April 15, 2012

The popularity of Internet banking has been both a blessing and a curse for financial institutions. On one hand, online banking has allowed banks to widen their customer base and provide a desired channel while simultaneously trimming operating costs. But those benefits come at a steep cost: Moving customers to online channels means less personal interaction, lower customer loyalty, and decreased retention.

The challenge – and the opportunity – for most financial institutions is to reconnect with their online customers. Community banks and credit unions that pride themselves on service can't afford to lose the personal connection that’s so essential to retaining business. Yet that face-to-face interaction is often lost within the online channel. It creates a catch-22 for banks who see the value in online business but are struggling to retain and attract new customers.

Live chat – particularly live audio and video chat – can be a helpful tool in engaging online customers. Live chat combines approachability and human interaction by creating a real-time, contextual dialogue between two people, easily initiated by either party. But a little goes a long way when it comes to a personal touch. It's a simple yet important fact — when a bank is able to provide personal, immediate service within its customers' channel of choice, customer satisfaction increases. It's why many banks are turning to live chat technology to strengthen customer relationships and differentiate their online channels.

Live chat allows banks to easily accomplish the goals of being accessible and personable. When customers visit a bank's site, they can click a button and talk live to a customer service representative immediately. This creates a win-win for both the bank and customer. Take Wells Fargo, for instance, a pioneer in the use of online chat. In 2002, Wells Fargo was trying to improve its online conversion and applicant approval rates, so it implemented live chat. The result: high satisfaction scores, higher loan balances and approval rates for those who chatted and home equity conversion rates that jumped from 30 to 40 percent. And, since live chat representatives can multitask and handle several calls at once, banks can simultaneously save on operating costs.

Customers are equally happy about the arrangement. In a recent survey of over 1,000 online shoppers, 73 percent said that the chat experience positively influenced their attitude about the company they are doing business with. Of those who prefer live chat, 74 percent said it was because they can get their questions answered right away, which brings us back to the point about feeling like a company cares about you.

In the era of Internet banking, when customer retention is a greater challenge than ever, the value of quick answers and personal human interaction is increased. Live chat technology extends to all financial institutions, large and small, the opportunity to fully engage their online channel customers. The return can be measured not only in increased customer satisfaction and retention, but in how well your bank differentiates itself.

Kurt Bager is the Chief Executive Officer at Netop.