Chat Gets Serious

By Julie Monahan

Instant messaging presents service opportunities for banks, as well as some challenges, like keeping the chat productive.

Ever since instant messaging broke free of the confines of America Online's private network, the technology has presented banks with both an improved method of serving customers online and more risk to data security. Managing instant messaging has taken on a tone of urgency as the technology has caught on with the public. The Yankee Group in Boston says there are already 80 million users in the U.S.

IM, also known as "live chat," presents a grab bag of potential rewards and risks. The potential lies in offering customers a faster option than e-mail to communicate with service reps. Customers who can get their problems handled via a live chat session are less likely to log off and dial a call center.

"Live chat assists both service and selling," says Randy Adams, senior vice president of online customer services at Wells Fargo & Co. in San Francisco. "It will truly help us get the most out of our Internet offering."

IM can also help an institution improve internal communications by enabling a more immediate form of contact than e-mail. Employees trying to reach other employees stand a better chance of getting through the e-mail clutter by depositing a flashing message on the recipient's computer screen. This flashing message can be hard to ignore, since closing the IM screen erases the content, unlike e-mail, which can be opened and saved at will. Stamford, Conn.-based Gartner, Inc. estimates that 70% of U.S. businesses use IM to communicate internally and externally.

The potential risks of IM revolve around training and security. Employees who interact with customers via live chat must possess strong writing skills and conduct themselves appropriately in this medium — the dialogue must never become so informal as to resemble a chat room conversation. Since banks need to make this process as efficient as possible, they are experimenting with canned or automated responses. This issue has to be handled with care, however; customers may drop the session if they're not getting the response they seek in a timely fashion.

Security can be an issue with both the internal and external use of IM. Most of today's business IM traffic occurs over public IM networks operated by Yahoo!, Microsoft Corp. and AOL. This low-cost approach has a clear financial advantage, but it's the kind of uncontrolled exchange that gives IT departments nightmares — employee usage of IM goes undetected due to anonymous screen names and the lack of a system to capture and log messages as they travel back and forth. Also, virus writers have begun to explore public IM as a new way to wreak havoc on corporate systems.

All this has raised concerns among bank regulators and the Securities and Exchange Commission, which began enforcement this year of regulations requiring all electronic communications to be logged, supervised, audited and archived to ensure broker/dealers and their customers adhere to ethical trading behavior. Whether instant messages are intended for internal or external recipients, banks must conform to the same regulatory requirements for appropriate content and access to searchable archives as e-mail and other electronic communications.

The upshot is that IM can indeed be a useful tool for banks, both as a service solution for customers and as an internal communications system. But institutions need to keep well within the safety zone by paying attention to training and security issues.

"Are You There?"

Instant messaging originated in 1989 as a technology on AOL's private network to facilitate chat room conversations. It proved wildly popular with users, and soon Microsoft and Yahoo! had their own versions. Since Microsoft and Yahoo! did not require membership fees to use their basic IM products, popularity spread across the Internet and beyond AOL to include both business and personal use.

During a recent BAI conference, SunTrust Banks Inc. senior vice president R. "Book" Booker described how his company had implemented a live chat system designed by New York City-based LivePerson Inc. and found it useful for sales.

When a customer views the loan offers on SunTrust's Web site, the system will track that person's behavior. Certain activities, particularly clicking on rate information, will generate an intervention from a SunTrust rep, who e-mails the customer asking if he or she would like some help. An affirmative answer produces an online chat session. "We're just playing around with this to see if it really works," Booker said at the SmartTactics in Retail Delivery conference, held in Las Vegas last March.

For now, SunTrust only dedicates about five people in its contact center to online chat duties. But customer usage is rising, from 778 sessions in October 2002 to 3,196 this January. And the experience so far — about half the chat sessions result in a loan application — has encouraged the bank to consider expanding the use of IM to other parts of its Web site, Booker said.

SunTrust's experience sums up the attitude of many banks toward IM technology: potentially useful, worth investigating, but no reason to bet the farm on it just yet. The past shortcomings of e-mail in customer responsiveness loom large for some institutions.

Internet banking, almost by definition, is supposed to be convenient and fast. Yet customers who try to contact their financial institution by e-mail typically wait a day or two to get a response, and then the answer often comes back as a canned rather than personalized message. This kind of experience compares poorly with the low-tech telephone call, where the customer service rep usually resolves your problem once you get them on the line.

Theoretically, IM should solve this problem, since the interaction between customer and rep occurs in real time. But the use of automated responses and requiring service reps to juggle multiple chat sessions can degrade the customer experience if not handled carefully. "You never want to see a customer type, 'Are you there?,'" says Milton Santiago, senior vice president of electronic banking at ABN AMRO Services Company, the technology arm of LaSalle Bank Corp. in Chicago, which is owned by Netherlands-based ABN AMRO N.V.

Even so, pioneers such as Wells Fargo, SunTrust and ABN AMRO have found that IM technology can provide a useful adjunct to established capabilities. While banks such as SunTrust use it on their consumer-oriented Web sites, ABN AMRO and Wells Fargo focus the technology on servicing commercial clients.

Wells Fargo, for example, introduced live help to 15,000 subscribers of its Web-based "commercial electronic office," an online portal to the bank's treasury management, international, trust and investment, and credit and interest rate management services. Similarly, ABN AMRO has adopted IM to service the time-sensitive needs of 28,000 users of its Web-based corporate treasury management system.

Live chat enables service representatives to see exactly what appears on the customer's screen, which alleviates the necessity of trying to explain things over the phone. Customers also don't have to go searching for their account manager's business card. "IM allows us to provide a higher level of service," says Santiago. "Instead of searching a Rolodex looking for an 800 number, now the customer can reach us just by clicking a button."

Employee Skills

However it's used by the bank, IM technology does present managers with some special issues.

First, banks need to recognize online chat as a discrete service and avoid simply grafting it onto existing call center (or contact center) operations. It's tempting to take employees who are fielding telephone calls and simply provide them with some additional training to handle online chat. But the skills don't necessarily transfer. A person who is adept at handling verbal communications may not possess the reading comprehension, grammatical and typing skills to do a good job with IM. So it may be necessary to hire these employees from outside the contact center.

Secondly, training needs to be IM-specific. It's important, for example, that employees recognize customer language that indicates frustration or anger. Employees must be provided with suggested responses to defuse those situations.

Also, while customers may be accustomed to the informal speech common to instant messaging, such exchanges occurring around a business transaction must still conform to certain rules. "We're careful to keep it professional," says Wells Fargo's Adams. "We convey the sense that we are a bank, not a chat room." The bank reviews IM transcripts every day, for example, to ensure that its reps stay on track.

This is all a matter of degree, however. Some institutions, such as ABN AMRO, do strive to retain some of the casual tone that comes so naturally with IM. In the cash management area, for example, bankers know their customers well and online conversations are sometimes allowed to veer off to more personal exchanges, such as asking about a spouse's health or a child's progress in school.

Messages may even contain an occasional "emoticon," a symbol on the keyboard used to denote a facial expression such as a smile. "The technology requires you to be more engaging," says ABN AMRO'S Santiago. "We don't want it to be too impersonal."

Speediness is another feature of IM that banks will want to retain, although this requires a balancing act as well. To make their online chat services more efficient, some banks ask reps to handle more than one session at a time. The trick is to do this in a way that doesn't slow down session speed too much. Larry Perlstein, managing vice president at Gartner in San Jose, Calif., says he has seen how companies can botch live chat with long wait times and auto-responses that don't quite match the question. But it's also hard to predict how much wait-time a customer will ultimately accept in return for the convenience of online help.

"It really depends on what you're used to," Perlstein says. "If you're used to sitting on the phone waiting for someone to talk to, IM can seem very fast in comparison."

One strategy to ensure chat remains quick and to the point is to limit its use to simple requests for assistance. For anything more complicated, it may be better to direct customers to a service rep with a higher level of financial expertise. This leads to a related issue: systems integration. If a customer tries to solve an issue online and then follows up later with a phone call, the call center rep needs to be able to reference the previous online activity. And management needs to analyze the service levels provided at each stage in this progression.

"An integrated system with content available in context is the best way to go," says Robert Mahowald, research manager of collaborative computing at IDC in Framingham, Mass. The best systems, Mahowald adds, are those that sit on top of other customer relationship management systems, such as those from Siebel Systems Inc. or Oracle Corp. Although some analysts are skeptical about vendor claims of integrated IM communications, the technology is maturing quickly. "It's coming," Mahowald says.

It's possible that increased use of online chat will help reduce call center volume. Republic Bank & Trust Co. in Louisville, Ky., for example, has observed a slight drop in calls to customer service since launching IM on its Web site two years ago. "We've also reduced the amount of time that customers are online," says Michael Sadofsky, senior vice president of marketing at Republic, which is owned by Republic Bancorp, Inc. The bank, the third largest in Kentucky, currently handles about 1,000 IM sessions a month.

It may not be advisable, however, to establish cost reduction as a priority when implementing IM. A typical chat session can last as long as a phone call, so it absorbs as much of the employee's time, unless the rep is able to juggle multiple sessions.

Tailored Solution

The efficiency potential of IM technology can perhaps best be seen in the arena of internal communications. IDC researchers estimate that business users will make up nearly half of the 506 million IM users expected online by 2006.

The problem here is that users of public networks, like Yahoo's Messenger and AOL's Instant Messenger, can't screen messages for inappropriate content, block corrupted attachments or store messages for regulatory review. To address these shortcomings, a number of vendors have rushed in with a new genre of IM, called enterprise instant messaging solutions.

EIM can be used with both internal and external IM. It can be applied to closed IM networks that restrict usage in-house and for communication with approved businesses only, or to network-independent platforms designed for broad customer use, which will recognize all messages regardless of whether the customer uses an IM application from Microsoft, Yahoo! or AOL.

The value of the latter lies in its ability to accept messages from any IM client the customer chooses. The systems also screen messages for inappropriate or illegal words, store and catalog messages and generate management reports.

EIM seems tailor-made for the intensity of the trading floor where customers with fortunes at stake want their buy and sell orders implemented quickly. No surprise then, that trading departments have been at the forefront of EIM adoption, a list that includes Banc of America Securities, owned by Charlotte-based Bank of America Corp., and Wachovia Securities, the trading arm of Wachovia Corp., also based in Charlotte. The new SEC regulations 17a-3 and 17a-4 (regarding the content and archival storage of electronic messaging) drive most of this implementation. Securities departments that want the convenience and speed of IM will need the data management tools of EIM to satisfy these new requirements.

Wachovia Securities signed on to EIM management almost two years ago after attempting control by requiring traders to print out an IM log everyday. The resulting reams of data soon became unmanageable. More than 220 employees now use an IM auditor from FaceTime Communications, Inc., in Foster City, Calif., which mirrors the bank's e-mail monitoring application. A similar system in operation at Banc of America Securities now handles 36,000 IM sessions a day.

Clearly, the effort to adapt IM to the demands of the financial services industry requires solutions that neatly integrate the technology with current service platforms as well as internal standards of external and internal communications. IM is still a very young application in the world of Web-based banking, and managers will need to stay on top of new technologies that will no doubt improve — and expand — IM efficacy.

Ms. Monahan is a freelance writer based in Seattle.

Copyright © 2003 by Banking Strategies, published by BAI.

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