Tuesday, November 20, 2007

Enabling Premium Online Banking Services

Back in 1959, American Express issued their first charge card. Then in 1966, they introduced the Gold Card, and in 1984, the Platinum Card. This was followed up by the introduction of the Centurion, or "black card" in 1999. Coming this December: the American Express "Plum" card.

Where am I going with this?

The regular introduction of a new premium service tier has proven to be a huge success for American Express. For an increasingly large percentage of the American Express member population, annual service fees have risen from $6 in 1959 to more than $2,500 annually for a Centurion Card today (not counting the $5,000 account activation fee).

Clearly, offering premium service tiers generates revenue. So why is it that no online banks are lining up to charge me a $200 annual fee for "Platinum Online Banking"?

Jim Bruene, who authors the Online Banking Report, believes 2008 is the year that "Platinum" premium online service programs will take flight. In fact, Jim lists "Premium Online Banking Services with a Security Emphasis" third in his list of the Top Fifteen Marketing Tactics for 2008 in his 2008 Planning Guide.

Currently, several banks offer security software suites to their consumers, and typically they earn a bounty on each purchase. However, selling a non-sticky retail product-in-a-box doesn't promote retention - consumers can use the product regardless of whether or not they remain loyal to the site they got it from.

What is needed instead are attractive services that promote lasting relationships, based on technologies that securely and persistently link consumer devices with the bank's infrastructure.

Example 1: Real-time information widgets that update rate information, account transactions, security alerts, investor tips, and financial news - in real time, right on the consumer's desktop.

Example 2: Data backup and restore software, as enabled by our partners FarStone and IBM CDP. This service leverages the bank's extensive IT infrastructure to keep secure and provide access to statements, records of web sessions, expense reports, scanned documents, and "create-once, administer-remotely" personal banking profiles.

Example 3: ID Theft Prevention software, such as our own Authentium VERO Virtual Desktop and Virtual Browser (called VirtualATM in some markets) - software that only runs if first "recognized" by the banks infrastructure, and allowed to execute on the consumer's machine.

I could go on, but you get the idea: software now exists that can add value to a bank's infrastructure, and justify offering a premium service tier consisting of security offerings and services that leverage the bank's existing assets and proprietary market intelligence.

Note 1: If you haven't read Jim Breune's 2008 Online Banking Report Planning Guide yet, I strongly recommend you head over to Jim's Online Banking Report site and buy a copy - this guy is one of the hardest-working people in the industry.

Note 2: Marketers, here's a great story - Amex originally set their $6 annual fee a dollar higher than Diner's Club so they could position their card as the "premium offering".

This initial positioning exercise has to rank as one of the most successful marketing decisions ever taken in the finance industry.

No comments: