Our View On What Matters In European Retail Banking eBusiness & Channel Strategy

Benjamin Ensor

The past five years have been awful for most European retail banks. The financial crisis, and the resulting recessions in most of Europe's economies, nearly destroyed some banks and crushed the profitability of many of the remainder. Worse than that, it was a problem that was partly or largely of (some) banks' own making. Banks are being forced to shrink their balance sheets, sell off non-core businesses and cut costs (i.e. fire employees) just to survive. And Europe's ongoing financial crises are far from over as banks' fortunes are closely entwined with those of their indebted governments.

There's one small silver lining among these dark clouds. Over the past 15 years, eBusiness has evolved from providing an electronic brochure to become a fundamental strategic function within retail banks. One of the effects of the financial crisis has been to force most European banks to focus on how to generate profits in their core retail banking operations by serving customers efficiently. Digital banking is a big part of the answer. So, despite the bleak economic outlook, most retail banking boards know that they must continue investing in digital channels. Digital strategy is an increasingly important component in overall strategy.

I'm still surprised when I find heads of eBusiness who remain marginalized within their firms, reporting into IT or marketing rather than a centralized distribution channels function alongside branches. The leading banks no longer make that mistake. That has greatly increased the power and influence of digital banking executives, but also their responsibility for the overall success of their businesses.

Here's our view of the top five priorities for eBusiness and channel strategy executives at European retail banks:

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Forrester Releases Its New Asia Pacific Online Retail Forecast

Zia Daniell Wigder

Today we published our Asia Pacific Online Retail Forecast, 2011-2016 highlighting online retail sales in five different markets in Asia Pacific: China, Japan, Australia, South Korea, and India.

Along with providing overall online retail market sizes, we note that:

The combined size and growth of China's eCommerce market are unprecedented. China's online retail market surpassed $100B in 2011 and continues to grow at a breakneck pace — when the US online retail market was the same size as the market in China today, growth was considerably slower. We revised our forecast upward to reflect the fact that online sales continue to increase at a rapid pace, even as the market size swells.

Growth rates in Japan, South Korea, and Australia are more tempered. In contrast to China, online retail sales in Japan, South Korea, and Australia will grow at rates more in line with those of the US and developed eCommerce markets of Europe. However, all three markets are attracting increased investment as a growing number of both domestic and foreign players launch new online offerings in these countries. 

India will grow quickly off a small base. India's eCommerce market, by far the smallest of those covered in our forecast, is poised to grow by more than five-fold by 2016 as the number of online buyers and per capita online spending increase rapidly. This market is gaining more attention as global brands look to markets that are in the early stages of eCommerce adoption but offer significant long-term potential.

Forrester clients can read a summary of the report here.

How Quickly Can You Add A New Touchpoint?

Martin Gill

Here at Forrester we have been talking about the concept of "agile commerce" for some time now, but it's not always easy to point to live examples of “agile”businesses. What is agile commerce? How do I become agile? Both are very valid questions that we are in the process of building out a series of research documents and case studies in order to answer.

But there is a live example happening right now that encapsulates what agile is all about for me.

 Pinterest.

For those of you who are yet to become completely addicted to Pinterest (and you will), it's basically an image sharing site that allows you to group together images from around the web into categories and pin them to a virtual pin board. It creates highly visual mood boards, wish lists, galleries, and collections of images that link back through to the original source (which is where Pinterest makes its money). And since so many Pinterest boards are all about style — fashion and home in particular — it has the potential to be a bit of a retail gold mine.

 

Unlike Facebook, which is much more about social connections, it looks like Pinterest users are more in a discovery and pre-shopping mode when they are pinning and are pre-inclined to buy if they click through to a retail website. With an ever-expanding network of users, Pinterest has the potential to bring some much needed serendipity to web shopping.

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US Online Retailers Still Look First To Europe Despite Growing Interest In Emerging Markets

Zia Daniell Wigder

Online retailers are rapidly adding emerging markets to their list of new global opportunities to explore, as these markets are set to take a growing percentage of global eCommerce sales going forward.  However, it’s important to remember that Europe still ranks as at the most popular region outside of North America for US online retailers expanding internationally. The market is set to grow at a healthy pace over the next five years: Clients can read my colleague Martin Gill’s recently published forecast of online retail sales in key markets across Europe.

Some takeaways from recent conversations with online retailers expanding into and within Europe:

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Yet Another Dumb Move By A Bank

Sucharita  Mulpuru

Until a few months ago Bank of America won the “Best In Biting The Hand That Feeds You” Award when it initiated its $5 debit card fee increase. Citibank may have trumped that in January when it decided that frequent flier miles that it gave away as promotional bonuses in exchange for getting customers to sign up for a new bank account was taxable income that needed to be reported to the IRS.  The absurdity of this move is so large it’s not even measurable.  Because if they pull this off, they will solidify a position as an anti-customer bank at a time when banks could use some customer love, but worse they threaten to kill the single most effective tactic in the entire marketing industry: the promotion. By giving away a gift in return for a customer’s patronage, and then calling it taxable income, this is the ultimate string attached. Does this mean free ice cream at Ben & Jerry's on their customer appreciation day is taxable? What about upgrades airlines sometimes give for free on flights? Or the eyeglasses that Coastal.com is giving away for free?  Most of the time your social security number isn’t captured, so there isn't an easy means to report any promotion or gift to the IRS, but let’s hope we never get to the day where we do have to give away such information in order to take advantage of a promotion. How anyone at Citi could have thought this was a good idea (and not making very clear the taxation consequences) is baffling. Marketing freebies are aimed at getting new customers or retaining existing

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The Age Of The Customer Drives Four Insurance eBusiness Mega-Trends In 2012

Ellen Carney

This year, North American insurers overall are pretty darn happy. For starters, there clear signs that the economy is finally starting to gain steam, premiums are on the rise, the market’s firming, and the political will may well shift enough to revisit past regulatory reforms, particularly those that impact health insurers.  And these factors are coalescing into the new strategies for 2012.  In our “Trends 2012: North American Insurance eBusiness And Channel Strategy”, we discuss what factors are driving insurance ebusiness teams to:

  1. Become obsessed about their customers
  2. Get serious about how to collaborate better with their agents
  3. Focus on the infrastructure that supports the digital business
  4. Refine their thinking about what eBusiness means to the insurance ecosystem
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Learn From Your Peers And Forrester Analysts

Patti Freeman Evans

Springtime in London will bring the Forrester eBusiness and Channel Strategy Summit (May 23).  The event will focus on how progressive organizations are actually executing effectively in serving their customers across a complex array of touchpoints.  In particular, we'll spend a good deal of time talking about the impact mobile is having on how we all effectively serve customers.  Julie Ask will lead us off on that topic from her vast knowledge in the mobile space.  She and Thomas Husson recently published their much-read Mobile Trends assessment for this year — great read. 

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Some Thoughts On FiftyOne's Acquisition Of Borderfree

Zia Daniell Wigder

FiftyOne, the company that provides globalization and international logistics services to US-based online retailers such as Gap, Pottery Barn, and Crate & Barrel, announced today that it is acquiring Canada Post’s Borderfree unit. Borderfree, one of the first organizations to play a role in driving cross-border eCommerce, carved out a niche for itself helping US online retailers target online shoppers in Canada.  

A few observations:

The acquisition does not disrupt the landscape of solution providers. With this acquisition, FiftyOne boosts its Canadian offerings and takes a small competitor out of the market, but the acquisition does not counter any direct threat from another solution provider in the space. Other providers tend to focus on different market segments, for example, International Checkout counts hundreds of clients in the SMB space, while BorderJump focuses on Latin America and the Caribbean (For an outline of different vendors, clients can read our 2011 report on Using International Shipping To Reach Online Shoppers Around The Globe). Today FiftyOne does not face another rival with the same roster of large clients.

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Learning From Digital Innovation At Commonwealth Bank Of Australia

Benjamin Ensor

There are a number of firms that we watch closely at Forrester because they stand out for sustained innovation. Behind the technology giants like Google and Apple, there are a number of established firms that are using technology to adapt rapidly and successfully to changing customer behaviour and needs. One of them is Commonwealth Bank of Australia. Over the past four to five years CommBank has introduced a series of digital innovations to serve its customers better including:

  • Finest Online. In the course of its "Finest Online" project from 2007 to 2009, Commonwealth Bank of Australia redesigned its NetBank Internet banking service with the objectives of building an excellent customer experience and driving online sales. The bank implemented new content and functionality to support the customer journey and integrated new secure site sales processes with in-person channels and the bank's multichannel customer relationship management (CRM) system. The two-year, cross-organizational project boosted online sales, increased customer satisfaction, and improved the bank's image. (Forrester clients can read our case study.)
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US Online Retail Hits $200B

Sucharita  Mulpuru

eCommerce sales continue to grow rapidly, having topped $200 billion in 2011. As web shopping has been on an upward trajectory for over a decade now, these figures should shock few. We expect online sales will grow from 7% of overall retail sales to close to 9% by 2016. Key drivers of this growth include:

  • Aggressive deals, particularly during Q4. During key time periods in the last holiday season (e.g., Thanksgiving, Cyber Monday), more than 70% of online holiday buyers (in a joint survey with Bizrate Insights) say that they purchased online instead of in stores because deals online were better.

  • Innovative new business models. Among the most rapidly growing business models of the last decade were the flash sales sites, companies like Gilt Groupe and Woot. An earlier study that Forrester conducted with online shoppers showed that the majority of consumers said they spend less at traditional retailers after shopping at these daily deals sites.

  • More online loyalty programs. While over the years physical stores and brands have managed to capture greater shopper data with loyalty programs and private label credit card programs, online retailers such as Amazon.com have essentially created loyalty programs of their own with shipping clubs.  In fact, during the holiday season in 2010, 9% of online buyers said they belonged to such a program, while in 2011 12% of online shoppers affirmed the same (again, a joint survey with Bizrate Insights).

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