Internet Banking: How can Banks Enhance Channel Maturity? (Part 1)

Internet banking enables banks to perform many functions that are much more expensive to perform using the traditional banking channels. Most of the tier 1 and tier 2 banks have made significant investments in making the Internet Banking channel available to its customers. To make the investments in alternate channels good, banks worldwide have realized the importance of migrating customers on the self-service channels and are making considerable investments in channel migration campaigns.

Most of the banks view and measure channel migration in terms of traffic, number of new registrations and number of active accounts. Although these parameters offer a quantitative view of channel penetration, they fail to provide an insight on ‘channel maturity’ – the degree of adoption of services offered.

For banks to realize full set of potential benefits offered by Internet Banking, the scope of channel migration campaigns must be broadened – from acquiring customers on channels to include ‘channel maturity’- maturing customers on channels.

Enhancing ‘channel maturity’ is an ongoing process that works to improve two key aspects – awareness and adoption of services. It aims at improving customer awareness about tasks that can be performed on self service channels and maturing customers from performing basic informative functions to more advanced transacting functions.

An effective ‘channel maturity’ strategy can be devised by monitoring and measuring level of channel awareness and channel usage. This knowledge of user behavior, when viewed in light of a behavioral segmentation approach will help banks apply an appropriate strategy for each customer segment to achieve precision in channel maturity efforts rather than adopting a “One Size Fits All” approach.

Understanding Customer Behavior is the Key

Currently, the potential of internet banking is underutilized by most banks. The efforts to improve adoption rate fall short to achieve the desired results; primarily because of untargeted generic campaigns. Let alone the channel maturity, even the channel migration efforts by most of the banks lack a well defined approach. This leaves banks with high migration costs and unpredictable and low conversion rates.

The process of building a successful channel maturity strategy must begin with a focus on:

1. Thorough analysis of customer behavior by monitoring the usage of services offered and understanding the channel awareness levels.

2. Customer segmentation based on customer activity on internet banking channel.

3. Identification of offerings that can improve stickiness and motivate customers to mature to performing more advance functions

4. Designing targeted campaigns customized for each customer segment

Given the evolving state of internet banking, the degree of channel awareness varies and includes awareness about speed, technology, convenience, ease of use, services offered, security of online transactions etc.

The ‘services used’ parameter measures transaction-centric functionality used by customers. The classification of channel offered services that each of the four segment use assumes inclusion and adoption of lower level services and is a measure of growing awareness as well as channel maturity.

The author, Anand Kulkarni, is a business analyst / consultant by profession and can be reached at or on LinkedIn. All the views expressed in this paper are those of the author and not Intuit Financial Services.

Written by Anand Kulkarni