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BirdsEye View

the salesman that never sleeps

Quote of the week: "Banking is not waiting for the storm to be over, but learning to dance in the rain". Edward Lett, Bank CEO.

My colleague Matt Volk and I collaborated on the article below. It represents Matt's Millennial view of internet banking, Liat's excellent edits and a perspective that we can all gain from.

Gil started college at UCLA, and I miss him already. It's funny since he's been in prep school for the past four years, but somehow this change seems seminal to me.

Cecilia, mother Monica and father Guy are all doing well. Dick and I had two days of pure joy with Isabella, Cecilia's older sister (3 years old), while mom and dad took care of the new baby. Sharron Aldrich (and so many others) is right: grandparenting is great fun! Pictures are on the website in the slide show.

One thing we did with Isabella is watch Uncle Arik score a 40 yard touchdown, tackle another player to cause a fumble and another touchdown, and play both defense and offense for all but 5 minutes of the game. It was such a thrill! I think the unique workout regime his older brother, Paul, taught him (and Gil and me) is working.

The Jewish New Year has just transpired. In order to ensure it's a sweet year, one is encouraged to eat as many dishes with honey as possible. I applaud this tradition, and offer two recipes (chocolate honey cake and honey cheese cake) as my contribution to your sweet year. Whether you're Jewish or not, baking is always a noble pastime!

I also hope that our volatile industry will soon return to its sedate, boring days...

The Salesman That Never Sleeps

One thing that puzzles me most about banks is their websites. They range in quality from exceptional to exceptionally poor. For those whose websites are sub-par, the question is: what the heck are you thinking? Why do we have so many publicly traded companies with such pathetic footprints on the web?

I am from a different generation. I can barely remember a world without personal computers and, frankly, if I am away from the internet for an extended period of time I start to have the DTs. While not necessarily true for everyone, today, I can't think of single person that does not own a computer nor has access to the internet.

When I see a bad bank website I am baffled. Your website is not just the website for the bank; it IS the bank. The website for a person like me is the branch. In the past four years I have talked to a teller once. The overwhelming majority of my interaction with my bank is through the ATM and the website.

So I am sure some of you are thinking: "Well, we have internet banking so we are fine." This is absolutely incorrect. Strong functionality and look are essential to effectively compete. I know how much capital and time is put into opening a new branch. What confuses me, though, is how so many banks ignore the fact that their websites receive more traffic each day than their largest branch. Few banks spend on the website anywhere near what they spend maintaining their branch network. I just don't get it.

The website is especially important in the current business climate. Banks are failing and depositors are nervous. Do you think the average American evaluates the stability of his bank on capital ratios? If your website is your most trafficked branch, and it looks worse than a teenager's MySpace wall, then you're in trouble. Friends ask me all the time about what happens if their bank fails and if they should move their accounts. Most are completely oblivious to the FDIC guarantee.

Your website is the salesman that never sleeps. I say this from personal experience - I spent some time working for a broker who managed around half a billion dollars of corporate cash using risk free instruments, mostly CDs and Treasuries. When interest rates would drop, we would constantly be fielding calls from inexperienced clients about some CD rate they saw on such and such bank's website. In most cases it was part of a special promotion they were unable to take advantage of, but the point remains: It's not just techno savvy kids roaming the internet looking for a deal; it's also corporate controllers with millions to invest.

Another experience I had with the web-based salesman was with a mega-bank. I was quite impressed by this experience. Over the course of a few months I built up a relatively large amount of money in my savings account to be put toward the cash purchase of a new car. One day, when logging into my account, I was presented with a screen which asked if I would like to make an appointment with a banker to see if I could do something more productive with the money as it was only making .00001% interest in my account. Knowing I was just about to spend the money on a car I clicked "no thanks" and went about my business. The next time I signed on I was presented with another offer for a higher yielding savings account of 3.75% and the time after that an offer for a CD. Although I never pursued any of the offers, I was thoroughly impressed with the persistence and realized how cost effective it must be to use the web to prospect and generate new business. You will never have to pay your website a commission, let alone overtime, for its grueling 24 hour workdays, 7 days a week.

The web does have its draw-backs. It won't give you the warm fuzzy feeling of talking to another human being. You can mitigate this by placing pictures of smiling faces on your website as many banks already do, or, better yet, offer live chats with your representative. Also, continue to maintain access to customer service representatives available by phone, preferably with a minimal automated menu (nobody enjoys spending 10 minutes yelling "CHECKING ACCOUNT" into the phone), to offset the inevitable computer glitches people will encounter.

Another way you can improve your website is by making it easier to use. You can make your website more intuitive, by conforming to standards established by the world's most popular websites. Such improvements can range from propensity-based marketing to the basic colors of your site. For example, white backgrounds are pervasive. They might be boring but it makes it easy to read and find things. For text, most sites use blue for the links and black or gray for the text. Also, keep the site simple. There is no reason to have every single piece of information on the main page. You can easily categorize information and provide links to it. The most trafficked website is Google and its interface is extremely simple.

Also, use your customers for feedback. Customers are primary users of your site; if they think it needs to be improved then it does. It is also helpful to check the websites of the nation's largest banks, who spent a good amount of time and money improving the interface. Contrary to popular beliefs, websites are relatively inexpensive to change and maintain, so this is an area where you can easily compete with larger institutions who may be experiencing deposit outflows due to questions of the stability of the institution as well as the fact that some are exiting businesses to conserve capital. As you know, your website might be the deciding factor for bank selection by many prospects.

In sum, these are turbulent times for the financial industry. Depositor confidence in one's institution is crucial. Your website is an important extension of your institution and you want it to represent you in the best possible way.