Panel: Personalizing Online Financial Products Key

NEW YORK (03/01/2000) - There are so many different types of potential online banking and investment consumers around the world - from those seeking the lowest costs to those who want to bank anytime, anywhere.

That's why the key to capturing the most profitable consumers is to tailor products and content to meet their individual needs, according to a panel of e-commerce experts from the financial services industry who spoke at the Internet & Electronic Commerce (iEC) conference held here today.

For example, DLJdirect Inc., the online brokerage arm of Donaldson, Lufkin & Jenrette Inc., is in the early stages of studying its customers' behavioral attributes and developing products that meet their personal profiles, said John Albrecht, vice president of marketing at the Jersey City, N.J., firm.

The company is using a front-end application it calls a "dialogue manager" to capture every transaction that a customer makes with the brokerage, said Albrecht. That information is then fed into an Oracle Corp. data warehouse to capture personal information about DLJdirect's customers - such as how they prefer to invest and whether they're more interested in buying technology stocks or municipal bonds, he said.

So if a customer has expressed an interest in learning more about, say, fixed-income products, the systems will send an alert to a sales agent who can then follow up with an e-mail or phone call to that customer and provide more information about those products, said Albrecht.

Even though the online broker is in the early stages of using these tools, "it's starting to show tremendous promise" by "driving down" the company's customer acquisition costs, said Albrecht. He declined to quantify the company's results for competitive reasons.

But the early success is key for DLJdirect, since it has elected not to sink as much money into advertising as competitors such as ETrade Group Inc. and Ameritrade Inc. have been doing in their efforts to lure potential online investors, said Albrecht.

Security has been the mantra behind USAlliance Federal Credit Union's nascent online banking efforts thus far. "The biggest challenge we've faced is that our customers - who are primarily technical people - wanted rock-solid security" before they ventured into online banking or investing, said Bruce Simons, senior vice president and CIO at the former IBM credit union in Rye, N.Y., which has 40,000 customers.

After installing 128-bit encryption technology into its online services, 20 percent of the credit union's customers have begun banking online, with 10 percent to 20 percent more getting onboard each month, said Simons. "We've had to do a lot of hand-holding (with our customers), especially with all of these recent (denial-of-service attacks)," he added.

For its part, e-Citi, the online banking and brokerage arm of Citigroup Inc., is talking with a variety of wireless communications partners about providing services to some of the 85 million people worldwide who use cellular phones, said Larry Rubin, vice president of new electronic-business development for the New York-based group.

"We want to reach out and touch those customers that aren't just buying Cadillacs and Volvos - we want to reach out and touch the agnostic play," said Rubin.

That "agnostic play" still represents an enormous, untapped reservoir of customers for bankers like Rubin and Simons. According to Stamford, Conn.-based Gartner Group Inc., one of the sponsors of the iEC conference, only 29 million out of 196 million U.S. adults are doing any kind of online banking or investing today. Noted Gartner Group analyst George Barto, who moderated the panel session, "The endgame (for the financial services community) isn't even in sight. There's still great opportunity out there."

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