Financial Services Firms Face Data Constraints OnlineThe short history of Internet use has so far limited the amount of actionable data available to financial services firms. Yet the increasing diversity of Netizens combined with improvements in measurement technology will, over time, give online marketers data similar in depth to that available offline, according to e-strategy firm Mainspring.
Financial services firms thus must take a "learn as you go" approach to collecting and analyzing consumer information. Currently, not enough data exists on online financial behavior to group consumers into common clusters for targeted e-mail campaigns.
"In the physical world you have list firms and postal software and a whole lot of experience in how data matches up," said Patricia McGinnis, managing director of Mainspring, Cambridge, MA. "Online, you have a different type of data with a limited history, not enough history to have a match."
Many companies that have customer data that could decipher online tendencies lack the data mining infrastructure to bring that information to the Web in a timely way. While banks can track how many times a customer visits a branch or uses an ATM, their databases lack an element to track online transactions. To include this activity will require adding design features to existing databases, McGinnis said.
Banks and their credit card offshoots are making more strides than securities and insurance firms because of less online competition and a lack of competing sales channels of brokers and agents. Nine of the top 20 banks, in fact, have launched customer-centric e-commerce initiatives and are deploying other new Web technologies in an effort to build greater market share, according to Mainspring's report, "Deploying Competitive Web Sites."
Banks are leveraging that lead by adding brokerage services to their existing online offerings and building brand through portal partnerships. Among the partnerships sewn up are Citibank-Netscape, Fleet Financial-Goto.com, Fleet-Lycos, Bank One-Excite, First USA-Yahoo and Bank One, FirstUSA-America Online. Insurer John Hancock has gotten into the act by partnering with the Microsoft Network.
"In the search for consumer market segments, banks have a lock on a lot of relevant Internet real estate," McGinnis said.
Partnerships have evolved to where banks are paying for performance, such as click-throughs or some other measure, rather than mere positioning. The banks want to know who rather than how many click through their ads, she said, and more partnerships are capturing those variables.
As technology improves, measurements will get more sophisticated and capture a better variety of behaviors until the complexity of the online data will match that available offline, McGinnis said.
More than 120 customer-focused Web sites of banking, brokerage, mutual fund and insurance firms were surveyed to measure current levels of functionality. The overall rating of financial sites was not very strong, and Mainspring has concluded that plenty of room for improvement exists for both traditional and online-only competitors.