A successful online strategy for banks requires the right mix of technology and customer service. “Over the past five years, banks have learnt that they cannot merely build online banking and expect customers to come,” says Alenka Grealish, senior analyst at Celent, the research firm.

“Rather, banks must put in place three pillars to assure strong adoption: technology-driven improvements, call centre and other remote support, and branch support.”

One bank that appears to have got the formula right is Bank of America, the second largest bank in the US that has the highest number of active online banking subscribers in the country. Its nearly 19.6m online banking subscribers constitute almost half of its total customer base, and more than one-third of the market in the US.

“Our focus has been all along on simplicity and innovation,” says Sanjay Gupta, e-Commerce executive at Bank of America. Along with account access, bill payments and funds transfer, the bank has regularly tried to incorporate new functions, such as receiving bills from utility providers, inter-bank funds transfer, a personal financial planning tool and online alerts. It also offers an online customer support feature for complex functions.

“We try to follow a consultative mode of developing the online service to ensure a great customer experience. For instance, based on customer feedback, we developed a comprehensive bill-pay service that enables customers to not only pay bills but also receive bills online. It helps put our customers’ lives on auto-pilot,” says Gupta.

With Bank of America having more than 7.5m active online bill-paying customers, the strategy seems to have been effective and is profitable – it has found that customers who both bank and pay bills online are 27 per cent more profitable than offline customers. “We have found there is a dramatic increase in loyalty when customers both bank and pay bills online,” confirms Gupta.

The strongest growth in online banking has come in the past five years. Gupta attributes this to the prevalence of broadband, the increase in range of services being offered, and the bank’s aggressive marketing and pricing strategy. For instance, the bank has been offering a free bill payment service.

“We have done a lot of customer education through TV ads, radio and billboards. We also got all our sales associates to experience the convenience of online banking themselves so that they could sell the concept more easily to customers,” says Gupta. He adds that enhanced online security is another large factor responsible for recent growth.

Online security is indeed a key area. Last year Bank of America was among four leading banks targeted by identity thieves who stole information on more than 650,000 customers. This has led to the creation of extra security features, such as user authentication systems and free security alerts.

“We understand that security is one of the foremost concerns for our customers today and will be even more so in the future. So we have endeavoured to create a highly secure service where customers do not have to think twice while banking online.”

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