Reference no: EM132183254

It seems to me, that everyone hates banks. They don't treat customers right, charge a bunch of fees, etc.

ALMOST NO ONE LIKES BANKS. From surly tellers to long lines, from “bankers’ hours” to fees for just about everything, consumers are fed up. But Prudential, the big British insurer, was convinced things didn’t have to be this way. Way back in October 1998, Prudential launched Egg, which has gone on to become one of Europe’s largest online financial services providers. Egg, unlike many in the banking indus- try, believes superlative customer service is the key to growth. But can such service be delivered online? “The aim of all Egg’s communica- tion is to make the customer feel like an individual,” says Patrick Muir, Egg’s director of marketing. “We want to make money easier to understand and easier to manage.” Offering great customer service is easy to say, but is much harder to deliver consistently. Egg has suc- ceeded by making a series of decisions about the prod- uct it offers—various services, in its case, rather than goods—and then managing its execution and service delivery very well through the use of technology. Banking with Egg is a far cry from conventional bank- ing or most other applications of customer relation- ship management technology, for that matter, which often infuriate rather than please customers. What were the product decisions that helped Egg succeed? First, Egg offers its customers a variety of channels of communication. There’s the internet, of course, but Egg doesn’t stop there. Egg TV offers interactive access from the comfort of one’s living room. Further, Egg’s 1,200 call center associates are available round the clock to help customers who want to speak to a real person. “You actually have a conversation with someone, rather than sticking with a rigid script,” says Muir. What Egg also does differ- ently is to offer a wide variety of financial services. Checking accounts, savings, credit cards with cash- back discounts financed out of retailers’ commission to Egg, mortgages, even insurance. Egg’s wide range of financial services offers one-stop shopping to Egg customers. And each Egg customer can access a per- sonal balance sheet that displays all his or her assets and liabilities on one screen. Even accounts with other online providers can be included. Egg’s multichannel strategy provides customers with more access points and enables them to access their money where, when, and as they wish. At home? Use Egg TV. At the office? Use the internet. On holiday at a beach resort? Find an internet cafe?, and access your account. Egg says it’s committed to mobile banking, too, as wireless technology deploy- ment permits. Egg’s technology gives it a comprehensive customer-by-customer view that enables Egg to come up with suitable products and service to offer, based on each customer’s own profile. “We want to put great offers in front of our customers that we believe are right for them rather than pushing unwanted products through hard-hitting sales campaigns,” says Muir. Egg’s early results spoke for themselves. In 1999, it won 22 percent of net new deposits in the U.K. banking system. Within 18 months of launch, Egg had attracted more than one million customers. By 2002, brand awareness had reached 88 percent and its cus- tomers numbered over 2.1 million. Egg’s success in the United Kingdom led man- agement to believe it could replicate the Egg model elsewhere. But its foray across the English Channel was not a? la mode. French consumers didn’t respond in the same way Brits had, and by 2004, Prudential was forced to shut down the French operation, post- ing an overall loss for the year of £107 million. But it was not just the French business that fared poorly. Prudential sold Egg’s investments business to Fidelity at a small loss and put its investment wrap business, Funds Direct, up for sale. Chastened by these setbacks, management refo- cused on its basic UK business, returned the com- pany to profitability, and—with Egg’s stock price in the tank—bought the company back from its public shareholders, taking it private. In May 2007, hav- ing returned the business to health, Prudential then sold Egg to CitiGroup for £546 million, or just over $1 billion. Despite the somewhat rocky road it has traveled, Egg’s service-centric focus has served it well. Whether that focus is sufficient to fuel future growth in the hotly competitive online finance industry, where just about every brick-and-mortar bank is also now online, remains to be seen. But CitiGroup’s billion-dollar bet suggests that it believes Egg still has room to run.

Questions

1. Does Egg's multi-channel strategy in your opinion provide a successful environment?

2. How could Egg do a better job outside the UK to drive revenue and profit?