Is it just me or have you noticed that the pages behind the login for your bank haven't changed much in the last 5 or 6 years?

According to the omnipresent Wikipedia, Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in October 1994. Interestingly, while the Gramm-Leach-Bliley Act introduced some important elements to support internet banking, it wasn't until 2002 that the The Office of the Comptroller of the Currency issued final regulations on the use of Electronic Banking for US-based banks. This informs another key innovator's dilemma. That of trailing regulation. In fact, it's also indicative more broadly of the speed at which the banking industry adapts to changes of the significance of the introduction of the Internet. Far too slow for the rate of change that is occurring these days.

Excuse me sir, your Internet banking is looking a little tattered...

I wrote recently on The Finanser's Blog about the problem of lack of investment in Internet banking by the mainstream banks. The issue is that when you categorize Internet banking internally as a channel where you migrate customers to reduce cost, the initial impetus for investment in Internet banking is just getting the required functionality in place - once in place, and cost savings on-track, it's hard to get further investment in the customer experience behind the login because it's already doing its job.

The problem is - it isn't doing its job.

The assumption that internet banking behind the login is about transactional costs savings for the bank is a very bad assumption. It assumes that customers are using the channel to save the bank money, when customers are actually using the channel for convenience and to increasingly engage the bank on the fundamentals of day-to-day banking. The increase of online banking usage just doesn't want to slow down because of this behavioral shift, and unless banks understand and adapt to this shift, their internet banking platforms will increasingly isolate customers who want more convenience and control. Here's how comScore, who has been measuring this since 2006, characterizes the relentless take-up of internet banking:

Since the inaugural comScore online banking report in 2006, the number of DDA customers visiting the top 10 online banking sites has increased from approximately 40 million people to more than 58 million people. In any given quarter, nearly 60 percent of the total U.S. Internet population visits at least one of the top 20 financial institution (FIs) sites.
Comscore: 2010 State of Online Banking Report

This is played out across the world. In looking at data on major website and internet banking redesigns, the fact is that since the launch of Internet banking in the last 90s and early 2000's most banks update their public website's look and feel every couple of years, whereas they've only updated behind the login capability every 3-5 years at most and in general the last round of updates was largely cosmetic. And yet, the growth keeps coming...Look at the statistics for Commonwealth Bank of Australia for monthly logins between 2007-2010 as reported in The Age of August 12th, 2010.

Year CBA Monthly Logins

2007        18.5mil
2008        22.9mil
2009        29.3mil
2010        35.6mil

See more details at CommBank Investors site

That's a 92% increase in usage between 2007-2010. This trend is borne out the world over. Internet banking usage is increasingly not only in that a larger portion of the population is logging in, but that existing customers are logging in more frequently. So if Internet banking needs more than just a facelift, what exactly does Internet banking need to become to capture the behavioral needs of the customers who are using it?

More than bill pay - my financial control tower

What I need more than a transaction dashboard, more than pure functionality is something that helps me manage my finances. Right now Internet Banking is to intelligence, what an old mainframe dumb terminal is to an iPad. Extremely primitive. There are some solutions out there right now that do an admirable job of personal financial management, I'd rank Geezeo's and Yodlee's toolset and Mint as solutions every bank should be looking at. Geezeo has taken it once step further of recent times with their customizable widget/dashboard approach.

The thing is most banks are not yet using PFM and many claim the jury is out on whether or not PFM really generates strong ROI. Intuit certainly sees differently, their acquisition of Mint late last year for US$170m is telling - they see the future in managing the finances of individuals.

The top three activities within Internet banking are still checking account balances, transfers and bill payment. But just adding PFM functionality is not necessarily going to be the answer to solve the flagging, lagging development of the world behind the login. More is needed.

The future of behind the login

What customers will be looking for from their Internet banking portal moving forward is more control. More than just offering the ability to pay bills, customers will be looking for integrated bill management - this is not just direct debit services. Customers will be looking to see a consolidated view of their billing relationships, and have their internet banking dashboard help manage bill payments automatically. This will require banks to be integrated in respect to data with utility companies, telecomms network operators, cable companies, and the usual suspects. The Internet banking dashboard will become the place I go to see my aggregated monthly expenses, drill down on individual accounts and statements, and setup rules for automated bill management.

On the products side, banks are going to have to start to get a lot more proactive. For example, if I have a lump sum sitting in my savings or deposit account, the bank could show me how much interest I could be earning if I invested that in either a term deposit, CD or in something more exotic like an equity-linked investment. On my credit card statement, that large ticket item purchase you made last month...the bank could offer to put that on a 12-month payment plan at a lower interest rate. Observing that you do a lot of travel, the bank could proactively upgrade your credit card to a deal that gets you free air miles with your favorite airline.

In addition to those more obvious elements, the whole multi-channel thing will start to come into play here too. For example, the dashboard will also let me manage alerts. Increasingly we'll have to handle of whole lot of messages in respect to ingoing and outgoing payments, warnings about upcoming bills where your balance is short, location-based offers for retailers that you frequent and where you get a discount for using your NFC mobile enabled credit card, and other trigger-based alerts or offers that you subscribe to.

Mobile has to become one of the primary acquisition tools that banks will use in the future, but to ensure that this channel is not abused by overeager marketers, we'll need a filter mechanism. That means that you'll need somewhere to tell the bank what you will and won't accept being sent either by SMS or to the the apps that you utilize on your smartphone. The Internet banking dashboard will need to manage all of this - it will be a critical tool in managing the multi-channel relationship.

If you're a bank you better get serious about investing behind the login - you've got a long way to go.

If you are on the corporate banking side, stay tuned...I'll talk about corporate Internet banking dashboards next