Profiles in IT: Banking on Online
An early approach to making e-commerce work by focusing on customers and customer needs—while still using the Web in innovative ways.
If the short and often inglorious history of dotcoms has proven anything, it's that the surviving companies are those that offer genuine value and convenience to customers. KeyCorp, an $86 billion financial services company based in Cleveland, designed its online banking services around those goals when it began exploring the Internet's potential four years ago.
Historically, the bank's online services were viewed as an outgrowth of its other electronic offerings, including its ATM network and call centers. "It seemed like a logical extension, another growing, budding electronic delivery channel called the Internet," recalls Patrick Swanick, president and CEO of Key Electronic Services, the KeyCorp subsidiary that handles the firm's electronic banking services. The subsidiary was formed in 1997, around the time when Internet banking and electronic services were starting to make an impact in the financial services industry. "We felt it was necessary to have a dedicated approach, corporatewide, to our Internet efforts," Swanick says.
"The thinking was that we really needed to take a customer-focused approach to these electronic vehicles, and the Internet would be no exception. One of the basic guidelines ... was that we were going to make sure that any online offerings would be integrated with offerings in the ATM network, the branch bank network and the call center. We built our Internet services in such a way that clients got the same information—updated and in real time—no matter what access mechanism they chose to use. That was very different—and is still quite different—from some of the larger banks because most of the larger institutions today have multiple legacy systems that don't talk to one another."
Swanick's own background is in business, not technology. He has an MBA in management, and although the positions he's held since he joined KeyCorp in 1992 have often touched on technology, he is not a technology expert himself. "I would say I know enough about the technology to ask the right questions in most cases," he says. "The thinking [when Key Electronic Services was formed] was that technologists could certainly make the technology work, but they might not have the business or financial background to understand how to make money at this or how to make sure the customer and the company benefited."
Uniform information across KeyCorp's customer touch-points doesn't mean the bank's online services merely duplicate branch and telephone banking services, however. Although general goals—the bank likes to build multiple-product relationships with customers, for example—serve as marketing touchstones for Key Electronic Services, the subsidiary also exploits the strengths of its electronic channels to build new services.
"The technology has enabled us to do more and provide a richer service overall to the client," Swanick says, "but what we focus on with customers is letting them choose how they want to access us. We have some tools and products that are available through technology online, but you can always call your relationship manager or your account officer and get the people side of things, if that's what you want."
Many of KeyCorp's online services are by now fairly common among banks. Included in those are checking account balances and electronic bill payment. KeyCorp, incidentally, charges for online bill payment. It is, the company reasoned, a value-added service, and if costs were kept at reasonable levels and customers perceived the value-add, they'd be willing to pay the fee. In fact, KeyCorp's line of thinking proved correct: 24 percent of its online customers use electronic bill payment—one of the highest percentages in the industry, Swanick says—and the fees provide a nice income stream.
But Key Electronic Services is also using the Web to provide some unusual, cutting-edge capabilities to its retail and small business clients. Recently, for example, the bank began offering its customers online budget management capability with features similar to Quicken. Customers with PDAs or Internet-enabled cell phones can access at their account information and pay bills via Key's wireless services. The bank also operates a business-to-business marketplace, called KeyProcure, for its business customers, and clients can select and apply for IRA accounts online as well.
The newest service, which was scheduled to go live in September, is an aggregation service that lets customers view not only their KeyCorp accounts, but also brokerage and other bank accounts. "Customers would provide us with information about their account relationships with other providers—like Schwab or Fidelity—and we would go to those Web sites and, using passwords that customers have provided us, pull back information to give them a combined, aggregated view of all their financial relationships," Swanick explains.
"We want to be the trusted advisor, the relationship advisor...and bring clients solutions that help them manage their financial affairs. We want to go beyond the basic deposit and loan products of banking and extend out into more of a lifestyle focus—saving for retirement, dealing with a child's education—those kinds of things."
Key Electronic Services' approach wins awards—KeyCorp recently ranked among the top 100 e-businesses in an Internet Week survey, and it has scored high in other rankings as well. But more important, its approach wins customers. Over 350,000 customers—about 21 percent of the total—are enrolled in its Internet services, using them to manage their accounts online, pay bills, and so on. Over a million unique visitors log on to the www.Key.com Web site every month, some just looking, others applying for loans or credit cards.
Bob Mueller is a writer and magazine publishing consultant based in the Chicago area, covering technology and management subjects.