1. MIS 3090: IT for Financial Services Online Banking and Financial Portals (Account Aggregation and CRM) October 5, 2015

2. 2/18 “A Survey of Online E-Banking Retail Initiatives” CACM article 2004 Examines paths banks are taking to put their services online. Predicted that there will be two types of banks left: Very large ones Small niche ones that compete using portals E-banking should be the focus for gaining competitive advantage in banking industry

3. October 5, 20153/18 Survey Methodology Studied two different segments in U.S. retail banking wrt differences in their e- banking strategy Five largest banks, and Five random community banks Broke web features into five main areas

4. October 5, 20154/18 Web features studied Informational Administrative Transactional Portal Others

5. October 5, 20155/18 Results of survey Smaller banks focused more on external portals while large banks focused on using internal information and services Smaller banks focused on local accessibility Bundling services was more important to national banks Smaller banks could offer a unique bundling opportunity Limited wrt wireless applications Three classes of banks evolving: mega, niche, and barely alive Web-wise

6. October 5, 20156/18 E-Banking Opportunities Eliminates geographical boundaries for customers Products and services can be tailored to individual needs; i.e. mass customization (CRM) Self-service features allow customers to do more and provide greater satisfaction Smaller banks can mine their niche by showcasing local community activities and offering multi-lingual sites

7. October 5, 20157/18 Portals Enduring and profitable Customer Relationships Financial Portal Strategy Aggregated content from a variety of external providers Creation of a central point on the web where consumers can handle all of their financial affairs Types of Portals

8. October 5, 20158/18 Financial Portals  One-stop financial management solution  General notion of online banking with the addition of non-banking services including brokerage, insurance, bill payment, investments, etc…  1-to-1 relationships with customers leading to better understanding of customer requirements and identification of leverage opportunities – price, convenience and value-added services – drive new business (customer retention vs. acquisition) – increase cross sales to existing customers – increase service quality (increase switching costs) – reduce service costs (reduce transaction costs)

9. October 5, 20159/18 Aggregation Service Bank A Login & Password from Internet Bank B Account info Aggregator logs in masquerading as customer Aggregated View of Accounts How Aggregation Works

10. October 5, 201510/18 Yodlee

11. October 5, 201511/18 PROBLEM!  Messages are scraped in HTML only  This describes data appearance but not the meaning of the data  So… the aggregator must know exactly where on the external website the account balance is situated  Anytime there is a change in the layout or design of the website, the aggregation must adjust their scraping algorithm which needless adds cost and complexity to their business model Screen Scraping

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13. October 5, 201513/18 Individuals Banking Online Laudon & Traver, Ecommerce, p. 591, Table 11.1

14. October 5, 201514/18 Financial Supermarket Model Laudon & Traver, Ecommerce, p. 594, Table 11.7

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18. October 5, 201518/18 Non-Financial Institutions  Projected boom in online investment and banking has also attracted non-financial institutions  Financial portals provide comparison shopping services and steer consumers to online providers for independent financial advice and financial planning  Generate revenue from advertising, referral fees, and subscription fees  Financial portals add to the online price competition  Thwart the ambitions of the large banks that would like to lock consumers into a single branded financial supermarket in which switching costs from a single, all purpose account would be considerable

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23. October 5, 201523/18 For Next Class…  To do list: − Read the Bank of Ireland case − Check out some online mortgage and borrowing sites such as www.lendingtree.com, www.eloan.com or www.ditek.com www.lendingtree.comwww.eloan.comwww.ditek.com