Banking on ecommerce

The common perception of banks is that they are as safe as houses, and about as fast-moving. Because their business is based on trust, banks are terrified of doing anything the slightest bit controversial - especially when it comes to technology.

But all this is changing. Last week, 850 banking executives attended the Oracle-sponsored Banking and Finance Ebusiness (BFE) conference for a crash course in moving from the cocoon of closed systems into the world of ecommerce.

At times, listening to bankers talk about ecommerce is a bit like watching your dad dance, but they are deadly earnest - they realise the market is theirs to lose to the hordes of dotcom newcomers. New players such as Egg and If are an obvious threat to established brands, and shock waves are being felt throughout the industry. No longer averse to taking a risk, the big banks are learning what the New Economy could do for them.

Ian Arthur, a partner in Andersen Consulting's financial services group, said: "Not everyone is buying through the internet, but it's changing customer expectations."

In recent weeks, both Barclays and Lloyds TSB have gone out of their way to explain their ecommerce strategies. In Barclays' case, this meant a complete rewrite of its applications into Java to deliver the same service to multiple devices.

Survival of the fastest
While some analysts argue it is possible to benefit from being a late adopter of technology, even bankers are acknowledging that sometimes you have to move fast. "You do have a chance to aim before pulling the trigger. But you can be too rational to make money out of a revolution," warned Christopher Rodrigues, chief executive of the Bradford & Bingley Building Society.

One big problem for banks is simply working out who their customers are. Most customer data is held in product-specific databases, with little integration across the different channels - call centres, branches and the internet - that the bank uses. The Royal Bank of Scotland (RBS) is one of many trying to build a single view of the customer by linking these different systems and using customer relationship management (CRM) software.

Peter Wood, retail products director at RBS, said: "We had a problem. Fragmented customer contact between channels meant that sales leads were escaping. Some 58 per cent of customer advisor time was spent on admin instead of selling products."

The integrated CRM system is currently being rolled out by RBS. "It's a very complex project, but crucial because if you don't know the customer it's hard to sell," said Wood. The intention is to create a coherent approach across all sales channels - branch, web and call centre. Claims for the system include increasing the time advisors spend with customers, and doubling sales from the same number of customer contacts.

In addition, RBS is grappling with the acquisition of NatWest earlier this year. Work will start in the next few months on migrating NatWest over to RBS systems. "Because we are using existing products and a stable platform, the technical risk is minimised," said Wood.

TV, web or mobile?
Speakers at the BFE conference were split over where the action in e-banking will be. Abbey National is launching its standalone internet bank this month, and is investing £100m in TV banking. From the autumn, it will also be offering mobile banking via Wap-enabled phones.

"Mid-market families will replace their TV because they are being offered new packages. For families that are scared of technology, this is where the market is," said Ambrose McGinn, director of ecommerce at Abbey National.

Abbey National has signed deals with telcos NTL and Telewest, and has already noticed differences between internet and interactive TV usage. "Peak time for TV banking is 7.59pm - in the commercials between Coronation Street and The Bill. We have to get used to huge peaks and troughs driven by programming," said McGinn.

Banks are waking up to the challenge. Dancing dads? Sometimes, but they are looking increasingly quick on their feet.

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