mapa - card reader research - april 09

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Card Readers and Online Banking:Ten top tips for their successful introduction

By M. Pavan and C. Wassell of MapaApril 2009

Based on the experiences of Barclays, Nationwide and NatWest customers


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April 2009 Page 2 Mapa

Contents

A. Introduction p.3B. 10 Top Tips p.5

1. Was it easy or difficult to use for the first time? p.62. What makes it easy to use for the first time? p.73. What changes / improvements would they make? p.84. Has it ever failed to work, and how was the problem resolved? p.85. How many payments have customers set up? p.96. Has it given customers more confidence when banking online? p.9

7. When did customers set up their last payment with the card reader? p.108. Will customers use the online banking service more often? p.109. Where do customers keep their card readers? p.1110. Are customers more likely to recommend their bank? p.12

11. Appendix: Methodology and list of questions p.13

12. About Mapa p.1413. Contact Details p.15

C


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IntroductionA

What is a card reader?A card reader is a hand held device used to authenticate users and transactions in online banking. The device has a slot for the users bankcard, a decimal keypad and a display. When using online banking the customer is instructed to insert their bank card into the reader and entertheir PIN, a number will then be displayed on the readers screen which must be entered on the website

This document examines the key differences between the experiences and attitudes of Barclays, NatWest and Nationwidecard reader users as they come to terms with their introduction and continued use.

Why have card readers been introduced?The APACS statistics speak for themselves; online banking fraud across all UK banks has jumped by 132% in 2008 to stand at a record52.5m. Never has fraud prevention been more important for banks.

When Barclays introduced its card reader in late 2007 it was the first among the traditional high street banks to do so, using the reader for bothaccount login and new payment creation. Shortly afterwards, NatWest and Nationwide introduced card readers, opting to use them for newpayment creation only. As a result of introducing card readers, each of these banks have considerably reduced levels of fraud.


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Introduction (Contd)A

For the full list of questions that were asked, please see the Appendix on page 13.

Topics researched included:

How difficult customers found using the card reader the first time and why How many payments had customers set up and how long was it since they had used their card reader What changes or improvements would customers make to the card reader Where customers keep their card readers and what they had done if it had failed Whether the card readers had given customers more confidence in online banking and lead them to use online banking more often Whether customers were more likely to recommend their bank to friends as a result

From a consumer perspective however, the increased protection comes with a price. Card readers add a layer of complexity and inconvenienceto the overall online banking experience that was not there before. This could conceivably undermine the extensive efforts made by banks to getcustomers online.

It is with this in mind that Mapa commissioned a comprehensive research program to be conducted amongst active card users at Barclays,NatWest and Nationwide. The key research objective was to understand how internet banking customers usage and attitudes had been affectedby the introduction of card readers.


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Summary: Ten top tipsB

The research findings show unequivocally that successful deployment of the card reader has directly contributed to greater customer advocacy andmore positive recommendations. Whilst this research deals specifically with card readers it may be used for more general application in successfullymanaging online innovation and technological changes

Mapas ten top tips are:

1. Explain the benefits: Customers that understand why they are using it are more likely to support it

2. Be positive in communicating that the card reader is easy to use: Customers will become stronger advocates

3. Make the instructions easy to follow: You cant afford not to

4. Make it for log-in as well as payments: Customers will to be positive about it and use it more

5. Battery replacement: Have a clear plan for how this is done and communicate it to customers

6. Attractive design: If it is aesthetically pleasing, customers are more likely to like it

7. Ensure that the reader has big buttons: User friendly

8. Make the reader portable : Easy to carry around

9. Allow customers to request two readers: Home and away

10. Prepare your contact centres for an increase in calls: Customers will ring you up


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Was it easy or difficult to use for the first time?1

On the question of how easy or difficult users found the cardreader to use for the first time

Only 1 in 10 Barclays customers found it difficult, fewer thanNatwest where 13% had problems

Twice as many NatWest customers than Nationwide customers

found it difficult

Total

T otal 302 301 300 903

Easy 276 262 282 820

91% 87% 94% 91%

Difficult 26 39 18 83

9% 13% 6% 9%

Nationwide(29)

NatWest(11)

Barclays(14)

Base: 54 respondents

A supplementary question at the end of the survey gave respondents theopportunity to provide any further comments

Nationwide customers were twice as likely as Barclays customers todescribe the card reader as easy and three times more likely than NatWest

customers


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What changes / improvements would they make?3

On the question of what changes or improvements customers would make to their card readers the four most commonly

suggested enhancements were:

Be issued with two card readers

Smaller size

Spare batteries

Bigger buttons

Has it ever failed to work, and how was the problem resolved?4

Around 10% of respondents reported that their card reader had failed to work

It fails twice as often with Barclays customers than for either NatWest or Nationwide ( NB. Barclays also use the card reader forlogin (and not just payments), therefore customers may have experienced problems with site login not necessarily as a result ofthe card reader)

To resolve the problem, customers either call the bank by telephone or try again


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How many payments have customers set up?5

Has it given customers more confidence when banking online?6

It is evident that Barclays customers, who use the card reader to log in as well as to make payments, have set up significantlymore payments than either NatWest and Nationwide:

Barclays users have on average set up over 4 payments each. Nationwide just below 4 and NatWest near 3.5 on average perrespondent

Barclays users have performed around 20% more transactions than their competitor peer group

With clear instructions and regular use Barclays and Nationwide customers are increasingly confident about banking online:

Only two thirds of NatWest customers feel the card reader gives them more confidence when banking online compared to ofboth Barclays and Nationwide

Total

T otal 302 301 300 903More confidence 231 187 218 636

76% 62% 73% 70%

Less confidence 5 16 5 26

2% 5% 2% 3%No difference 66 98 77 241

22% 33% 26% 27%


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The theme of confidence is translated into more frequent use by Barclays and Nationwide customers:

NatWest users have not used their card readers for 7 weeks whereas Barclays and Nationwide users have been active in thelast month

Barclays and Nationwide customers are twice as active as NatWest customers

Total

T otal 302 301 300 903More often 88 57 55 200

29% 19% 18% 22%

Less often 19 19 18 56

6% 6% 6% 6%No difference 195 225 227 647

65% 75% 76% 72%

Barclays customers, who also log in using their card readers, are most likely to use online banking more often:

Nearly a third of Barclays customers say they will use online banking more often whereas less than 20% of NatWest and

Nationwide customers will

When did customers set up their last payment with the card reader?7

Will customers use the online banking service more often?8


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Barclays customers, needing the card reader to access online banking as well as authorise payments, are more likely to carry itaround with them as a result:

Nearly all of the respondents kept their card reader at home

1 in 10 Barclays customers carried the card reader with them, nearly three times as many as either NatWest or Nationwide

Total

T otal 302 301 300 903

Home 254 273 272 799

84% 91% 91% 88%

W ork 14 9 7 30

5% 3% 2% 3%

Carry it around 31 13 11 55

10% 4% 4% 6%

Other 3 6 10 19

1% 2% 3% 2%

Where do customers keep their card readers?9


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Methodology and list of questions1 1

Methodology

300 online surveys were completed with customers of Barclays, Nationwide and NatWest (ie. 900 surveys in total) during January 2009.

Respondents were all active internet banking customers, ie. Login at least twice per month.

Questions

Q1. Approximately how many new payments have you set up using your banks card reader?Q2. When did you last make a new payment using your banks card reader?

Q3. When you made a new payment using the card reader for the first time, did you find it easy or difficult to complete?

Q4. What made it particularly easy / difficult to complete for the first time?

Q5. What would you change to make it easier when using the card reader when making a new payment?

Q6. Does using your banks card reader give you more confidence when banking online in relation to the security of your account?Q7. Will making a new payment using the card reader make you use online banking more or less often, or will it make no difference?

Q8. After setting up a new payment using the card reader, are you more or less likely to recommend your bank to friends or relatives?

Q9. Where do you keep your card reader?

Q10. Has your card reader ever failed to work when making a transaction?

Q10b. If YES: How did you resolve the issue?

Q11. Are there any comments you would like to make on your banks card reader system?

All questions were multiple choice, with the exception of those indicated by italics.


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Contact Details1 3

Ross Methvenhead of operations

[email protected]

Mark Pavanmanaging director

[email protected]

Niklas Olssoninternet research consultant

[email protected]

Elsabeth van Overbeekeinternet research consultant

[email protected]

Key contacts:

Claire Wassellinternet research consultant

[email protected]

Mapa73 Princedale RoadLondonW11 4NSUK

www.mapa-uk.com

t +44 20 7727 3130f +44 20 7229 4713e [email protected]

mapa - card reader research - april 09

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