|
i-statements Offer a Dual Promise: Improve Customer Experience and Reduce Costs
BY PAT ALLEN
Adobe aims to turn a ?diary of historical transactions? into ?a platform from which customers engage with a bank.?
|
SYNOPSIS | Bank campaigns to reduce expenses by migrating customers to electronic statements have had limited results. Adobe Systems Incorporated expects customers to warm to the powers of its intelligent statements, in pilot test today with one bank. According to Adobe, customers win by using i-statements to query customer service and otherwise interact using this secure ?platform.? Banks save on statement and servicing costs while making branding and cross-selling revenue gains.
At a time when current account balance and transaction information is available online, via e-mail alert, voice response, at the ATM or branch, bank customers continue to cling to the printed account statement they receive in the mail days after the close of the month.
Billions are spent on the printing and distribution of these statements, and the financial services industry for years has been financially motivated to wean customers away from them. Despite the industry’s advances in delivering more timely information using a range of media, its campaign to stop printing paper statements has been slow going. Better progress has been made in the last year as banks and others have cited security risks in urging customers to “turn the paper off” in favor of statements delivered electronically.
Adobe Systems Incorporated, creators of the ubiquitous portable document format (PDF), believes it has a “cutting-edge” innovation that can address financial institution expense and security concerns and go one step further —improve the customer experience.
Adobe intelligent statements (i-statements), introduced in November 2005 at BAI Retail Delivery Conference & Expo, are being tested by a single pilot bank in a limited application today. But Adobe Financial Services Industry Marketing Director Chris Yaldezian says i-statements have the potential to be “a platform from which customers engage with a bank.”
I-statements are a technology and not a trademarked Adobe product. Adobe believes it is the only company with an i-statement solution today.
Q: What’s the difference between an e-statement and an i-statement?
Yaldezian: An e-statement typically is a PDF of the paper statement that you receive in the mail. There’s no intelligence, there’s no interactivity to it. An i-statement, being an intelligent statement, allows the bank to create interaction or engagement within the statement itself.
E-statements have been effective in producing savings to the bank. With a paper statement costing on average $1 to $2 to produce and distribute — compared to only 10 to 25 cents for an e-statement — banks can save millions of dollars a year by increasing customer adoption.
But that’s easier said than done. Part of the problem lies in the fact that most e-statements are just static digital representations of the same documents mailed to customers. As a result, customers don’t see e-statements as providing more value.
I-statements provide a bridge from static e-statements to engaging in two-way communications. I-statements enable customers to initiate a variety of activities such as updating account information, applying for new services or choosing financing options for payments.
Q: So, you’re saying that the richness of the platform is what will finally convince the customers to turn the paper off?
Yaldezian: Yes, because they can do things they want to do that they can’t do with their paper.
Q: What’s driving the interest now?
Yaldezian: Currently, the traditional e-statement has rather low adoption. While a 2004 Forrester Research study found that 26% of online households received one or more e-statements from financial providers, all but 3% of e-statement adopters continued receiving paper statements.
So, the bank is really not saving anything. And, if you push customers a little bit, they give up the e-statement and go back to paper. So, banks are definitely looking for ways to make the statement more engaging, to generate better adoption because it would save them a lot of money.
The savings aren’t limited to the cost of producing and mailing statements. An Adobe-sponsored Harris Interactive study found that 40% of banking managers said customers abandon service applications because they believe their questions can be answered only in conversations with bank employees. One benefit of an i-statement is that queries can take place between the customer and the service area within the document.
In addition, more than one-third of bank managers say customers abandon online applications because they can’t save them to their home computers to complete later. I-statements can be completed online or offline and sent electronically back to the bank for rapid processing.
The powers of the intelligent statements can offload traffic to call service centers or branch offices. Banks often experience a huge spike in customer service calls following statement mailings. By enabling customers to interact online, banks can reduce customer service inquiries and costs, as well as free staff to concentrate on higher-value services.
Perhaps one of the reasons that e-statements have not been a big success is that banks have approached them from a cost saving point of view, as opposed to a customer engagement service point of view.
Q: Do you find that there is a different champion within the bank when i-statements are identified as a way to improve the experience versus as a way to reduce expenses?
Yaldezian: Yes. It tends to be someone from the marketing and sales area, as opposed to the IT production area. Banks right now are asking: Is this going to help retain my customers? Is this going to help me create an engaging customer experience? They’re looking to differentiate their brands, and the capability to create a consistent brand across all your products is something that the chief marketing officers enjoy, as opposed to, say, the CIO who’s probably looking at it and wondering, “OK, will it work with my technology, and how hard is it going to be for me to do this?”
Q: Chris, i-statements are pushed to customers via e-mail as a PDF attachment. Yet many banks seem to be leaning toward pulling their customers to their Web sites as a means of minimizing online security threats. Why does your approach rely on push?
Yaldezian: One of the main problems with “pull” is that customers have to take an action, such as going to the Web site. In contrast, “push” puts the statement right in front of customers. Also, unlike an HTML-based application, PDF makes it possible to save, e-mail or print the statement exactly as it looks, which helps customers get past their need for a separate paper version.
I-statements incorporate critical document control and security. For example, document-level security can be integrated to create statements that can be digitally signed, verified, encrypted and decrypted. There are controls to limit who can open, view, print and copy statements, as well as prevent recipients from modifying content. While many controls are hidden from customers, one control is evident as soon as the statement is opened — a message confirms that the statement came from the customer’s bank and was not altered during transmission.
Other security measures can also be implemented, such as placing time limits on how long statements or other forms can be stored on customers’ desktops. After a set period of time, access to documents can expire, which is useful for banks sending time-sensitive customer offers.
Q: What are the characteristics of the banks showing the most interest?
Yaldezian: We have talked to five different financial institutions. We have a pilot at one, a West Coast commercial bank. The types of banks that have expressed interest have been big to medium, have been business-oriented, or they have been high net worth type-oriented. As of right now, it hasn’t been oriented toward the mass market consumer. This is pretty much cutting edge.
Q: What kinds of systems and process changes are required in order to deliver a statement that interacts with areas of the bank?
Yaldezian: Well, there is some back-end systems work that you have to do, depending on what you want to enable in the statement itself.
If all you wanted to do was pull all your customers’ statements together and put a table of contents on them, that is pretty simple. Most banks already print their e-statements into PDF. Instead of using the flat V file, a bank would use the intelligent document PDF file and leverage our platform to assemble the statements into almost a book-like form with a table of contents. The process of pulling the checking, the mortgage, the credit card statements together has the added benefit of forcing a repackaging into a single brand. This is a big problem that banks have, which is appearing consistent from channel-to-channel.
Q: What kind of return could banks expect on an investment in this?
Yaldezian: A lot of it depends on the infrastructure that the banks already have.
If they have an enterprise service technology kind of architecture, capable of pushing this out and replacing the flat PDFs they use for their electronic statements to an intelligent statement, that’s good. Yes, there’s a cost of our software, but it’s not something that’s daunting, compared to the cost savings that they’re going to get immediately. If you would imagine something like 100,000 customers, so that means you’re doing 1.2 million statements minimum, one statement every month to the customer. And if you’re saving, say, a buck, it is going to more than give you a very nice ROI. On something like that, I would say that they’ll have definitely a less than one-year payback period, probably less than nine months.
Q: Do you envision banks offering i-statements across the board to their entire customer base, or do you think it would be more typical, as, with your pilot bank, to offer it according to the value of the customer segment?
Yaldezian: It might be today’s technology, but it’s not today’s application, for the broad mainstream of the world. So, it will take time for the statement to become sort of an interaction page, as opposed to a diary of historical transactions. Yet slowly but surely it will get pushed out to the mass base and when you’ve banked at one bank and you gotten used to it and liked it, you will start asking your next bank, if you had to move for some reason, why they’re not doing it. And, that’s differentiating. The physical item that you get in your hand right now is your statement, that’s your connection with the bank when you’re not at their ATM. I think the statement could continue to represent the brand in the future, but it won’t be paper.
|
