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The Online IQ of Retail Banks: Feeble or Genius?

A report from L2, a digital think tank at NYU Stern, attempts to quantify the digital competence of 17 retail banks and 10 credit card issuers, ranking each on an IQ scale.

The Financial Services Digital IQ Index scored each financial institution along four key factors: website, digital marketing, mobile and social media. Those with a combined IQ score above 140 were classified as “genius,” followed by “gifted,” “average,” and “challenged.” Those with a score below 70 were labeled “feeble.” More than two-thirds of the financial services brands were ranked as “average” or above, with 48% achieving “genius” or “gifted” status.

According to a separate study conducted by the ABA, 44% of consumers ages 18 to 54 choose online banking as their preferred channel. And yet despite financial consumers’ vote for browser-based banking, the L2 report points out that the industry allocates only 12% of its marketing budgets to online channels.

“Some brands get it, and are allocating substantial resources to digital,” says Scott Galloway, Professor of Brand Strategy at NYU Stern and author of the report.

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Bank Brand IQ Level of Online
Intelligence
BofA 153 Genius
Citi 123 Gifted
Chase 122 Gifted
ING DIRECT 122 Gifted
Wells Fargo 118 Gifted
Capital One 110 Gifted
PNC 95 Average
TD 94 Average
SunTrust 93 Average
BB&T 92 Average
US Bank 88 Challenged
Union Bank 75 Challenged
Regions 69 Feeble
HSBC 66 Feeble
KeyBank 64 Feeble
Fifth Third 63 Feeble
RBS Citizens 53 Feeble
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The Main Website: Low-Hanging Fruit

“An analysis of brand sites across the Index suggests that many are still stuck in a 1.0 mentality,” the report says. “Most fail to provide touch points associated with a more traditional retail environment. Nearly half of sites do not incorporate live chat or offer cross- sell opportunities, both of which could garner additional share of wallet.”

Empty Inbox

While 66% of consumers say email is their preferred channel for receiving financial information, only 27% of bank brands allow email opt-in through their customer acquisition site. While the majority followed up with marketing emails, none offered emails that linked to social media or were viewable on a mobile device. There is clearly an opportunity to shift marketing dollars from mailbox to inbox.

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Search Wars

Spending by the financial services industry for online “paid search” advertising was up 78% year over year in the first quarter of 2011, while click-through rates declined 35% and traffic to brand sites in the study remained virtually flat. 41% of banks were purchasing competitor brand terms. For popular brand names, as many as four banks bid against each other.

Social Media Wallflowers

“For an industry built on relationships and community, few bank brands have been able to translate their offline tactics to the new social ecosystem,” Galloway wrote in his report. “Many are still trying to determine how to incorporate Facebook, YouTube, and Twitter into their marketing mix.

Facebook

Only 28% of financial institutions have a Facebook page for their overall brand. Instead, they like to create separate pages around episodic marketing programs and sponsorships. Because their Facebook strategy has not been anchored around brand pages, the number of “likes” in retail banking trail behind those of other industries.

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The Twitter Teller

Of the 68% of banks using Twitter, two-thirds provide real-time customer service through the micro-blogging platform. Of those, 80% have an account on Twitter dedicated solely to customer service, and 70% use faces of the representatives to humanize their online profiles.

Mobile Mania

The financial sector is one of the most sophisticated when it comes to providing mobile capabilities for  consumers. Most brands are taking a multi-pronged approached to their mobile strategies, providing a buffet of options including apps, dedicated mobile sites and SMS alerts. More than two-thirds of the brands host a mobile site or app.


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Comments

  1. JP,

    I think this study is being rather generous :)

    There’s a lot of work on basic engagement to do. One of the key factors that wasn’t measured here is engagement behind the login. 90%+ of daily traffic to bank websites goes behind the login, so how are banks converting that? That’s a key data set missing here.

    Brett King
    Bank 2.0

  2. Brett, if you look at the methodology on page 5 of the report, you’ll see they evenly weight the four categories: website, digital marketing, social media and mobile. Personally, I think social media does not warrant 25% of the total score. And one could argue about the significance of mobile right now — is it 25%? And you’re absolutely right: where is the online banking component? My guess is that they didn’t feel like taking the time to open accounts at 17 banks to test OB.

    On page 4 of the report, it says, “Like the medium we are assessing, our methodology is dynamic, and we hope you will reach out to us with comments that improve our approach, investigation, and findings. You can contact me at [click here for author’s email].

  3. It looks like these guys have developed a standard set of criteria to assess the players in different industries. What they have failed at badly is understanding the difference between buying a new pair of shoes and paying your bills.

    While the criteria are valid to an extent, the equal weighting of social, and the absence of any mention online banking makes the whole thing pretty useless.

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