In the midst of the economic crisis, while most banks are trying to keep attracting customers by offering higher interest savings and money market accounts, one bank (PNC) is thriving by focusing on delivering a unique online customer experience, specifically designed to target the generation Y (people aged 18 to 34, according to PNC demographics).

PNC created a product called Virtual Wallet that boldly discards all usual conventions from the banking industry, such as checking or savings accounts, and offers 3 types of accounts (dubbed “Spend,” “Reserve” and “Growth”) combined in a single solution.  They focused on two simple concepts:

• Twentysomethings consider bank sites clunky, and they typically don’t know how to manage their money (’We need help helping ourselves’)
• The Gen Y really understands how to take advantage of online resources.

The solution takes advantage of concepts borrowed from other online services, games, social networks and even e-Commerce sites with features like Wish-List, Financial Calendar, Money Bar, Danger Days and “Punch the Pig.”   That strategy is luring 130 new customers a day (20,000+ Virtual Wallet customers since July) to an account that otherwise could hardly compete with more aggressive banks in terms of paid returns. 

Defying conventions and betting on exceptional experience can cost a lot initially (PNC expects the project to cost about 15 Million overall), but the ROI is unquestionable: PNC estimates to break even 1 year faster than a similar investment on a new brick-and-mortar branch would have.

From that example (plus everything that we preach here at Vox), I can get 3 great lessons to any company in any industry:

1.  Don’t be afraid to defy conventions!  Know your customers, understand what they what and what they need and create NEW experiences that fit their expectations
2.  Test your concepts with real customers, watch how they react and behave and adjust your solutions accordingly
3. The best strategy in times of crisis is still to offer a truly great customer experience.  Marketing gimmicks and discounts can only go so far as… well, superficial wins…

 So… What strategy will your company follow to get over this crisis?

 See more about it in this article from BusinessWeek or in this blog post from Customer Experience Matters.

Security has always been placed in the opposite side of usability.  By default, when you think about adding security measures to a website, you are talking about creating extra processes or at least adding an extra layer or complexity to existing process, so invariably the site usability suffers.  Several promising researches were conducted in the past few years using graphical passwords, nonverbal memory systems and biometrics, but nothing seemed quite ready for immediate, cost-effective or practical use.

Well, ready or not it seems we are about to witness those solutions coming to market very soon.  Vidoop, a technology innovation company, is rattling the security cage by promising to definitely merge security and usability with their new product, soon to be launched on a Fortune 500 bank website not yet disclosed.  If they deliver what they are promising (and demonstrating on a 12 minutes video presentation), it will surely be a big step on the right direction.

Of course, after seeing the video and testing the Demo, I realize that the solution is not perfect (how could it be?).  Although they’ve probably addressed 9 out of 10 of the common usability problems and close to all - if not all - security known issues, from a customer experience perspective there are still 3 main unaddressed concerns.

Accessibility - I can’t say for sure, but I saw no practical option for users with disabilities (impaired vision).  A work around can be devised, but not without impact to the usability and somehow disregarding the use of images, thus throwing away the main advantages of the solution.

Cross-Channel Consistency – The solution works perfectly for the web channel and could be easily adapted for ATMs and Face-to-Face Interactions, but is moot over the phone.  That means one needs to have different passwords for those channels, so the phone will still be the weakest link of the security chain.  Given the old maxim that a system is only as safe as its weakest link, Vidoop may guarantee a better easier web security process, but not a safer process overall (not to mention the fact that one still have to memorize two sets of passwords for the same bank). 

Password Portability – Graphical passwords are way easier to memorize, even with long gaps between uses, but it is still something one have to commit to memory. If each website adopts a different password process (graphical or not), at some point the users won’t be able to remember all sets of passwords for individual sites and will start writing them down, thus eliminating the point of having a safer/easier to remember password (they are already working with OpenID, which might just be the solution for that).  Anyway, for this to work as projected,  Vidoop’s solution (or OpenID) must become a standard rather quickly, but I don’t think they mind that part.  :)

All in all, it is a great step in the right direction and opens a lot of new possibilities. If Vidoop keeps working on those points and acts quickly on their users’ feedback, they should be able to rapidly change the bank industry scenario.

In my opinion, a little bit of change is always a good thing. 

For the past 4 months I’ve been helping to conduct a study about the Online Customer Experience on the U.S. Banking Industry.  The study is called “Mind Model” and is finally available for free download from Vox Inc at http://www.voxinc.com/banking-mind-model.htm.

The Banking Mind Model Representation is a general analysis of how Banking industry websites are represented and how typical consumer banking customers would recognize and react to some of its distinct characteristics. Customers become used to this convention, deeming bank websites that don’t follow such protocols as “confusing”. While a company’s strategy may purposefully break from this convention, such a break should not be arbitrary. Rather it should be driven by a thorough analysis of the risks and benefits associated with such a divergence.

Below is an example of graph, extracted from the study, showing the Industry Mind Model representation and Allocation Map:

The Banking Mind Model highlights the similarities and differences between various consumer banking website homepages and how consumers, exposed to the online banking competitive landscape, might recognize and react to a site’s distinct characteristics. Vox compared the top 10 U.S. providers and several bank sites from related segments including insurance, financial services and regional banks. Bank sites assessed include:

Allstate Bank3	Merrill Lynch Bank USA4
Bank of America, N.A. 1	State Farm Bank, F.S.B. 3
Citibank, N.A. 1	SunTrust Bank1
Fifth Third Bank2	U.S. Bank N.A. 1
Harris N.A. 2	Wachovia Bank, N.A. 1
HSBC Bank USA, N.A. 1	Washington Mutual Bank1
ING Bank, FSB4	Wells Fargo Bank, N.A. 1
JPMorgan Chase Bank, N.A. 1	World Savings Bank, FSB1
LaSalle Bank N.A. 2

^{1 Top ten U.S. Bank by assets 2 Regional Bank; 3 Insurance; 4 Financial Services}  

Customer engagement is critical to ensuring strong, long-term relationships. Online banking is one of the most effective offerings for cementing customer loyalty. Given this fact, it’s surprising how many of the major sites don’t prominently feature tutorials for online banking and contextual help. Another area where banks are behind the curve is screen resolution. Most bank sites are optimized for 800×600 displays, ignoring the fact that approximately 75% of today’s customers use larger monitors. Thus, valuable real estate opportunities are being lost.

To know more download the full report. It’s free. 

A friend pointed out yesterday some news about how banks are charging when customers overdraw their accounts via ATM withdrawals – without informing them! - You can check it out here.

At the same time, I read today on goodexperience.com that Bank of America had a Customer thrown in jail for trying to verify if a check he received wasn’t fraudulent.  You can reed the full post at “Broken: Bank of America jailing a customer.”

I feel like I have fallen through the looking glass into a place where banks are beheading their customers, and themselves along, to save some money.  Oops… Wait a minute!  That’s just the real world…

It all began when I received an offer to open the new Citibank e-Savings Account. Already a Citibank customer, I thought that this new savings product with 5% APR would fit me perfectly.

I went online but couldn’t find any way to sign up through my internet banking account. So I called my account manager to see what I was doing wrong. She told me that my account wasn’t considered a domestic account and, as such, not eligible for an e-savings account. To qualify, I should open a new checking account.

I explained that this account is a remnant of my wife’s relocation benefits package and it is linked to it several other Citibank products (investment brokerage account, CD account, normal savings account, credit cards, bill payments, etc). Reconfiguring everything to a new checking account would be a tremendous hassle. I mentioned that I could easily open an e-savings account with several other institutions and link it to my current one with no hassle.

My Citibank account manager’s opinion? I SHOULD GO AHEAD AND DO THAT!

I wanted to prove myself a loyal customer, so I reconsidered opening a new checking account. To my surprise, I found out that with my balance, investments etc, I was entitled to a more beneficial financial package than I have with my current checking account.

Of course, instead of being happy I am now very upset.

What did I learn?
1.  I am a better client than I knew but never got any recognition.
2.  They seem to value the acquisition of new customers over retaining the current ones.
3.  They are willing to let me go to another bank without even trying to accommodate my needs
4.  Their internal bureaucracy and inconsistencies are getting in the way of a good customer experience

So, now that I know I am more than they deserve, what do you think I will do?

*see original post at Customerspective