Boston, MA, USA
October 17, 2001
Customer Retention and Cost Savings Drive Online
Banking ROI
Report Published by Celent
In a new report titled
“Finding the ROI from Online Retail Banking Applications” Celent
Communications assists financial institutions in determining the
possibility of profitability and reasonable expectations for a
comprehensive internet banking platform.
 Over the past few years,
Internet banking applications were expected to revolutionize the banking
industry and pave the road towards dramatic cost savings, extraordinary
customer acquisition techniques and a competitive tool to combat customer
attrition. Today, virtually
all major and second-tier banks (banks with at least $30 billion in
assets) have implemented transactional Internet banking. Applications
included in these platforms include online bill payment, electronic bill
presentment and payment (EBPP), account aggregation and online lending.
However, the fall of the
Internet economy has caused some firms to re-evaluate their Internet
offerings, questioning their monetary benefits.
Financial institutions in particular are questioning whether their
current and expected online applications will indeed lead to profitability
or if the institutions instead fell victim to the dot.com era of overly
optimistic expectations.
 The report is based upon
a return on investment (ROI) model constructed by Celent Communications
that is in turn based upon industry standards and discussions with
financial institutions. “Often
we see ROI models that are either overly optimistic or one sided –
addressing only the benefits or costs of an application,” reports Ariana-Michele
Moore, co-author of the report.
“Celent wanted to establish a model that takes into
consideration both the cost and benefits, as well as realistic
expectations. What we
discovered is that financial institutions that implement a comprehensive
suite of internet banking products can expect to reap significant
rewards.”
Most of the benefits from
a comprehensive online banking platform are derived from cost savings and
customer retention. “Banks
are discovering that active users of their online banking services are
much less likely to jump ship to another institution,” adds Neil
Katkov, co-author of the report. "A rich Internet banking
platform improves not only the stickiness of the site, but more
importantly, the stickiness of the bank itself." Celent concludes
that a comprehensive online banking platform can increase the value of an
active online customer by 25 percent.
In this report, Celent
Communications addresses both the costs and benefits of online banking as
well as online bill payment, EBPP, account aggregation and online lending.
In addition, Celent Communications offers insight into how
financial institutions can maximize the ROI on their investments.
A Table
of Contents is available online.
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