Banks are taking a very cautious approach to ecommerce, leaving themselves open to rapid customer churn.
Speaking at the IDC Ecommerce Forum, Bob Giffords, an associate consultant for IDC, warned that traditional banks "will have to reinvent themselves" to retain a loyal customer base.
This will mean "providing personalised content, interactivity, education and entertainment" to ensure that customers keep coming back to their cyberbanks, he said.
Customers will be able to move banks "from one to another at the click of a mouse online" he explained, so customer loyalty will be a far greater issue than with traditional banking.
New players are coming in and starting on marketing and price: "They are reinventing the game and traditional banks have to see this," explained Giffords.
He singled out successes such as Egg, which also has an Internet service provider business and provides chat and the ability to send postcards on its site, and Virgin Direct which offers a single account where interest is calculated daily.
"Variable pricing is an integral part of doing business on the net," said Giffords, and banks are no exception to this rule.
Giffords forecasts that outside players will start setting up online banking businesses against traditional banks.
"Its not just big boys, the technology is there, if you get partners you can get to market quickly," he said.
Giffords said it was not enough for traditional banks to offer brochures and simplistic transactions online. If they are to succeed they need to invest heavily now for the future.
However, speaking at the same conference, Roger Alexander of Barclays Bank, said security was still the fundamental concern for financial institutions that was holding them back from the Internet and that SET was not the answer. (see earlier story)
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Yeah, sorry about all that, simpers Zuckerberg
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