A few weeks ago I teed off on Internet banking vendors’ financial problems. While this crowd is indeed improving and growing revenue, running lawless like untethered loons are the smoke and mirrors and blue sky projections offered to soften the landing of free falling bottom lines.
With this in mind, here are some practical strategies to protect your bank when trolling for the right online banking vendor:
ROI Ay Ay
Don’t listen to the vendors about retail Internet banking paying for itself. Wasted is any time you spend trying to ROI-justify the project. You are not going to make money from retail Internet banking. You have to offer it and there are opportunities in using it, but you are not going to make money from it. Nobody charges for the basic retail service, and any revenue you collect from bill payment will be a wash. Intangibles such as customer retention and cross-sell opportunities have minimal hard value and few success stories. Retail shopping portals, once touted as revenue machines, are now sold as kitschy, me-too features. Concentrate on the cost side of the equation and save the ROI analysis for projects that have a chance for a Return.
Go as short as possible in your Internet banking contracts. This industry remains ripe for rampant consolidation. While a merger or acquisition of your online banking vendor could help you, too often it means that the product you use will be forgotten or sunsetted by the acquirer. (Ask the hundreds of former nFront, Edify, Homecom, CFI and Cavion customers how mergers tend to play out.) Having your Internet banking vendor fail or get acquired is one thing; having that happen in month four of a five-year contract is an embarrassing something-else altogether. Hedge your bets and keep your contract as short as possible – two years or three at the absolute longest.
Pay Attention to Bill Payment
Avoid making bill payment an also-ran in your selection process. Bill payment is a chief reason that high-end consumers use Internet banking, and it is one of the biggest generators of customer complaints. In general, avoid using your Internet banking vendor’s homegrown bill payment product. Choose, instead, one of the more established bill payment vendors in the market – such as CheckFree, Princeton or Metavante. If your Internet banking vendor craters, you can switch retail products with relative ease and minimal customer impact. However, switching bill payment vendors is a heavy and jagged logistical brick to the skull of each of your bill pay customers.
Nearly all of the Internet banking vendors are sucking wind, hard, so practice safe selection to protect your bank (and your own reputation).