CHANGING THE FACE OF FINANCIAL SERVICES
By Pete Williams, AIT Group plc
The likely impact of interactive digital TV on all our lives cannot be
underestimated. Only a year ago, the Henley Centre forecast that by 2003
e-commerce through the computer and television would account for £42
billion a year in the UK, and that by 2008 interactive digital TV (iTV)
will be the dominant channel for e-commerce. These predictions may actually
have been rather pessimistic: Dataquest now forecasts that, by 2005, TV
shopping will exceed that via the Internet, while Gallup has found that
42 per cent of consumers prefer TV shopping, compared to 26 per cent who
prefer shopping via the PC. With the UK Governments announcement
early this year that it may switch over to digital from analogue in 2004,
this momentum can only increase: especially if it does give away set-top
boxes to help speed up adoption of digital TV.
Consumer adoption is supporting these predictions. Just 18 months ago,
the BBC produced a report which suggested the likely growth rate of digital
TV. By July 2000, its most optimistic figure had been exceeded, with five
million digital households, and by the end of 2000 there are expected
to be a third more than predicted. Echoing the pattern of mobile phone
adoption - give the hardware away and charge for usage has been
a significant driver in advancing this high rate of adoption.
Twenty five per cent of UK households already possess a digital TV, which
means it has almost reached the penetration levels of the home PC. If
the UK government does press ahead with plans to give away set top boxes,
then by 2004 over 95 per cent of UK households will have them: the same
ubiquity as the telephone. Financial services organisations ignore this
phenomenon at their peril.
There are three key interactive functions via digital TV which can be
applied to offering financial products and services: enhanced TV; interactive
adverts; and the interactive services which underlie them:
Enhanced TV is probably one of the most powerful new ways in which commercial
opportunities will arise, but this is in its infancy and will take some
time to become widespread.
The main features of enhanced TV will be sponsorship, product placement
and supporting content links. For example, you are watching a car review
and want to know more: you could link to further technical details, or
to relevant financial services (how to finance this car, how to insure
this car, etc). The quality of leads produced by this self-selective process
should be much higher than via many other forms of marketing.
interactive advertising would provide a means of immediate fulfilment:
one click to get a brochure, to get more info or to buy the product.
underlying both of these will be interactive services. These could include
sales and servicing elements, such as online applications and account
administration. Initially, these will be contained within a walled
garden (ie, on Open
..) but will eventually be by direct Internet
So what will be different about iTV? Firstly, it is not simply the Internet
on TV: consumer use and expectations are very different. Its an
entertainment medium: people sign up for it to watch sport, movies, etc,
and only once they have it do they start to explore the interactive services
on offer. Its used in a shared environment, by an average of 2.6
people as against a single PC user. Its looked at from a distance
within the limitations of the TV interface. The best use will be made
not by trying simply to re-render web pages for display on TV, but by
developing a customer proposition specifically for this medium.
While the TV is extremely powerful for sales messages and attracting consumers,
these drawbacks may hinder its adoption for fulfilment: for example, the
rest of the family may want to watch their TV programme rather than wait
for a long application form to be completed. Therefore, the whole consumer
proposition is likely to be designed as a multi-channel solution: attract
the consumer via the TV, provide online approval on the basis of limited
information, and then complete the details via another channel (eg, a
So how might interactive TV be used in the home for accessing financial
services? As far as sales are concerned, there are three main areas to
creating leads, for which the TV medium is very well suited. As
some basic consumer details (name, address, etc) are held on the set top
box, a lead could be captured from a single click much
more efficient than on the PC Internet.
Agreements in principle, taking lead generation further by capturing
just a few extra vital pieces of data, enabling perhaps a credit check
to be run online and an agreement in principle to be delivered immediately.
Fulfilment may then be completed using other channels.
Fulfilment, where every detail needed to offer the service can
be collected online. This would work for simpler products, where the amount
of additional detail needed is limited and therefore the consumer might
be willing to spend the time needed to provide this in online. Banking
and credit products are likely to require items that cannot be dealt with
via TV, such as proof of identity or detailed information on residence,
which make it unlikely that the process can be taken to completion via
Servicing has different requirements:
Information: providing additional static data about products or
services taken, terms and conditions, etc. This can be static text, as
with a web site, but the nature of TV means that it would work well as
streaming video or audio, thus avoiding costly service provision by a
call centre or branch.
Basic data: in the simplest cases this could be current balance
or most recent statements, where most of the data is pulled
and displayed. This offers operational cost savings by encouraging consumers
to use the low cost access of TV for routine and regular enquiries. These
transactions can be performed quickly and hence fit in with the idea of
something to do while the adverts are on.
Transactions: supporting everything the customer is likely to request
in connection with that product or service, and which requires the exchange
of data between the consumer and the provider. With products which require
few transactions and/or little data entry, the TV can work well. Where
a significant amount of data is required, it is unlikely that the TV will
be an effective channel and others will need to be used.
Figures one and two apply various functions to different products
and assess whether they can be successfully used via iTV. If products
can be designed with simple application processes, perhaps by selecting
packaged options, and the services needed to support that product are
simple, then it may be possible to buy and run that product via the TV.
Figure 1: iTV for Banking and Investments
Figure 2: iTV for Pensions and Insurance
Its vital to ensure that, if other channels are needed, there must
be a fully integrated approach. When an iTV implementation is part of
an overall, integrated multi-channel solution, enhanced TV and interactive
advert material can be created and transmitted by the service provider
over whichever channel is chosen by the consumer at that moment. Even
the simplest transactional service will require integration with the organisations
host systems and will be most effective when part of an integrated multi-channel
solution (see figure 3).
Figure 3: iTV and multi-channel eCRM
Consider the following mortgage scenario as an example of how an integrated
financial services offering should progress:
Consumer sees an interactive advert for mortgages and clicks on the interactive
button to find out more.
Consumer uses the interactive service to try some quotations and enters
basic details and requirements (price, loan required, salary etc) and
receives an instant approval.
Consumer requests a call back in an hour to complete all the necessary
Workflow is automatically created in the multi-channel CRM system for
a scheduled call back to the consumer.
Call centre agent is prompted by workflow, and because it is part of an
integrated system can see all available data on the consumer (who they
are, what they want etc) and makes the call.
Some additional items are required as proof of ID and the consumer elects
to take them in to the nearest branch the following day.
Branch staff can accept the proofs from the customer and up-date the mortgage
case immediately with the integrated system
There will be many variants for different products but for the consumer
it feels like a single integrated interaction with the company
So how should you estimate the cost of an iTV implementation? The factors
to be considered are:
Access - what kind of contract will be agreed with the service
provider to be in its walled garden: fixed, transactional
or a mixture. Or is this to be an Internet only delivery to TV (less cost,
Proposition - how complex? Will it attempt to use elements of one-to-one
marketing with newly created media, including video, or be more straightforward
re-using existing media assets to the greatest extent possible?
Media production - if re-using assets then the cost can be low,
but if newly commissioned TV quality video is required then costs will
IT development - is there a multi-channel CRM architecture in place
already, so that the costs are limited to the specific channel enablement?
Will middleware elements need to be produced in addition?
The final costs will be dependent on specific circumstances and the strategic
choices of the organisation.
So what about operational benefits of iTV compared to other access channels,
starting from the assumption that creating an infrastructure would cost
approximately the same. Call centre costs do fall with volume, but more
agents are needed as the volumes grow, keeping transaction costs up. Internet
delivery yields significant cost savings as volume grows, as there is
little incremental costs: hence it is particularly beneficial for high
volume activities. iTV is essentially the same as the Internet in its
ability to provide cost savings as volumes grow. However, the fixed access
fee associated with being part of a walled garden reduces
these cost savings when compared to the Internet.
The benefits, however, must be weighed against this higher cost associated
with iTV. Firstly, iTV provides true mass market access. When the analogue
signal is switched off, it will have reached 95 per cent of homes, providing
a market only seen via the telephone in the past. The already strong selling
power of TV is boosted by interactivity: adverts become more interesting;
there is an immediate ability to click and buy; and additional information
can be provided online to support the sales message. And of course, TV
is so familiar and frequently used. Those intimidated by the PC will not
feel threatened by the TV. Fear of technology will already have been lessened
by experiences with teletext, and iTV trials have seen popular demand
for email, opening up huge possibilities for self-service.
Added to this, customer retention will increase through convenience of
use and ease of access. There are great opportunities for targeted marketing,
including delivery according to postcode area, which can lead the way
to one-to-one marketing. Servicing costs will be low, especially for high
volumes where the cost model will be very similar to that for the Internet.
More than any other channel, however, iTV requires the combination of
creative marketing with solid IT delivery. Particularly with its suitability
for both sales and servicing, there is an enormous cross-over between
marketing and operations that is not so marked for other channels. This
may generate huge organisational challenges, both over ownership of the
project and particularly who foots the bill.
iTV has mass market appeal, low operational cost for servicing and the
combination of the selling power of the TV coupled with the transactional
power of the Internet. In short, it has the potential to revolutionise
the sales and servicing of financial services products to the mass market
in the way the call centre did in the 1990s. For financial services, it
offers almost unprecedented opportunities.