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Customer E-Services Problems and Solutions
Customer E-Services Problems and Solutions
Customer E-Services Problems and Solutions
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Caron Green
School of Computing, Engineering and Technology, University of Sunderland,
The Informatics Centre, St Peters Way, Sunderland, SR6 0DD, United Kingdom.
Tel.: +44 191 515 3640 Fax: +44 191 515 2781
e-mail caron.green@sunderland.ac.uk
Abstract
Successful customer capture and retention are critical in the virtual business world,
but it appears that many customers are being lost through the failure of businesses
to anticipate demand and comprehend the possibilities of technical instability. In
particular, many banks do not seem to have totally adopted the internet technologies
that could enable them to offer a full online service. The current state of customer e-
services is examined with particular emphasis on the banking sector. Customers’
alienation with Electronic Commerce systems is illustrated by consideration of the
situation in the UK prior to Christmas 1999. Problems due to poor back-up systems
and e-service demand are then reported. Aspects relating to customer capture and
failures to anticipate demand and provide technical stability are also considered.
Next, particular aspects relating to the e-banking sector are then examined. In
particular the situation of UK online banking and the nature of Electronic Commerce
and e-service are reported. An Internet survey has been undertaken which evaluates
online banking services and the availability of financial products online in the UK and
US. The survey mechanism and evaluation criteria are reported and the results
obtained are discussed and comparisons are made between UK and US sectors.
Finally, overall conclusions are presented with regard to customer e-services.
1. Introduction
Consumer dissatisfaction is the major issue that many of the businesses operating
Electronic Commerce (EC) systems urgently need to address. It is highly likely that
good customer service will be the main factor that will determine, in the future,
whether these businesses survive or fail. The virtual business world can be seen as
a “One-Chance/Customer-Capture-Zone” and online vendors need to listen to their
customers and act on the information obtained in determining appropriate business
strategies for their EC operations. Such strategies must have components that
promote good customer e-service, because this is of highest importance when
relationships are developing online. Also, business lessons appropriate to EC must
be learned if online business relationships with customers are to be successful. In
particular the UK banking sector appears to be to be struggling with the Internet e-
service. The growing number of people joining the Internet should have presented an
excellent opportunity for banks to provide better services to existing customers and
attract new ones. However, the banks and other financial institutions in the UK
appear not to be making enough effort to speed up changes in their infrastructure to
fully incorporate Internet based commerce and offer full banking services through
web sites.
In this paper we are primarily concerned with problems and solutions related to
those e-services that impinge primarily on the customer. In particular we consider the
banking sector and provide comparisons between activities in the UK and the USA.
In section 2 we consider in general terms the customer service problems associated
with EC. In particular, we consider the following aspects: customers’ alienation with
EC as illustrated by the situation in the UK prior to Christmas 1999, problems due to
poor back-up systems and e-service demand, aspects relating to customer capture,
and finally, the problems caused by failures to anticipate demand and provide
technical stability. In section 3 the e-banking sector is examined in general terms.
Subsections here are devoted to online banking in the UK and to the fundamental
nature of EC and e-service. Then in section 4 a detailed appraisal of particular
aspects relating to the e-banking sector within the UK and US is presented. An
Internet survey has been undertaken which has evaluated online banking services
and the availability of financial products online in the both UK and US using criteria
that determine the quality, usefulness, usability and customer e-service factor of
each site. The survey mechanism and its results are reported, discussed and
comparisons are made between UK and US sectors using score analysis. Also,
particular attention is paid to the level of e-service relating to services and products
available entirely online. Finally in section 5 we present overall conclusions relating
to the future of e-services and we highlight the need for EC based businesses to be
customer/service focused and concentrate on building customer trust.
In the UK electronic shopping could have been more of a financial success for
businesses offering goods for sale over the Internet in the run up to Christmas 1999.
Survey findings between November and December 1999 by Shop.org and The
Boston Consulting Group showed that US e-vendors had experienced a four-fold
increase in online sales with 300% growth in revenues and 270% growth in the
number of orders placed by consumers (Bonisteel 1999). The size of orders was
also up by 8% compared with the same period in 1998. Stoughton (1999) also
reports online revenue increases in the US stating that spending tripled at AOL's
shopping mall section before Christmas and Yahoo reported a twofold increase in
orders from their mall gateway. This appears to be good news for US online
businesses. However, there were still reports of US retailers being unable to meet
order demands and delivery times. Important failure situations that became evident
during the 1999 Christmas period often stemmed from the reliance on third-party
providers for services like shipping and delivery. In general customer satisfaction
surveys in the US suggest that online-shopping consumers were happy. However,
unmet demand was still evident with the toy sector having particular trouble and
some toy retail sites were forced to shut down because of demand overload.
However, it appears most leading web retailers in the US learned from the 1998
season and upgraded web servers and other related technology appropriately.
Flood (2000) wonders why the problems experienced with EC during the Christmas
run up were not foreseen. He only comes up with one excuse that he thinks is viable.
The focus was on fixing Y2K problems and this is where the majority of management
and developer attention was directed. However, there are still two basic questions
that need to be addressed in his opinion.
• Why did IT departments let companies go live with systems that had not been
effectively tested?
• Why didn't they think through what would happen if 20,000 customers all tried
to buy things at the same time?
• Fulfilment.
• Shipping.
• Inventory Control.
• Customer Service required to be successful.
These failings in any combination or severity would account for the 62% of online
shoppers who gave up looking for items they wanted to buy online. This particular
figure was based on research covering a 2-month period and reported in Fridman
(1999). Main causes of consumer dissatisfaction and abandonment appear to be
slowness of web sites and navigational problems as in not being able to find the
goods required. Consumers are all too often not given enough information about
where to go and are exasperated by the amount of clicks it takes to get there.
Inefficient usability options in general appear to be a major cause of lost sales online.
The Christmas UK experience online has highlighted many problems that could have
been dealt with. If only companies had looked at the US experience from the
previous year, then many companies could have anticipated and addressed the
problems highlighted above. It is evident that the US is still having some major
problems with EC resulting in huge losses in potential revenues. However, they
appear to have learned from last year's mistakes and as a result have greater
technical stability than the UK. Applying this scenario to the banking sector may give
some indication of what the differences are between the UK and the US in terms of
advancement in e-service.
In this section the e-banking sector is examined in general terms prior to a detailed
comparison between the UK and the US sectors being presented in section four.
The real challenge, according to the Bank of Scotland electronic business director
(e-director), is to re-personalise banking experiences made impersonal by
technology (Wakefield 1999). This director also thinks that physical banks will get
smaller, friendlier and more conveniently situated, perhaps opening up closer to
supermarkets and being part of the Saturday morning shopping. He may be under a
misapprehension here, as supermarkets are already into banking and most own or
have major control of their own retail sites especially those that are out of town and
purpose built. They are not likely to let major banking names open up on or near
these sites without some commercial deal that first benefits supermarkets and then
their customers. The other thing to consider is the growth in online shopping. If more
More Internet banking services are appearing in the UK and one of the latest is an
existing high street bank - the Halifax. They are planning to launch a stand-alone
Internet bank using telephone, Internet, digital television, and mobile-phone-Internet
technology (Nicholson 2000). However, they state that they will not be offering high
interest rates as a loss leader to draw deposits. They intend to compete on the basis
of lower costs saying that their start up costs of £100m are £150m less than the total
spent on launching online rival bank Egg. The Halifax also say they are designing a
new bank from scratch but they appear to be confused as to what an online bank is,
as they expect two thirds of their business to be handled over the telephone with a
shift to online transactions later. They are also still talking with British Telecom about
a web-type mobile phone network. Like many attempts at online business the Halifax
online banking appears to be still a dream of what could be done, not what they are
actually doing. This scenario seems to be typical in the UK bank sector. More is
being talked about than being done, leaving customers who wish to deal with their
entire portfolio of banking needs online with an inadequate number of e-services to
choose from. To offer a full online service, understanding the nature of EC is vital, as
is the need to plan for the future, innovate and maintain in order to change services
to customer needs, which is the key to keeping online customers.
Goodley (1999) states that although the US still leads the way in EC the findings of a
Mori poll show that the UK is not far behind. Looking at companies with revenues
between $50 million (£31m) and $1 billion (£625m) they found that:
• 54% of businesses in the US buy products over the Internet compared to 50%
for the UK.
• 37% sell products or services online compared with 29% in the UK.
• 34% of US businesses conduct financial transactions over the Internet
compared with 25% in the UK.
Butler (2000) states that businesses that understand the nature of risk and have
some creative individuals in charge are embracing IT and the potential of EC in a
new way. Banks could do more to embrace EC, and the following eight statements
taken from Butler are an indication of what they should be doing and the ways they
could be thinking to gain market strength on the Internet.
1. The big pay off in IT today is not associated with its cost saving role. They
come from innovation and the creative use of this medium to reach
customers.
2. The savings are too small to use IT as a cost saving mechanism compared
with more imaginative and creative uses.
4. Technology is not sold on its features and excellence. It is sold to most on the
"me too" factor and the fact that life would be somehow inadequate if did not
have it.
5. A new IT related product will be sold on its innovative characteristics and fun
factor and there is no reason why this could be applied to banking related IT
products.
To gain market strength on the Internet, banks need to fully comprehend the way EC
works best and that means seeing things from an e-customer perspective. Focusing
on customer requirements is something banks have been failing to do since they
started automating services, rationalising work force numbers and more recently
merging with each other and closing more branches. The emergence and growth of
EC should be looked on by banks as an opportunity to redress this balance and
make customers and their needs the central focus.
The aim of the survey was to compare the online services offered by UK banks with
online banking services in the US. The survey also aimed to look at these sites
purely from a consumer service perspective. It is recognised that access speed may
vary due to the time of day or other factors such as modem speed. However,
consumers are likely to access web sites when they feel the need to do so, at any
time. Therefore it was not considered relevant to look at this factor in detail. We deal
mainly with general access and what would be considered general consumer
behaviour, which is to access sites on demand and have an efficient, productive visit
resulting in customer satisfaction. The scoring criteria deals mainly with quality of
web sites, information availability, and the range of services being offered. The UK
banks were chosen from a list at:
http://www.mylesrix.demon.co.uk/banking/index.html and the US online banks from:
http://www.onlinebankingreport.com/resources/.
Information was obtained by testing the services available as far as possible without
actually opening accounts. Each web site was scrutinised for approximately 15
minutes during which a search was undertaken for information and product
availability. If information could be not found within the 15 minutes, it was assumed
that no service or information was available for these particular topics. Results for
the first section of the survey have been converted to average scores for the two
countries and are shown in figure 1 along with the scoring criteria. Analysis dealing
with product availability is shown in figure 2. The sites were also measured against
what could be considered a full banking service (results given in figure 1). In this
research full banking is defined as being able to apply for all services and products
listed in Figures 1 and 2 online. Information was also looked for which indicated that
application decisions would be made and returned to customers online in real time
(result given in figure 2).
Scale of
Full
Full online % of
Total contact Corporate banking Possible
site Speed and Availability Customer Look of web details information service Overall Maximum
access ease of of relevant Service site easily easily (score 5 = Service Service
speed navigation information rating (Viewability) available available Full) Score Score
US
Average 3 4 4 4 4 2 1 3 22 54%
UK
Average 4 4 3 2 3 3 3 2 22 55%
In columns 1 to 3 and 6 to 7 scoring is determined by the amount of time taken to access services or information. The longer
it took the lower the score. If Column 1 & 2 access was below 7 seconds = high score, up to 35 seconds = medium score,
between 36 - 75 seconds = low score.
Column 4 is rated on how helpful the available information appeared to be; poor quality of available information, lack of
helpful information or hard to find information resulted in low score.
Column 8 (Scale of full online banking service) was rated by the number of services and products available but was heavily
influenced by the availability of online applications and credit decisions being made online. The lower the number of online
services resulted in low score.
1 2 3 4 5 6 7 8
% of
Apply for Apply for Apply for Apply for Products
current savings mortgage Apply for credit Products Available Credit
account account or loan insurance card Available from the decisions
online online online online online Score 5 sought online
US Score
Totals 10 10 10 5 11 43 86% 12
UK Score
Totals 6 6 5 3 7 27 54% 4
Scores in columns 1 to 6 and column 8 are out of 12, which relates to the 12 banks that were
surveyed
scoring method 4 was considered good and the US scored the most 4 ratings.
Speed of access and navigation, availability of product/services information and
viewability was relatively the same in both countries and they both scored
reasonably in these categories. There was little difference between the percentages
of possible maximum score; the UK average of 54% almost matched the US at 55%.
US sites scored lowest in the categories regarding display of full contact and
corporate information. For customer service the UK scoring was much lower at 50%
less than the US. Neither country managed a high rating for Scale of Full-Online-
Banking but the UK score was lower. Despite some category differences, overall
these average scores indicate that both countries need to improve, with the UK
needing to pay more attention to the availability of products/services information and
viewability of their web sites. Full contact and corporate information was lacking in
both countries and when it was there, it was not always easy to find.
The difference between the two countries was greater in regard to being able to
apply for products online and the availability of credit decisions online. Figure 2
shows that from the 5 products sought only 54% of them were available online in the
UK banks. With the US banks scoring at 86%, this indicates 32% lower availability of
online banking products in the UK. Applying for and getting insurance quotes entirely
online scored low in both countries. Also there is 50% difference between the UK
and US in regard to applying for a mortgage or other loan online, 10 of the 12 banks
surveyed in the US offered online mortgages/loans as opposed to 5 out of 12 in the
UK. Only 7 of the banks in the UK offered online credit card applications as opposed
to 11 out of 12 in the US. Average scores for the total availability of the 5 products
from all banks would indicate that US banks have more to offer on the Internet than
UK banks.
Credit decisions were assessed in terms of the bank indicating on the web site that
they offered this facility. Some of the UK banks were followed through to test if they
actually did perform this service. One bank Firtse, did give an online decision but
only for a preliminary account and to fully activate the account they wanted the client
to post-mail two utility bills and a photocopy of the applicant’s passport. Smile bank
also said they offered decisions on line and they do, but it takes from 4 to 7 days to
activate the account. Similar tests were not carried out with US banks as most only
offered accounts to US citizens, although some did offer international banking but all
application procedures for this were paper based.
The results of this survey showed that 12 out of 12 banks looked at in the US offered
some online decisions and many stated that it would only take 60 seconds. However,
only 4 banks in the UK offered any type of online credit decision process - a
difference of 67%. Undoubtedly the UK banks are lagging a long way behind the US
in adoption of such online methods. Looking at the overall results, the UK banks
have some considerable catching up to do if they hope to compete in what is soon to
be a global market in banking products and facilities. They need to get better at
embracing the technology that enables fast, safe, customer-orientated
comprehensive banking online. In other words they need to understand the nature of
EC.
There seems to be little hope for any online business creating a phenomenal
success in the virtual business world if they do not plan and organise themselves
appropriately. The days are practically gone when anyone could put up a web site
and just rely on surfing customers homing in. New e-ventures have to make
important decisions as how best to attract and retain customers. Focus on the
customer is what matters now. No company can afford to let customers slip through
the net, let alone drive them away in droves. Not having what customers want or
making the process of getting what is on offer difficult, because of poor performance
technology is a sure way to loose online customers for good. Inadequate business
planning and weak back up infrastructures will drive many companies into severe
financial loss, not only through lost revenues but also through damage to company
reputations and brand loyalty, culminating in a loss of trust that is very difficult to
regain.
To build customer trust online business management must be customer focused and
be able to offer real-time services and backup. Business strategies should be
designed to greatly enhance e-customer care and promote trust. This takes
monetary investment especially for large companies but even small or one-man type
ventures can and will be successful if they focus on the customers’ needs and do
this ethically. Attracting and retaining customers with the aim of developing long-
term relationships, through high performance and superior customer e-service is the
key to achieving high and lasting profit margins. Online businesses that adopt
customers as their own and give them a unique and satisfying online experience
every time will survive best and longest.
The survey research although modest in scale does however provide a snap-shot of
what is being offered by the banking sector over the Internet. From the results
reported above it is obvious that the US is ahead of the UK in most areas. Banks in
the UK should be learning from the US and they should perhaps set up some kind of
monitoring of Internet bank sites worldwide. They need to do this to find out what is
being offered and what appears to work for customers. They need to move away
from old strategies and embrace a new, "customer first" attitude which is the only
one that works for successful EC. The overall culture of banking is changing but not
enough to embrace complete e-service. This change must take place before take up
of online banking will offer adequate, let alone superior, service to customers.
Banking companies that give greater attention to what their customers want are
more likely to succeed in online banking business ventures than those that think that
converted traditional strategies will do the job. Customers hold the key to success
and companies must find out what different customers want and provide it, using the
best available technology and making sure that the latest information is what they
are acting on.
People will not tolerate inadequate web sites. Information must be instantly available
and financial decisions must be available online for a whole range of products. It
must also be an easy process to open accounts on-line with credit and reference
checking happening in real-time. There are many ways to approach online banking
business and some companies who don't think "customer first", are likely to fail
The phrase “Online Banking” should define a fully comprehensive service where all
banking needs are catered for online. There appears to be some way to go before
online banking provides a full e-service, at least in the UK. Many high street banks in
the UK may not succeed if they do not fully comprehend what EC can do for them
and their customers. US banks seem to be more aware of what is needed and what
e-customer needs are. At this juncture banking institutions in the UK have failed to
lead in this field and they have much catching up to do. They all need to think of
strategies that will give their current and new customers superior customer choice
and e-service online. Future planning and innovation is the key as EC is a fast
evolving medium. The most successful EC vendors design their services and
products to attract and retain new customers and to keep those that they already
have. They also have strategies that aim to attract competitors’ customers, which
includes anyone who is surfing or browsing.
People - customers, consumers, and users are the ones that are in control in the
virtual business world. The fact that these groups have real power is a fact that all
businesses, including banks, must come to recognise very quickly if they wish to
have and maintain a viable EC presence online.
Butler (2000) Best Practice Bad Practice. Contra. February. Butler Group. pp. 3-4.
Dennis, S. (1999) UK Web Users Still Wary of Online Shopping - Report. Newsbytes.
20 December. online. Available from: [http//www.itexplorer.com/news/].
Flood, G. (2000) Ecommerce Was Well and Truly Stuffed. Computing. 6 January. p.
4.
Lauchlan, S. (2000) That Was The Glitch That Stole Christmas. Computing. 20
January. pp. 16-17.
Nicholson, M. (2000) Halifax: Online Banking Service Set For Spring Launch.
FT.com Financial Times. 11 February. online. Available from:
[http://news.ft.com/].
Ranger, S. August, V. Goodley, S. (1999) Web Site Gaffes Hit Christmas Etrade.
Computing. 16 December. p. 1.
Wakefield, J. (1999) Virtual Banking Hits the High Street. online. ZDNet/UK.
Available from: [http://www.zdnet.co.uk/news/1999/46/ns-11648.html]