online Privacy, ATT 1999)

What are the major consumers concerns towards
  • Reliability of businesses
  • Too many disreputable companies on the web
  • Consumers will increasingly adopt EBPP through
    trusted sources, especially sites that
    consolidate multiple bills and statements at one
    location, e.g. bank sites. (source NARM
    Research, Jan 2002)
  • recognition of companies on the Web by a
    reputable third party, such as Better Business
    Bureau, would definitely have a positive effect
    on online purchasing, (source BBB System
    Releases Online Shopping Survey Results, Jan 1998)

Customer Profile - Advertiser
US online Ad Spending of total Media Spending
Source eMarketer, February 2002 Interactive
Advertising Bureau/PricewaterhouseCoopers,2001
Source eMarketer, December 2001
Reasons for Online Ad Growth
  • Number of Internet User is Growing.
  • Increased Broadband Penetration.
  • More People Shopping and Buying Online.
  • (Sources End-user Analysis)
  • Resolving Online Standards and Measurements.

Attractiveness effectiveness of online Ad?
  • People spend relatively more time on Internet
    than other media.

Source Forrester Research, 2000
  • More consumers click banner ads!! - Increase
    from Oct 02 to Jan 01 (Source Greenfield Online
    Inc. 2001)

Attractiveness effectiveness of online
  • Banner ads may lag behind TV and magazines for
    creating brand awareness, but they lead in
    increasing brand recall. (Sources Morgan Stanley
    Dean Witter, 24/7 Media, AdRelevance, ADVO, CAB,
    DMA Dynamic Logic, 2000)
  • Cost effective

Online ad dollars will begin to flow from the
traditional advertisers
SWOT Analysis
SWOT Analysis
  • Company
  • A provider of extremely compact, standards-based
    and modular database technology.
  • Strong investors and partners like J.P. Morgan ,
    GE Equity, Technology Partners
  • Product and Service
  • Win, win and win solution
  • Comprehensive and evolving user profile gt On-line
    very targeted marketing
  • Mini-database gt Minimize customer privacy concern
  • A cost saving and customer retention tool
  • Aggressive service offering - FREE of charge
    sharing the revenue from online Ad

  • Company
  • Not a reputable brand name
  • Product Service
  • The behavioral data may not fully describe user
  • There are things you can see from behavioral
    data that you cant see from transactions
  • Personal profile only stick on one device
  • Missed out those adopters who use wireless
    devices like PalmPilot, cell phone, etc as
    Illuminated Statement is stuck on a single
    computer (Fred Davis, CEO of Lumeria)
  • No unanimity to tackle privacy issue
  • Not an open standard solution

  • Market Technology
  • Economic downturn creates the ultimate need for
    enterprises to enhance productivity and create
    market by service innovation
  • Rapid adoption of broadband service
  • Customer
  • Increasing penetration of online transaction
  • Privacy is being emphasized among Internet users
  • Effectiveness of online ad is being recognized
  • Popularity of CRM
  • Customers tendency to visit a limited number of
  • Increasing awareness of being environmental

  • Competitor
  • Anticipates keen competition
  • Checkfree could rapidly enhance the system
  • Customer
  • Marketing to its customer is not banks core
  • Corporate could self-develop the system
  • User may not want to be stereotyped

Value Proposition
  • Corporate and Consumer Customer
  • Cost reductions
  • Enhance consumer care operations
  • Capitalize on one-to-one marketing
  • Environmental friendly
  • Reliability gt provide a secure link between
    businesses and their consumers
  • Convenient
  • Time saving gt efficiently manage bill payment
  • Control over payments
  • Protection over personal information (privacy)
  • Advertiser
  • Very targeted marketing
  • Increase successful online ad hit rate

Marketing Environment Analysis
  • Analysis on how Illuminated Statement capitalize
    based on External Environment

Social Changes
Technology Change
External Environment
Social Change
  • Public awareness of Online Privacy
  • 40 of Americans were worried about corporate
    gathering marketing information by tracking
    customers' behavior online.(sourceHarrisInteracti
  • 91 Americans would do more business with a
    company that had its privacy policy independently
    verified. (sourceHarrisInteractive)
  • View Bill Online
  • US households viewed 643 million consumer bills
    online in 2001. (sourceJupiterReseach)
  • Study estimates that 50 million households will
    view consumer bills online by 2006, up from 18
    million in 2001. (sourceJupiterReseach)

Social Change (Cont)
  • Reduce Letter Usage
  • Event - Anthrax contaminated letter
  • InVision Tech Screening System
  • Environmental Concerns
  • 8 in 10 U.S. consumers regard themselves as
    environmentalist (Source Marketing, Lamb, Hair,

Technology Change
  • Cost Reduction
  • Transaction Cost Reduction
  • Eliminate ongoing stationery and postage costs
  • Reduce Customer Service Cost
  • Convenience and ease to Use
  • Efficient Online Marking
  • Deliver relevant Ads to target customer
  • U.S. Web Ad Spending Will Increase To 6 Billion
    (source eMarketer)

(Source IBM EBPPS)
Legal Factors Analysis
Legal factors affecting Encirqs Illuminated
  • Personal privacy law
  • Anti-Terrorism Law
  • Advertising law
  • Billing privacy law

Privacy Law in USA
  • Federal Trade Commission
  • Federal Trade Commission Act1
  • Childrens Online Privacy Protection Act1
  • State legislatures passed 140 new privacy laws in
  • Nearly 1400 new bills on legislative agendas for
  • From Federal Trade Commision http//
  • From privacy online fair information practices
    in the electronic marketplace

Privacy Survey
? Against privacy Action
? Concern user privacy
From Ernst Young, http//
DoubleClick Case
  • Online ad provider DoubleClick has agreed to
    adhere to stiff privacy restrictions and pay a
    US450,000 settlement, in order to ward off an
    investigation into its privacy practices (News
    23th Sept, 2002)

From http// http//austra
Anti-Terrorism Law
  • 26th Oct, 2001 President Bush signed anti-
    terrorism legislation USA Patriot Act, gives
    government powers to track wireless phone calls,
    intercept e-mail messages, monitor computer use
    and listen to voice mail
  • In the UK, controversial legislation requires
    internet service providers to keep records of
    text messages, e-mails, user profile and websites

Bush you cant get my profile in before, I use
Encirq (Designed Dialogue)
From 29th Oct, 2001 http//
/articles/2001/1029/news-antiterror-10-29-01.asp F
rom bbc news 7th Sept, 2002 http//
Advertising Law
  • The overview of laws of Federal Trade Commission
    (FTC) enforces is
  • Advertising must tell the truth and not mislead
    consumers. In addition, claims must be
  • Section 5 of Federal Trade Commission Act

From Fereral Trade Commission
Legal Issue of Web Portal Advertising
  • Electronic publishers, accept advertising, take
    additional legal responsibilities
  • Illegal activity (e.g. Terrorism)
  • Regulated businesses (e.g. Gambling)
  • Medical advertising
  • Non-misleading advertisement of legal products
    and so on

Privacy Billing Law in USA
  • New Banking Bill Includes Privacy
  • In March 2002, the House of Representatives
    Banking Committee awaited banking reform
    legislation, give financial institutions the
    ability to sell a broader set of services.
  • Privacy advocates were successful in adding
    provisions which would restrict the use and
    dissemination of personal data shared among
    banks, and insurance and securities firms owned
    by the same company. 

From http//www.ceoperspective
Effects from the Law
Socially Responsibility
  • Explain why you think Encirq acts or does not act
    in a socially responsible manner?
  • Answer
  • Encirq DOES NOT act in a social responsible
    manner because of the following reasons.

Pyramid of Corporate Social Responsibility
(Source Marketing, Lamb, Hair, McDaiel)
Economic Responsibility
  • Societal Marketing Concept
  • Profit is the foundation on which all other
    responsibilities rest.
  • Encirq does not make profit or even in financial
    difficult status now.1
  • Encirq does not have enough profit to act in
    social responsible manner.

From Encirq, no more investment after
26/9/00 http//
Legal Responsibility
  • Code of Conduct
  • Code of Conduct is to ensure high standards of
    protection to the personal data and fair
    treatment of advertiser with Encirq in issues
    including fair competition, bribery, conflict of
    Interest and transparency.
  • Encirq does not formalize the policies practice
    that Encirq has developed to deal responsibility
    with the consumer, advertiser and external
    information specialist.

Legal Responsibility (Cont)
  • Code of Conduct (Cont)
  • Encirq does not deliver Corporate wide staff
    training on the code of conduct.
  • Encirq should publish the code of conduct on its
    website. That would allow public and staff to
    read and maintain the legal standard constantly.

Ethical Responsibility
  • Dialogue with External Specialists
  • The development of new software and operation of
    the Encirq Illuminated Statement requires
    on-going and extensive discussions with a wide
    range of external consumers, advertiser and
    information specialists.
  • Encirq does not maintain regular seminars and
    meetings with consumer, marketer, information
    specialist throughout the year

Ethical Responsibility (Cont)
  • Dialogue with External Specialists (Cont)
  • Encirq should setup some open forum,
    demonstration and seminar to reveal public how
    Illuminated Statement could protect personal
    data and could allow advertiser to collect useful
    marketing information at the same time. To avoid
    improper use.
  • Encirq does not join the regulation ordinance for
    the on-line privacy dialogue.1

From Online Privacy Alliance http//www.privacyall
Ethical Responsibility (Cont)
  • Dialogue with External Specialists (Cont)
  • Organization involve in online privacy
    dialogue1) Center for Democracy and
    Technology2) Direct Marketing Association3)
    Electronic Privacy Information Center4) Online
    Privacy Alliance5) Platform for Privacy
    Preferences6) Privacy Right Cleaning House.
  • Encirq does not perceived by the consumer and
    advertiser as professional and as the leader in
    solving the on-line privacy issues.

From Online Privacy Alliance http//www.privacyall
Philanthropic Responsibility
  • Community
  • Without raise awareness to public about internet
    privacy importance. Encirq should launch more
    demonstration and exhibition to the public about
    the privacy issues.
  • Encirq should organize an on-line computer
    privacy club formed by public to launch events
    for charity and social welfare.

  • Encirq cannot archive successfully in the market
    although the product (Illuminated Statement) got
    those market-oriented values
  • Wrong time
  • (First Launch 22rd May, 2000 too early before
    public concern privacy too late for new economic
  • 911 incident (Anti-terrorism law)
  • Price Strategy (How to get revenue, almost free)
  • Promotion (Consumer no perception on pay for

Recommendations to Encirq
  • Content filtering plug-in module of virus
    scanners or personal firewalls
  • Franchises technology to virus-scanners or
    personal firewalls seller

About 40 percent grow each year
Recommendations to Encirq
  • Transforms in technology and knowledge service
    provider of e-billing, content-filtering
    personal privacy system
  • Being compatible to P3P (Platform for Privacy
    Preferences) browser next generation open standard

Thank YouQ ASection
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