South African banks have to look beyond delivering basic statement, balance and transfer facilities on their Internet banking sites if they do not want to lose online clients to more savvy financial services companies.
This is the view of Rubico technology research director Jay van Zyl. Rubico is an internationally focused financial services business component provider.
Van Zyl says retail banks are in danger of using the Web only as a cost-saving channel instead of a means of building businesses.
"Banks want to do more transactions online because it`s cheaper than over-the-counter banking, but that`s not all that Web-based banking is about," he says. "It`s about a lot more and the forward-thinking banks are now looking to take online banking to the next level.
"This is about content delivery, personalisation, customer advice and giving clients access to best-of-breed products even if they don`t happen to be the bank`s own," he says.
"Next-generation Internet banking users are not going to put up with what they are being offered today and if the banks are slow in responding to their needs, then someone else will - and it could well be competition from outside the financial services sector."
A recent Forrester Report, Streamlining Multi Channel Banking, March 2001, also advises banks to make the Web their financial services hub rather than transaction-focused channel.
The study says that, apart from the universal challenge of back-office legacy systems integration, with which Rubico is involved in the SA financial services sector, content and technology management are the major challenges being faced by retail banks in developing services across channels.
Lack of senior management buy-in has all but disappeared as a challenge, despite the general perception that this can be a major problem. Only 4% of the survey respondents, representing 30 UK retail banks, saw poor management built-in as a challenge.
"I think this is the same in SA," says Van Zyl. Most SA banking initiatives are now being driven from the top down. Senior management realise they have to have the systems in place which allow them to respond to changing market needs and new technologies.
"Just look at all the channels the banks are currently supporting or investigating - branch, call centre, Web, mobile, kiosks and, on the horizon, Internet television. This is why infrastructure flexibility is so critical."
Van Zyl says that looking at the report, SA`s banking sector is more advanced in its thinking in many cases. "Look at what they are doing to get and keep online users - Absa, through its free Internet service, and Standard Bank, with its `jellybean` currency, for example."
Forrester warns UK banks that their multi-channel ambitions will flounder without a core Web service that offers transactions, financial management and advice.
"Firms must restructure their channel management around the PC with other access points - including branches - taking a supporting role," says the report.
"As banks build aggregation and offer products from third-party providers, their services must broaden from transactions into personal finance management - allowing customers to manage their finances in a personalised environment - and advice," says Forrester.
According to Van Zyl, banks that fail to grasp the importance of the promotion of online banking to a higher position whereby it becomes the primary customer channel, could quickly fall prey to outside competition. The whole face of banking is changing radically with a new banking paradigm emerging, he adds.
"You already have Pick `n Pay setting up in opposition and becoming more aggressive in the market. Furniture stores make more money on providing credit than they do on furniture. And what`s to stop large companies with huge workforces moving into banking? They have a captive market and could easily provide staff services such as asset-based financing.
"SA banks are not taking this lying down. They realise that the PC-based online experience must become exceptional and are making sure they are not viewed as an adjunct to other channels. They also realise online must accommodate all forms of distribution methods including PDAs, cellphones, kiosks, etc."
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