By Geoff Dennis

Albert Wahbe is a self-proclaimed “Trekkie.” The show’s sci-fi legacy inspires him. As the chairman and CEO of e-Scotia, the electronic commerce arm of the Bank of Nova Scotia, he taps that inspiration to dream up new innovations for the bank’s online customers. Most of Star Trek’s technological advancements—like transporters, starships and time travel—are purely fictional and out of science’s grasp. Yet Wahbe has adopted some Trekkie technology over the past three years that would even make Scottie proud.

Last September, Wahbe spearhead a partnership with the Canadian National Institute for the blind on a voice recognition pilot project that allowed blind or visually impaired consumers to try a hands-free tech- nology for their telephone banking-eerily similar to the technology that allowed Star Trek's crew members to talk to the Starship Enterprise's computer. The feedback Wahbe received was tremendous and a national rollout is expected this summer. e-Scotia has also struck a deal with Rogers Digital TV to become the first bank in Canada to offer Web banking via interactive television (though at press time this was still in the pilot stage in the Toronto area).

"The sky is the limit!" Wahbe exclaims in his charming, softened French accent. "Being creative is my job, and if I'm not, they'll find someone else who is." As imaginative as interactive television and voice recognition are, most Canadians don't have access to them yet. But new research suggests that consumers are hungry for innovations that can make their online banking experience easier and faster.

Web-banking Breakdown

There are 4.7 million Canadians using Web-banking services; user numbers doubled last year and adoption rates are still growing. However, even the most successful banks service only about 20 per cent of their customers online.

And many of these clients limit their activities to fairly simple transactions such as transferring funds and paying bills. Most banks offer extra online services such as loan and mortgage applications, but according to Gomez Canada Ltd, an Internet quality measurement firm, penetration rates are extremely low and user expectations are very high.

A Gomez Canada survey of 9,000 adult online banking consumers across Canada found that only one per cent of respondents had obtained a mortgage online, 2.4 per cent had applied for a loan online and 2.1 per cent had purchased a GIC (Guaranteed Investment Certificate) online. Why the reticence? Most people don't feel comfortable enough to make such a major purchase on the Web-books and CDs are a far cry from buying a house.

"Canadians who bank online love it and are the happiest customers," says Bill Currie, an analyst at Deloitte Consulting in Toronto. "They love the ease of access, but not everyone wants the same thing. For complex sales like RRSPs, most people use their bank's site to research the rates and find the relevant information, but then go to the branch and complete the purchase."

Some observers interpret the limited range of banking activity by online customers as a criticism of the banks. "The Internet is all about instant gratification-people have increasing expectations and banks are not meeting those needs," explains Don Rolfe, managing director at Gomez Canada. "Control is shifting into the hands of the consumer; that's quite a change from the past 100 years when banks held all the power."

Rolfe says that banks must offer a significant benefit in online transactions (such as lower fees) that separates that service from the bricks-and-mortar offerings, thus giving customers a greater reason to take their more complex activities online.

Furthermore, he says, it's important to make customers feel at home online, and the best way to do that is to personalize their experience. "One-to-one marketing is the key because if a Web site is structured around who you are it will mean something to you," Rolfe says. "Right now, there is no bank site with an interactive, personalized strategy. It doesn't have to be a dehumanizing process either, people won't be reluctant to change if there's value in it."

Looking Ahead

Change is coming, and Gomez expects that the shift from the "one-size-fits-all" approach to the customized model will happen within the next 18 to 24 months. Already, the banks are trying to beef up their online offerings with wireless access and expanded services like online cheque ordering. Deloitte's Currie expects a new strategy called account aggregation to be the next wave in online banking. This will permit all of a consumer's different bank accounts, and third-party services like AirMiles rewards, to be managed from a single online site.

TD Canada Trust is the nation's largest online bank with 2.6 million users. Since the recent purchase of Canada Trust, TD has re-launched its site and changed its name from TDAccess to TD Canada Trust Easy Web. It also plans to implement account aggregation and to improve its wireless delivery through a partnership with Rogers. (Customers will be able to access their Web accounts through Research in Motion's BlackBerry devices.)

Perhaps TD's most progressive strategy is one that will pro-actively offer loan applications to known customers rather than having them make the first move. "Our customers know that we have loads of information about them, and we might as well have that customer profile work for them," says Chuck Hounsell, TD Canada Trust's senior vice-president of e-Banking. "Instead of the customer [taking the initiative] and applying for that $25,000 loan," he continues, "we should offer it to the customer."

Hounsell says that TD would look at their customers' credit histories to evaluate the best candidates, then offer the loans via e-mail. "Financial services are not fully utilized yet-this is a way to make them easier," he adds.

Other banks, such as CIBC and Royal Bank, are focusing on delivering basic services first before rolling out more advanced technologies. Yet both are working on wireless access and CIBC (along with TD and Scotiabank) has signed up to provide person-to-person (P2P) e-mail chequing (see CertaPay sidebar).

Although Royal has yet to join the CertaPay agreement, by the third quarter of this year the bank will launch its own private P2P system, where customers can e-mail each other cash as long they both have Royal Bank online accounts. The bank also provides e-mail communication for customer questions and is commencing an account aggregation pilot project in the fall.

Royal is also looking at eventually integrating one-to-one live image transitions to its Web site, where, for example, online users will be able to seek advice on investments face-to-face with their account advisors (see advisor sidebar). But there are limitations at the moment.

Playing Poker

Despite growing interest in broadband access such as cable and DSL services, most Canadians still use their turtle-paced 56K dial-up modems. High-speed access must become standard in order for people to make full use of the rich and data-heavy interactive services, but the infrastructure just isn't there yet: the piping for coaxial cable and high-speed connections must be upgraded and expanded as more users switch from conventional phone lines to broadband.

"We've concentrated on the basic transactions for a reason," says Tom Wolf, senior vice-president of e-Business at Royal Bank. "It's like table stakes in poker-you've got to have your chips in line first before you move forward." And you also have to be able to retrieve account information online before trying something like account aggregation. We're building it all up over time."

For more complex services, it's clear that trust plays a significant role-Internet users are more concerned with security and familiarity than value-added features. "People still want face-to-face interaction. No one has found a way to replicate that comfort level and communication online yet," Deloitte's Currie notes.

That's just not good enough for e-Scotia's Wahbe, who believes his bank can boldly go where no bank has gone before. In fact, he has even developed a single-sentence mantra that he calls the "Consumer Bill of Rights": "I can have access to any information I want at any time through any gadget I want."

Gomez Canada agrees. For Rolfe, online banks can improve their financial service penetration simply by educating their customers. "You can't be in this game without understanding the customer; they need to know what's available and how to use it," he warns. "Think of the telephone: 100 years ago, people needed to go through a switchboard to learn the technology. We figured it out, but it took time. It doesn't happen magically."