Financial Web sites Add Value but Save No Money

Toronto, October 16, 2001 – The Web is viewed by many
financial services firms as the most promising solution to the spiraling costs of customer
service. As securities market conditions severely intensify cost pressures, the need for
an “Internet Solution” grows more and more urgent.

Just how close is the financial services industry to an
“Internet Solution”? Dalbar’s 2001 study on “Consumer Use of the
Internet for Financial Services”
concludes that although the majority of
consumers are indeed getting online for financial services, this activity is doing very
little to benefit the bottom line of mutual fund and annuity companies.

Trends in usage indicate that instead of being used to divert
common customer service requests from call centres to Web sites, the Internet is
increasing involvement from customers who would not have normally been so active in
monitoring their accounts. Investors who never before called phone centres to check their
account balances or performance figures may now get online to do so, but this is not
helping financial services firms to reduce costs.

Dalbar’s study reveals that 83% of Internet
users check the performance of their investments via the Web. Reviewing account balances
(69% of Web users do) is the next most common use of the Web for financial services. These
two uses represent the easiest ways for today’s investors to monitor their accounts.

Yet, Web uses that are most likely to help financial
services firms reduce costs by diverting traffic from call centres are seeing much
less traffic. These online services include:

  • Using the Web to access statements (instead of paper copies);

  • Going to the Web for answers to questions.

Today, only 18% of Web-using customers routinely access
statements online in place of mailed copies and only 17% routinely use the Web to have
questions answered. While reluctance to receive online statement delivery is due in part
to customers’ cautiousness, financial services firms could do more (and are starting
to) to provide incentives for customers to adopt this method.

Significant consumer interest and use of the Internet for
financial services, especially among high income consumers, indicates that the
“Internet Solution” is surely possible, but will only arrive when financial
services firms use marketing and incentives to divert consumer activity from the more
expensive areas of customer servicing.

For more information on how financial services firms can
best leverage the Internet to decrease customer service costs while also strengthening
relationships with customers, Dalbar offers its 2001 report on Consumer Use of the
Internet for Financial Services
. The report includes specific recommendations to
financial services firms along with examples of best in class practices of industry
leaders such as INVESCO and Putnam Investments, among others.

Data for the report was drawn from a survey of 1,450 households with incomes of $50,000
or more. The survey was conducted during the month of April 2001.


Manny Da Silva
181 University Avenue, Suite 1426
Toronto, ON M5H 3M7
Phone: 416-642-6193
E-mail: [email protected]