Women as Banking Consumers

A top 20 U.S. bank will exclusively offer financial services on iVillage. iVillage has over 7.3 million visitors (mostly women) a month. The site will ask visitors what they want in financial products. Currently, e-commerce users are roughly 50-50 between gender. Since they are connected, naturally they have higher income. This means that women should most certainly be targeted for online products. A U.S. News & World Report study indicates that about 80% of all paper checks are written by women. This fact might not appear to be meaningful for marketing. Paper checks still account for over 96% of all check transactions. E-checks of various sorts cover the remaining 4%. An analyst could see three scenarios: (1) Allow Internet banking trends to follow their own course; (2) Actively shift the mass women's market away from paper-based checking and banking; or (3) Consider how to make the checking account product as paper more valuable to women.

Disintermediation -- What to Do Next?

E-commerce will make or break certain industries. What can banks do? Banner-laden Web portals just don't secure enough loyalty. A major bank announced that it will offer e-commerce to small business. For a transaction fee, merchants get this package: an e-commerce site, cash flow and inventory control, and discounts. Some question the potential. Technical glitches are dangerous. However, some risks need to be taken. Some disintermediation is hidden, causing banks loss in both transaction value and data mining. Annually, up to 20 billion checks (out of 67 billion) are presented at POS. Online grocers offer repeat purchase and food content information. Like 95% of e-commerce, it's by credit card. Here, checks and banks fall out of the equation. But one woman journalist admitted that she'd never give up real visits.

POS Customer Relationships

Anecdotes generally don't make good strategy or policy. But even Greenspan, after buying on the Web, concluded that convenience, not price, matters on the Internet. Some banks cross-sell at the window, as one did with me for a home equity line. At another bank, a teller supervisor grandly announced (within earshot of other tellers and customers) that a large deposit I was making must have been for "winning a prize". As much as virtual customer intimacy is critical, personal contact has greater impact, either way. In the end, customer relationships have to be nurtured one customer at a time. Today, each financial services firm needs to establish and secure "virtual customer intimacy." Touch points win or lose customers. A 1% attrition in deposit account customers leads to a $30-40 million drop in net income for major banks. Such banks lose 15-20% of their DDA customers annually. Attrition, whether in virtual or real channels, is still very real.

"Bear in mind that the consumer is not a moron. She is your wife. Don't insult her intelligence."
David Ogilvy

The CEO Footnote . . .

Cell phone banking is almost here. The world has 300 million PC owners, but now 400 million cell phone subscribers. Cell phones already passed PCs in new unit volume sales back in 1996 (old ones do well also -- 25 million circulate in the U.S.) Microsoft, understandably, wants them to be used like PCs. Banking channels, once neatly separable, will continue to merge. Banks will survive if they retain the power to manage money and data valuable to retail and business customers. If Internet currency ever takes hold, banks become just holders of data, whether customer data, currency or another exchange unit. Until then, perhaps there is a play on cell phone banking.

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