Let’s Chat: Online Text, Video Create Competitive Advantage for Banks, Credit Unions

By Kurt Bager, CEO of Netop

Not long after online banking began to go mainstream in the 1990s, industry analysts sounded the death knell for brick-and-mortar branches. Once customers get comfortable banking on their home computer, the theory went, they would no longer get in the car and drive to the local bank branch. The advent of mobile banking has only increased the volume.

But two decades later, bank branches have yet to go the way of the local corner cobbler or CD store. Although the number of transactions performed in bank branches continues to decline, banks continue to open new branches. Across the United States, annual growth is in the double digits, the Economist Magazine reported earlier this year. The reason why is as clear as more and more customers look for the reassuring tone in a teller’s voice as she helps customers complete transactions or answer banking questions.

The reality is, customers may appreciate the convenience of online banking, but the vast majority still seeks interaction with a real human being when they have banking and finance questions. If this human connection is not available, customers aren’t the only ones who lose. Banks and credit unions surrender one of their best ways of differentiating themselves from their competition and building customer loyalty.

It’s safe to say that the boom in brick and mortar branches is not practical or sustainable in today’s turbulent banking sector. To remain competitive, banks and credit unions need new ways to boost brand loyalty and conversions, but they also need to keep overhead costs as low as possible. Essentially, they are looking for ways to merge the personal touch that customers receive in branches with the convenience and cost effectiveness of online banking.

Many industries, from retail to health care, have already embraced live chat to improve their online customer care. These services provide a simple, unobtrusive way to exchange text messages or conduct live audio-video conversations with a customer service representative. The connection is made when customers click a button on the bank’s website and provide a brief explanation of their issue. Alternatively, online representatives can proactively request a chat if a customer appears to need help.  There’s no software to download or configure. Many computers already have the necessary hardware if customers opt for an audio-video rather than text chat.

Financial institutions are commonly among the last major industries to adopt new technologies. This helps ensure security issues have been addressed before banks and credit unions entrust the technology with their customers’ highly sensitive financial information.

Online chat services from established service providers like Netop, a company with more than two decades of experience in online chat, have matured to the point that even the most cautious financial institutions can rest assured.

Early adopters of online chat have gained a clear competitive advantage over slower-moving banks and credit unions. These institutions understand that the convenience of electronic bill pay and other online services may be essential for maintaining customers today. But these series do little to build customer loyalty or convince customers to switch providers because they are transactional, impersonal and generic. They’ve become commodities that do little to differentiate a provider.

Nykredit, Denmark’s fifth-largest bank, recognized the value of live video chat long before most of its competitors. It deployed Netop Live Guide, an industry leading live chat and video solution, to its online banking site in 2007 to build trust and increase human interaction with its customers online. “Personal contact and trust are crucial (with) personally sensitive issues such as finance,” said Thomas Egede Kragh, assistant director for digital channels at Nykredit.

Once trust is gained online, the rewards can be sizable. Wells Fargo, another early adopter of live chat, noticed a double-digit increase in online conversions for home equity loans after introducing a live chat solution in 2002.

Early adopters also have noticed that live chat improves the quality and the efficiency of their customer service, both online and off.  Customer service representatives who get accustomed to live chat are able to serve multiple customers at one time by toggling between online conversations and using prewritten responses to common questions.

Nykredit implemented video chat as both as an independent advice channel and the first step toward a traditional, face-to-face meeting, Kragh said: “Customers have varying needs and varying wishes as to how they want to be served.”

With live chat, he added, “it is easy to determine whether the customer’s problem can be solved online or whether it would be better to get together in person.”

For more information about the competitive advantages that banks and credit unions can gain by using live chat, visit www.netop.com/live-guide.  You can also download the white paper “Customer Service 2.0: How Financial Institutions are Driving Online Conversions & Building Customer Loyalty” here.