Gartner Says Banks Should Give Customers More Tools to Manage Their Money

Helping Customers to Better Manage Their Finances Will Reduce Costs for Banks

STAMFORD, Conn., March 11, 2008 —

Enhanced functionality for online banking, automated teller machines (ATMs) and contact centers can help banks to cut operational costs and lower bad debt losses, according to Gartner Inc. Analysts said that by adding features and tools to established applications that encourage customers to manage their money better, banks can meet some of the short-term cost and revenue challenges that they themselves are currently facing.

“With banks coming under increasing pressure to deliver a range of short-term cost savings, the ways that banks interact with their customers will become increasingly important in managing costs downwards,” said Alistair Newton, research vice president and industry services director at Gartner. “There are a variety of ways in which banks can help customers save money and better manage their exposure to debt while saving the bank money by encouraging greater use of self-service applications.”

Mr. Newton said that banks should set themselves one-, three-, six- and 12-month targets to extend current technology strategies that focus on adding tools to customer contact sites and afford customers better access to external data and information. Gartner has identified the following strategies to enable customers to better manage their finances and permit banks to broaden account relationships with their customers:

Debt Counseling
Banks need to make access to these services as easy, discrete and without stigma as possible. Providing an easily accessible link on a bank’s corporate and Internet banking Web site will enable customers to quickly and conveniently access the bank’s debt counseling services. Banks should also consider extending established online customer service functionality, such as the bank’s call-back service, and that secure instant-messaging (IM), chat and e-mail would all make access easier and enable customers to specify convenient times and places for the bank to call them.

Cash Flow and Money Management
The growth of finance-based online social communities, such as Wesabe, Geezio and Mint, and the growing importance of finance gurus and price comparison Web sites illustrate that many consumers are keen to better manage their finances. Banks have traditionally seen these as more of a threat than an opportunity. However, Gartner maintains that such communities can be of long-term benefit to banks, especially if they are able to encourage more debt-exposed clients to manage their funds more effectively. Banks should allow customers to aggregate their own banking data more easily online, ensuring that they can easily use social networks and other online tools to manage their budgets.

Account Consolidation
Banks should be helping customers consolidate accounts with switching packages focused on helping customers reduce their overall bank fees from holding multiple accounts. Switching packages could be bundled with other services such as debt counseling and financial management software as long as they take into account location regulations.

Provide Cost-Saving Data
By providing context-sensitive information on how to reduce expenses and save money based on a customer’s established accounts, banks can help customers save money while enhancing the customer-bank relationship. Gartner said that to be useful for customers, the advice and information should be personalized and focused on particular spending patterns such as more cost-effective insurance or loan repayment options.

Migrate More Consumers to Open Their Accounts Online
As part of a strategy to encourage customers to manage their money more effectively, banks should be providing all their customers easier access to more online accounts, which often pay higher rates of interest and attract lower fees but also cost less for banks to deliver.

“Each of these strategies requires banks to amend or add to the technologies they are currently deploying to help manage their customer interactions; however, in each case, the extent of these additions or amendments is minimized to accommodate the short time frames,” Mr. Newton said.

Additional information is available in the Gartner report “Help Bank Customers to Help Themselves and Their Banks." The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=611807&subref=simplesearch.

 

Contact:


Christy Pettey
Gartner
+1 408 468 8312
christy.pettey@gartner.com


About Gartner:
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.