Finding the ROI from Online Retail Banking Applications

October 17, 2001


Boston, MA, USA October 17, 2001

Customer Retention and Cost Savings Drive Online Banking ROI

In a new report titled “ ” Celent Communications assists financial institutions in determining the possibility of profitability and reasonable expectations for a comprehensive internet banking platform.

Over the past few years, Internet banking applications were expected to revolutionize the banking industry and pave the road towards dramatic cost savings, extraordinary customer acquisition techniques and a competitive tool to combat customer attrition.Today, virtually all major and second-tier banks (banks with at least $30 billion in assets) have implemented transactional Internet banking. Applications included in these platforms include online bill payment, electronic bill presentment and payment (EBPP), account aggregation and online lending.

However, the fall of the Internet economy has caused some firms to re-evaluate their Internet offerings, questioning their monetary benefits.Financial institutions in particular are questioning whether their current and expected online applications will indeed lead to profitability or if the institutions instead fell victim to the era of overly optimistic expectations.

The report is based upon a return on investment (ROI) model constructed by Celent Communications that is in turn based upon industry standards and discussions with financial institutions.“Often we see ROI models that are either overly optimistic or one sided – addressing only the benefits or costs of an application,” reports Ariana-Michele Moore, co-author of the report.“Celent wanted to establish a model that takes into consideration both the cost and benefits, as well as realistic expectations.What we discovered is that financial institutions that implement a comprehensive suite of internet banking products can expect to reap significant rewards.”

Most of the benefits from a comprehensive online banking platform are derived from cost savings and customer retention.“Banks are discovering that active users of their online banking services are much less likely to jump ship to another institution,” adds Neil Katkov, co-author of the report. "A rich Internet banking platform improves not only the stickiness of the site, but more importantly, the stickiness of the bank itself." Celent concludes that a comprehensive online banking platform can increase the value of an active online customer by 25 percent.  

In this report, Celent Communications addresses both the costs and benefits of online banking as well as online bill payment, EBPP, account aggregation and online lending.In addition, Celent Communications offers insight into how financial institutions can maximize the ROI on their investments.

A Table of Contents is available online.

of Celent Communication's Retail Banking research service can download the report electronically by clicking on the icon to the left.


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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents


Boston, MA, USA  October 17, 2001

Return to report Abstract

  Internet-Only Banks 4
  Internet-Enabled Banking 5
  The Model & Assumptions 10
  Basic Online Banking 12
  Online Payments 14
  EBPP 15
  Account Aggregation 17
  Additional Benefits 18
  Comparative Analysis 21
  Size and Penetration Factors 25
  Recommendations 26



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