Smile Case Study

Part of Co-Operative Financial Services (CFS), Smile was created as a 100% online bank venture and has never had a high street presence. Smile does have some 'bricks and mortar' buidings with support staff based in the famous ‘pyramid building’ in Stockport, Manchester.

Launched in 1999, Smile has been a success story and now has over half a million customers and has achieved numerous awards for its customer service. For example it was recently crowned the "best Internet banking provider" for the fifth consecutive year and “best online student account provider’ in the 2006 ‘Your Money Direct Awards’.
Other highs street banks such as Abbey National have tried to copy the success of CFS/smile an introduced an independently branded online bank (cahoot) but have not achieved the same success.

As part of CFS, Smile shares the same ethical policies meaning that it refuses to invest in companies involved in things like the arms trade, genetic engineering, animal testing or poor labour practices. For example, in 2005/06, CFS turned almost £10m of business on ethical grounds including a company that makes sporrans from fox pelts and a shoe firm that trims high-heeled boots with sable.

Smile’s Business Strategy
Smile offers the normal full range of banking products including current accounts, credit cards, loans, mortgages, savings, investments (ISA, sharedealing etc. ). They offer good interest rates and claim to simplify ‘hidden’ charges. So they do all the basic stuff reasonably well it seems.
CFS had a limited budget to launch Smile so focussed on creating a memorable brand with a slick marketing campaign. Smile targeted a customer base of young, urban and affluent consumers which the main CFS brand had failed to do. In this way they hoped that smile would not cannablise its existing customer base. The smile brand is central to the company strategy and has tried to differentiate itself by creating an image of being ethical, friendly, on the customer's side, and a bit quirky.

“We're pink where others are black, we're straight-talking where others talk gobbledygook." Paul Cairney, marketing communications manager for smile.

Smile aim to make banking straightforward without financial language and use words such as 'dosh' and 'wonga', clearly trying to appeal to a younger audience.

The focus for smile has now shifted to providing the best possible customer service to differentiate itself.

"To be a growing, pioneering, financial services business delivering benefits to customers, members and communities through commitment to value, fairness and social responsibility’.

Their vision is..."To be the UK’s most admired financial services business’.

So how does the IT Strategy support this vision?
To support thee vision of being the UK's most admired financial service business, smile has to get the basics right. And the basics in online banking starts with security.

Security
Smile takes security very seriously because of course it has to. There has been a lot of negative publicity about the dangers of online banking and we have all probably received a 'phishing' e-mail asking for our personal bank details.
It is the fear of these security breaches and the need for the occasional 'high-value' or 'complex' transaction that keep people loyal to their bricks and mortar bank. If you are offering an online only service then you can't pop down to your local branch when you want the comfort of completing a transaction face to face. But Smile seems to be getting this part right and are the only online bank to be awarded a British Standards (BS7799) kitemark for information security management. To log on you need your own personal security code plus 5 pieces of private information.

Cross Selling
Cross selling is key for any bank, and smile make this particularly easy. Once logged on you can sign up to new services literally at the click of a button as it remembers all of your personal details. This is absolutely key for smile because they want to keep their sales transaction costs down as much as possible so you don't want people giving up after a couple of clicks and calling the 'expensive' helpdesk facility.

Site Design
To be a no-nonsense, straight-talking bank they you need a website that is easy to understand and navigate. The site achieves this with all of your accounts appearing on one page with your 'net worth' totalled. Smile have not yet gone down the route of aggregating all of a user's accounts (including other banks). This is presumably because of the security issues this raises but this may be a mistake in my opinion. As a customer of rival Egg, I love the Egg Money Manager that allows me to view all of my accounts across several banks on one page. Account aggregation may go some way to reducing the barriers of take up of online banking as it solves the problem of remembering multiple log-in details. (The Data Protection Act in the UK prevents banks from knowing the passwords or personal information of their customers’ third-party accounts but services such as Ewise get round this by providing customers by aggregating information on the client side. Customers can put all their information and pincodes into a digital safe that only they know the details of, and then have one overall password/ PIN to access all the accounts. Another option is the use of a universal electronic wallet system, such as the proposed microsoft Passport system.)

Without an account aggregator, Smile is risking losing its customer traffic to a rival site and losing out on potential cross-selling opportunities.

The site is written in a friendly, down-to-earth style e.g. with one click you can check that your PC is set up correctly for Smile internet banking. The site has loads of how to guides and walkthroughs which makes it very user or idiot friendly.

Understanding its Customers
To deliver real benefits to customers then you need to understand them as well as possible. Smile uses Site Intelligence’s Visitor Behaviour Information System (VBIS) software to analyse website users' online behaviour and to drive its web development and marketing strategy. Smile uses VBIS to understand what its customers require from the website by analysing volumes of web traffic. The software allows smile to see visitor activity graphically showing where they have come from, what pages they viewed and how they navigated around the site etc. This allows smile to understand where its most valuable customers are coming from on the web.

Bank Extras
Again, because no physical branch exists on your high street, smile tries to do all the 'extra' things you can do at your bank on its site. For example, at the click of a button (or two!) you can order foreign currency and travellers' cheques or get copies of statements.

Quirky Extras
Smile is trying to strengthen its link to its young target base through alliances and deals. For example, it signed a deal with Capital Radio to become the first sponsor of Capital Radio podcasts.

In conclusion, Smile seem to be doing a lot of things right and clearly half a million people agree with me. But they had better sort the account aggregation out before they are smiling on the other side of their face...