Last month, I was standing in the TSA security line at Boston’s Logan airport for the “polite” pat down and body scan. I was already running late for my international flight when my BlackBerry buzzed with a low balance alert from my bank. Apparently, a number of checks had just cleared my account but in the haste of preparing for my trip, I had forgotten to transfer funds from my savings account at another institution to fund the large volume of checks that I had written. Now what?
I couldn’t call the bank’s call center and request a transfer – the TSA guys would go crazy, likely confiscate my phone and select me for the “more thorough” body search. I didn’t have time to clear security, open my laptop, login to online banking and navigate the six or seven clicks through their Website to complete the transfer request – I would have missed my flight. So, I got on the plane and held my breath hoping that no other checks would clear until I landed at my destination and I could make the transfer.
In this case I was lucky. But the ability to respond to my low-balance alert with a remedial action would have been nice. Fortunately, such a capability is likely to be more commonplace in the near future.
Over the past few years, many banks have provided customers with the ability to enroll in alert message services and to select the types and frequency of alerts that they wish to receive. With the rapid adoption of personal financial management (PFM) services by Mint, Yodlee and others, the number of alerts sent by banks has exploded. In fact, one top-tier U.S. bank recently told me that they send more than 45 million email alerts to customers each month.
These opt-in programs have shown banks that customers really do want to hear from them. According to a 2010 Foresee Results/Forbes.com survey, only 2% of online banking customers prefer that their bank not reach out to them, which means that 98% want to receive proactive communications from their bank. The vast majority of respondents (65%) preferred for that communication to be via email.
In a May 2010 report, Mark Schwanhausser of Javelin Strategy & Research identified a number of flaws with today’s financial alerts. He pointed out many problems that we – as banking customers – already know:
- They aren’t useful enough
- They aren’t actionable enough
- They aren’t safe/secure enough
- They aren’t woven into everything a bank does
The next generation of customer interaction will see banks securely sending event-triggered messages and alerts embedded with transactional capabilities. These new communications will enable customers to interact and transact with their bank from within the email message – without having to click on a link or open another Web browser session.
Customers will likely appreciate the ability to transact simply, without an interruption in their active lifestyle, across their desktop, laptop, and mobile devices. The technology exists today for customers to receive and directly transact in response to a low-balance or insufficient funds (NSF) alert with the ability to transfer funds, enroll in overdraft protection or take an express loan directly from within their bank’s email alert message.
Alternatively, banks can enhance their incoming deposit alerts by adding offers to open or transfer funds to a savings account, buy a certificate of deposit, or pay down a line of credit, all of which generate cross-sell, up-sell and new revenue opportunities for the bank while delivering a useful, convenient and improved customer experience. The opportunities are endless – bill pay, eStatements, stock trading, margin calls and so much more.
Security is critical, as banks must encrypt and securely transmit message content, enabling both the bank and consumer to interact and transact with confidence directly from within email. Anti-phishing technology must be applied to detect suspected phishing attacks and block the phishing attempt before the banking customer has entered sufficient data to compromise their identity, passwords or other credentials.
The “holy grail” in banking is to develop a trusted relationship with a customer so that they engage, interact and conduct all of their banking and financial needs with various products across multiple lines of business. According to BAI’s January 2011 Index of Consumer Sentiment, consumers who viewed their bank as being more innovative than the competition were inclined to grow their deposits and expand their relationship with that bank. In fact, the 93% of respondents who described their bank as “innovative” also said that they trusted their bank, while only 41% of respondents said they trusted their bank if they felt the bank was not being innovative.
For today’s consumers who are accustomed to immediate action, the idea of having to visit a branch, phone a call center or even log onto a Website to perform a banking transaction is outdated. They want the bank to come to them.
Consumers already spend hours each day reading email, whether in the office, at home or on their mobile devices. Now is the time for banks to proactively engage with customers with personalized, relevant, timely, event-driven offers and products – right at the point when they are most likely to need or purchase those products. Achieving this goal can be accomplished by empowering customers with the ability to easily and effortlessly interact and transact their banking from within actionable email alerts.
Mr. Schwartz is chief financial officer and head of marketing for New York City-based ActivePath Inc., which develops two-way email banking systems that enable banking customers to securely communicate and conduct alert-driven financial transactions within email. He can be reached at email@example.com.