Entry No.99c

IT Writers Awards

Standfirst
Phone banking has captured the hearts and minds of customers craving convenience, while the 'clicks and mortar' world continues to depress. These are the findings of Asia Pacific Banking Technology's inaugural consumer banking survey.  Compiled by Cameron Tomes

With every new whiz-bang technology the market is obliged to bring the hype to the boil before it can hope to guarantee that consumers will actually swallow its mesmerising sales pitch.  Internet banking has been that new flavour of the month for some time now, as Australia's banks attempt to bestow the virtues of convenience banking onto consumers while talking up the megabuck cost savings the concept can deliver to their own bottom lines.  It is certainly difficult to argue against Internet banking's potential appeal to the masses.

What with non-stop access to a booming range of savings, personal loan and corporate transaction services, cheaper fees and charges, plus the promise of faster inter-bank transactions among other incentives, you would think the punters would be busting the doors down to get a piece of the action.  Not so, according to the first of a series of surveys on consumer banking trends to be conducted by Asia Pacific Banking Technology.  The survey, which canvassed the views of a cross-section of banking customers last month, found that despite all the hype surrounding the emergence of new banking technologies, such as Internet banking and WAP-based mobile banking, customers are sticking to what they know best.  Alternative channel.  That's not to say that Internet banking as an alternative channel is a dead duck, but the survey respondents clearly favoured the use of ATM machines and EFTPOS terminals to conduct the majority of their transactions.

Interestingly, the one standout performer of the survey, which also received many rave reviews from respondents, was phone banking.  This result is noteworthy for two reasons. First, it signals that customers are demanding more convenience for their banking dollar and the right to conduct transactions, shift funds, check account balances and pay bills on demand.  Second, the shift to phone banking effectively hammers yet another nail into the bank branch coffin, which is certain to heighten calls for more branch rationalisations.  According to the survey, a stark division exists between the respondents' use of traditional banking channels, such as branches, ATM machines and EFTPOS terminals and their adoption of the new age of banking technologies, such as Internet banking, mobile banking, phone banking and shopfront services.  The standout traditional banking channel proved to be ATM machines with 98% of respondents claiming to use the terminals at least once last month.

As one respondent noted: "Internet and phone banking are all well and good but you still can't beat cash from the trusty, reliable ATM."  Continuing this convenience trend, respondents were similarly enamoured with EFTPOS terminals, with 86% reporting they had conducted over-the-counter transactions using these terminals in the last month. 

Popular opinion
And, contrary to popular opinion, it appears the much-maligned bank branch hasn't been blown off the face of the earth just yet. In fact, a large proportion (64%) of respondents reported that branches are a dependable alternative in the event of an ATM network crash.  Again, phone banking flew the flag for the new brigade with 70% of respondents claiming they had used forms of the service last month.  The concept, and its popular Bpay arm, struck a nerve with a majority of respondents with many advocating their support of the services and alluding to ways in which they could be improved and streamlined.  Some suggested that Bpay was an "absolutely brilliant" service and the "easiest way to pay bills", while others said it is "very time effective".

According to another satisfied user: "phone banking is great. So far I haven't been charged for this service, which is very surprising."

Constructive criticism
However, respondents offered plenty of constructive criticism for the technology, indicating that phone banking is well on its way to reaching critical mass among users.  "It's an excellent service, although I'm finding that there are too many codes to dial for just one transaction," one respondent said.

The long-winded nature of the Bpay service did come in for some flak.  According to a number of respondents, Bpay is quite a tedious and slow service once users become familiar with the transaction processes.  They claimed that the service was "effective, but rather complicated" as users are forced to remember billing codes, account numbers and passwords.  Others voiced concerns that Bpay offers little margin for error, subjecting users to frustrating delays in order to rectify their error. 

Long winded
"The system is too long-winded," complained another respondent. "The banks need to create some way of shortcutting the prompts (perhaps by providing users with individual codes that send them direct to a particular task).  "For example, if I want to pay my gas bill, I already know my Bpay number, so I should be able to directly access that account via a separate phone number, type in my password and the Bpay number followed by the payment amount.  "If the service were to work in this manner the job could be done much quicker without going through a thousand time-consuming prompts," the respondent suggested.  Some respondents also called for the banks and registered Bpay organisations to establish industry standards to streamline the Bpay payment process. 

Industry standards
Two suggestions included the creation of a website that lists the relevant Bpay numbers of all participating organisations, while an industry standard could be established to define biller codes and account numbers.  Meanwhile, a small group of respondents claimed they preferred to pay their bills and conduct their transactions either online or by using a credit card.  "I find that using Bpay through Internet banking is a lot easier than over the phone, which involves far too much user input," one respondent said.  In contrast, credit card advocates suggested there is a quicker alternative to Bpay, which offers benefits for the user, such as frequent flyer points.

According to one respondent, automatic credit card debit is the way to go as users "don't have to use a different service for each Bpay provider".

Gorilla marketing
With 25% of respondents claiming they had conducted Internet banking transactions in the last month, there are signs that the gorilla marketing and advertising campaigns conducted by the banks are starting to yield results. However, the general consensus is that Internet banking cannot seriously challenge for market dominance for at least three years.  Shopfront banking, like Internet banking, is an emerging channel that most of the major banks are determined to crack in one form or another.   With 18% of respondents reporting they had conducted shopfront transactions in the last month there is evidence to suggest that the highly prized retail customer base is warming to the so-called convenience of banking while they shop.

Mix of channels
However, the respondents quickly changed their tune when asked which of the broad banking channels they felt more comfortable using - traditional or online/phone.  The survey revealed that while 45% of respondents were comfortable using a mix of the traditional banking channels enabled customers to schedule banking into their lifestyles rather than make it a separate task.  When asked to suggest the most oft used banking channel, respondents were unanimous in their support of the more established ATMs and EFTPOS terminals.

Neck and neck
In the last month, 84% of respondents indicated that they had used an ATM machine for an approximate total of 194 transactions, while EFPTOS terminals attracted 57% of respondents during the same period and about 184 transactions.  Suprisingly, branch and phone banking services were neck and neck as far as customer comfort was concerned.

Around 45% of respondents conducted roughly 62 phone banking transactions in the last month, just shading branch services, which were used by 41% of the respondents on roughly 34 occasions over that same period.  In contrast, Internet banking and mobile phone banking failed to live up to the hype of the banks as respondents by and large steered clear of both services.

Despite the fact that not even half the country has internet access. Internet banking was favoured by 21% of respondents last month while only 18 transactions took place.

Not suprisingly, mobile phone banking using either WAP (wireless access protocol) or SMS (short message service) barely rated a mention among the respondents surveyed with a mere two users conducting just two transactions in March.

Commitment
The responses to this question reveal a trend towards convenience banking and confirm the commitment of Australia's banks to providing a variety of banking channels that customers can integrate into their lifestyles.  With comments like: "Thank God for phone banking. I don't need to stand in endless queues at banks where staffing is low. It's convenient, fast and safe," the banks are certainly reaping the rewards of branch closures, fee hikes and staff cuts.

User friendly probably isn't the first comment that springs to mind when canvassing customer opinion of banking services. However, ATMs, phone banking and EFTPOS terminals again topped the list of the most user-friendly banking channels. 

Excellent service
According to the survey, 61% of respondents claimed ATMs provided an excellent service while 36% declared it to be average.  Running a close second, 36% of respondents suggested EFTPOS services were excellent with 32% suggesting they were average.

Phone banking continued its popularity march with 41% of respondents claiming the services were excellent and 25% suggesting they were average.  Suprisingly, branch services, Internet banking and mobile phone banking services were far from user-friendly with dissatisfaction almost outstripping acceptance, the survey found.

A massive 45% of respondents complained that branch services were very poor compared with 11% of respondents who claimed they were quite happy with bricks and mortar.

Around 11% of respondents registered their displeasure with Internet banking compared to 18% of satisfied customers. 

Slow access
When asked to explain why they were wary of embracing Internet banking the survey respondents cited a range of concerns including security, slow access and complicated frameworks.  Security was earmarked by 23% of respondents as a major barrier to Internet banking, while 18% complained that many of the services on offer are too complicated.  And before you start thinking Internet access speeds have come a long way, 14% of respondents claimed access speeds are still too slow for such important transactions.

Security concerns
One user summed up the security concerns of many of the respondents, saying: "The last thing I need is for my system to hang while I'm paying bills or transferring funds."

While some respondents expressed dissatisfaction with online banking processing speeds, the survey found that they were almost unanimous in their derision of any imposed online banking fees.   Speaking at last month's Online Financial Services Conference in Sydney, Stephen Coulter, Commonwealth Bank's general manager - E-commerce, attempted to explain away the need to impose minimal online banking fees by citing the multi-million dollar investments banks outlay just to stay competitive.  However, according to survey responses the introduction of any online banking fees would see many respondents simply ignore online banking as an alternative channel.  "Banks still persist on increasing fees on electronic transactions or decreasing the number of free electronic transactions customers can make each month. This seems to be poor practice if they are attempting to encourage people away from traditional banking," one respondent observed.

Another complained: "How do banks justify the marginal cost of electronic banking services?  "Once the e-banking structure is in place the real cost per transaction must be negligible relative to traditional banking costs. 

Some support
"I would love to know the customer mark-up that is placed on the price of an online transaction for all the major banks."  Banks did receive some support, a mere 4%, for the introduction of online banking fees with the proviso that fees be charged on a user-pays basis.  "I don't mind paying a small amount for bank fees but they should only be charged on a sliding scale that reflects service usage."

So where to for the banks from here? The survey reveals that customers are expanding their banking comfort zones from branch, ATM and EFTPOS channels to encompass convenience channels, such as phone banking.  As for Internet banking and mobile banking, it may be some time before the banks can justifiably claim to talk to the talk and walk the walk.

Back to Most Controversial 
Top of page

Content Copyright © the author/publisher listed above

Design Copyright © Consensus Pty Ltd

This web-site uses frames, click here for the full picture