PERSONALISATION AND CUSTOMISATION
A strategic leverage to sustain e-trading market share
Jimmy Liu
Queens' College, the University of Cambridge, UK
Sven Fischer
ABN-AMRO, Amsterdam, the Netherlands
Steef Peters
Vrije Universiteit, Amsterdam, the Netherlands
Keywords: e-banking, e-trading, personalised services, customisation, customer retention.
Abstract: Electronic banking (e-banking) has emerged the most popular
way for retail banks to provide financial
services to private households. Stock trading transformed into e-trading as retail banks created
comprehensive web portals for customers to perform financial transactions. Low search costs have sparked
fierce price competition. For companies to sustain profitability and retain customers, service differentiation
is vital. Personalisation and Customisation (P&C) techniques allow banks to provide this individualised and
differentiated service and foster a stronger customer relationship. Various P&C approaches have been
examined through case studies of top e-trading companies. A three-layer architecture can be used to which
enables P&C to provide an individual service without undermining core business functions.
1 INTRODUCTION
All electronic-services (e-services) suffer greatly
from lack of personal attention towards its
customers. E-banking is no exception as clinical e-
services have seriously undermined the banking
experience. This has also proved to be the case for e-
trading.
E-trading is under heavy price competition, due to
low
search costs. The ease of information over
commission charges forces many e-trading services
to compete purely on price. For successful retention
of trading customers, these services must enhance
service differentiation and abandon pure price
competition. In the past, service differentiation was
undertaken by investment advisors having met face-
to-face with customers, thus ensuring the provision
of the right service and matching the stocks to the
needs of the customers' purposes. Facing e-trading
and given vast amount of data which are not tailored
to meet individual users' needs, the user chooses for
itself from hundreds of domestic and foreign stocks.
Personalisation and Customisation (P&C) is the next
step
towards closing the gap between traditional
trading service and modern clinical e-services. It
guides each customer by filtering and presenting
only relevant information to the individual, thus
making stock purchasing more efficient and
manageable to the average user. P&C techniques
solve the problem of impersonal services by giving
the customer exactly what they require (Spector,
2002). It fosters the relationship between the bank
and its trading customers and gains the trust of the
customer in order to successfully complete the
transaction (Allen et al., 2001). Consequently P&C
realises the strategy of service differentiation. This
enables the sustainability of superior service quality,
customer retention, and ultimately higher
profitability.
This paper presents a survey of innovative e-trading
services
upon which P&C techniques are evaluated
to construct a guideline for best practices.
40
Liu J., Fischer S. and Peters S. (2005).
PERSONALISATION AND CUSTOMISATION - A strategic leverage to sustain e-trading market share.
In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 40-47
DOI: 10.5220/0002554000400047
Copyright
c
SciTePress
2 RETAINING CUSTOMERS IN E-
TRADING
2.1 E-trading Services in Retail
Banking
There are three core activities upon each trading
transaction: stock-market data analysis, stock
purchasing, and stock portfolio management and
reporting. For e-trading to succeed as the as the
preferred medium for trading, it has to provide the
aforementioned activities in addition to
authentication, mapping of available services and
alerts to-stock market movements.
Good trading services would not present information
overload, but provide the right balance of
information and functionalities. P&C technique
establishes this balance to obtain optimal usability.
These techniques allow the user to individualise the
stock-trading experience by providing means that
allows the user to specify and meets their own
requirements through user profiles. Successfully
implemented, the trading service uses these profiles
to predict users' actions and provides information
and functions pre-empt of request.
2.2 Personalisation and
Customisation: Concepts and
Measures
Personalisation and Customisation is the act of
manipulating information and functionality based on
the users' profile or previous activities (implicit), or
set by the user (explicit). These P&C techniques are:
Explicit customisation refers to the case whereby the
user explicitly customises any part of the
functionality or interface based on revealed
requirements, e.g. optimisation of navigation using
"My Favourites" (msn.com).
Profile based customisation uses a profile of
interests and behaviour that is built up of the user to
select the appropriate content or functions to display,
e.g. localisation of language and content
(google.com); pre-population of form entries
(yahoo.com).
Behaviour or "click-stream" based customisation
selects content or service to display based on the
users' behaviour of past activity, e.g. automatic
notification of updates to previously visited pages
(vbulletin.com).
Collaborative based customisation considers past
behaviour patterns of a service user or community of
users, e.g. recommended of contents to which others
users in the same context are most interested in
(amazon.com).
A system that provides services normally
comprises of an interface layer and a functionality
layer. The functionality layer defines all business
functions that are made available through the
interface. This architecture tends to offer all users
with the same set of system functions and services.
Extension by another layer (P&C layer) allows rules
to filter only the relevant content and specific
functionalities, as shown in Figure 1. These
personalisation rules are governed by user and
content profiles. User profiles contain attributes the
location, job title and interests of the user. Content
profiles would contain the price, brand and creator
of the product (Instone, 2000).
User interface layer
Usersees and feels” P&C
User
Profiles
Values which
represent user
interests
Functionality layer
Contents and functionalities
P&C layer
Personalisation rules
Content
Profiles
Values which
represent aspects
of content
User interface layer
Usersees and feels” P&C
User
Profiles
Values which
represent user
interests
Functionality layer
Contents and functionalities
P&C layer
Personalisation rules
Content
Profiles
Values which
represent aspects
of content
Figure 1: P&C information architecture
The level of user involvement determines the
balance of implicit to explicit P&C techniques used
in a system. The degree of P&C use must be
monitored, as too heavy use of explicit user
involvement upfront discourages users. With the
right balance of explicit and implicit involvement,
users build up trust and are more willing to commit
more sensitive profile information. Implementing
P&C techniques in e-trading service will foster
costumer trust and clearly defined responsibility of
the e-trading service would encourage loyalty and
customer retention.
2.3 Research Methodology
A survey followed by a qualitative analysis features
the research approach we have adopted. The survey
takes a cross section of top performing e-trading
companies across Europe and the US. They are E-
trade (US), Charles Schwab (US), Reuters (US), TD
Waterhouse (US), Ameritrade (US), Egg (UK),
Royal Bank of Scotland (UK), Alex (the
Netherlands), and Binck (the Netherlands). The use
of P&C techniques was highlighted and evaluated
for all trading activities in each of the nine
PERSONALISATION AND CUSTOMISATION - A strategic leverage to sustain e-trading market share
41
(1) Login
(2) Service mapping & Navigation
(3) Data Gathering
Trading
share type X
(5) Portfolio Management & Reporting
(6) Portfolio
Monitoring
& Alerts
(4) Implement transaction
Non-Secure Part
(1) Logout
Trading Y
Trading Z
Secure Part
(7) E-trading account
management
Outsourced
Information
Vendor
Stock research
Breaking news
Figure 2: Trading activities to be evaluated
companies. This produces a guide for optimally
implement P&C techniques in e-trading.
For a rigid and comprehensive investigation of each
e-trading company and to establish where to best
organise P&C into the most relevant stages, a
generic trading transactions process was generated
from an overview of each service. Opportunities of
P&C were then categorised in accordance to each
stage of activity. Some activities do not require a
secure environment whilst for others a secure
environment is essential. The seven major activities
in e-trading are depicted in Figure 2, which reflects
the areas of research.
User identity verification is conducted as the first
activity (Activity 1), which allows the user to login
and sign out. Service mapping and navigation
(Activity 2), provides an overview of all available
services. Data gathering (Activity 3), presents
market activity and breaking news often from
outsourced information vendors such as Bloomberg
and Telerate (Veale, 2001). Trading and stock
ordering (Activity 4) allows the purchasing and
selling of stock based on purchasing criteria and
limits. Portfolio management and reporting (Activity
5), presents the collection of stocks held and
archives past trading activity. Portfolio monitoring
(Activity 6), alerts the user of market condition
regarding stock held of interested in. E-trading
account management (Activity 7), performs
administrative duties and allows the use to set
trading preferences.
We evaluated each company based on the seven
activities based on the following five usability
criteria. (Beynon-Davis, 2004):
Level of "individualisation" evaluates the success of
P&C techniques and the level of intelligence each e-
trading service provides.
"Ease of use" rates the companies on clarity of
navigation, logic of e-service and consistency of
contents and layout.
"Accessibility" evaluates the help functions and
stock-trading guides for new user or inexperienced
share trader.
"Efficiency" scores the time per transaction, number
of keystrokes to purchase one stock and the levels of
navigation present in each company.
"Facility to return" rates the ease of error correction
after mistaken input.
From this ranking, the top companies use of P&C
techniques can be highlighted and evaluated.
3 BEST PRACTICES IN E-
TRADING
The top five companies were E*Trade, Alex, Binck,
Reuters and Egg with Table 1 depicting the results.
The evaluation based on usability criteria showed
that two categories of e-trading sites could be
distinguished, those companies targeting
ICEIS 2005 - SOFTWARE AGENTS AND INTERNET COMPUTING
42
experienced customers (those with more than three
years of trading experience) and non-experienced
customers (less than three years). The top company
targeting experienced customers was E*Trade and
targeting non-experienced customers was Alex. The
distinction between targeting experienced and non-
experienced customers does not only differ on
functions, but also on amount of market information
and depth of analysis (as observed in Ameritrade),
and commission charged; the trader chooses the
most appropriate package. To successfully maintain
market share in each market, all e-trading services
should provide both types of platforms and let the
user choose the package that it requires.
4 PERSONALISING E-TRADING
SERVICES FOR COMPETITIVE
EDGE
Due to low search costs e-trading is under heavy
price competition. The ease of comparing
commission charges forces many e-trading services
to compete purely on price. For successful retention
of customers, e-trading companies must provide a
superior service through individualisation so as to
closely match customer's needs. Furthermore a
superior service it will enhance differentiation and
abandon unprofitable price competition. P&C
techniques form part of this individualisation
strategy and currently implemented techniques are
outlined in Table 2.
As shown, P&C techniques can be performed in all
phases of e-trading. A selection of the five most
effective techniques is presented below. The number
between brackets refers to the corresponding type of
customisation as described in Table 2.
Table 1: Top performers in
e
-trading
Trader
Activity
E-
Trade
Alex
Reuters
Binck
Egg
Schwab
TD
Water-
house
Ameri-
trade
RBS
1 User Identity
Verification 5 5 5 5 4 4 4 3 3
2 Service Map &
Navig 5 5 4 5 5 4 4 4 4
3 Data Gathering 4 4 4 4 4 4 3 4 4
4 Stock Ordering 5 5 5 4 4 4 4 4 4
5 Portf Mgmt &
Reporting
5 5 4 4 4 3 3 3 3
6 Portf Monitor &
Alerts
4 3 5 4 5 5 5 4 3
7 E-Trading Acc
Mg mt
4 5 5 4 4 4 4 4 3
Total Score 32 32 32 30 30 28 27 26 24
Table 1: To
p
p
erformers in e-learnin
g
4.1 Customisation of Menu and
Interface (2a & 2b)
One of the most obvious means of customisation is
allowing the user to adjust the menu and navigation
map of the website. This results in highly accessible
functions. Schwab Trader has successfully
implemented this type of customisation, as shown in
Figure 3. It allows the user to arrange and save the
layout of charts and stock market analysis.
The user determines the most important activities
and information for display and saves this layout. By
saving different interface layouts a user can create
different profiles: e.g. one basic layout for trading at
work, and a more extensive layout that allows for
detailed stock analysis for the evenings at home.
4.2 Interactive Data Charting (3a)
The data-gathering phase of e-trading is very
suitable for customisation. Charts and figures can be
configured in different ways, e.g. trend lines can be
added and modified, and different charts can be
integrated to establish moving averages. Figure 4
shows an example of interactive data charting as
implemented in the Schwab Trader website. With
this type of customisation, efficiency of use is
significantly improved with the option of saving the
chart format setting for future uses.
PERSONALISATION AND CUSTOMISATION - A strategic leverage to sustain e-trading market share
43
T
able 2:
Current
P&C Techni
q
ues
Activity
P&C Techniques
Trader
or
C
om pany
1a Change
preferred start page, e.g.from non-secured homepage to log in
page
.
Schwab
1 User Identity
Verification
1b Individualise first secured page to users’ preference, e.g. change from
secured homepage to
inbox or portfolio management pages.
Schwab
E*Trade
2a Fully customisable menu bar and windows, e.g. change the number of,
position of
and size
of windows
Schwab
2b
Creation of several custom display profiles depending on the complexity that
trader needs for
current trade, e.g less analysis and stock news presented to
user w hen e
-
trading is performed at w ork, comprehensive stock research when
user implements trading
in
evenings w eekends.
Schwab
2 Service Map
& Navig
2c
Drop dow n menu of frequently visited functions pages or information services
set by user, e.g.
favourites
.
Reuters
3
a
Format display of interactive charts according to user settings, e.g according
to pre set time range of prices.
Schwab
A
meritrade
Reuters
3b
Displaying news and quotes related to trader’s interest or portfolio holdings.
Reuters
3
c
dvisors message and emails of trading tips on shares which fit traders
profile.
Schwab
-
Messenger
Reuters
-
MS N
3 Data
Gathering
3d
List all stocks previously browsed in current session
e
-
bay
4 Stock
Ordering
4a
Sel
f
-selection
between simple view (non-experienced users) or complex view
(
experienced users).
The
user decides whether its walk-through mode or expert
mode
and determines
the number of checks and limits of trading.
Binck
5a
Sort stocks in portfolio to display according to user requirements
E*Trade
5 Portf Mgmt
& Reporting
5b
Create
custom views of
portfolios and watch-lists.
Reuters
6 Portf
Monitor &
A
lerts
6a
Pr e
-
set alerts
on stock price movements, e.g upon reaching price limits,
trading service send a
lart
to any mediu m of communication including e-mai l,
MS N
, SMS or i
-
mode.
Egg
7a
User specifie
s
the frequency of
confirmations, e.g user is able to turn on or off
stock order confirmation
.
A
mer itrade
7 E
-
Trading
A
cc Mgmt
7b
Create key
-
stoke short cuts t o vital functions , e.g. cont+p to view portfolios
page.
Yahoo
Table 2: Current P&C Techniques
4.3 Personalised Stock Research and
Trading Advice (3c)
An instant messenger window gives the e-trading
interface a more individualised feel; the customer
does not face a static data chart. Schwab Trader has
provided customers with a so-called
"Communications Panel" that answers customer
specific queries in real time (see figure 5). This is
important in building up a customer firm
relationship and thus adds to customer retention.
"Ease of Use" and "Accessibility" is high as the
interface is based on the widely used MSN
Messenger layout. Reuters, for example, solves these
two problems by directly using MSN Messenger for
real time customer queries.
4.4 Individualise Complexity of
Transactions' Criteria (4a)
Customers will have different amount of trading
experience. For those users who are not accustomed
to finance, there should be a simple stock-ordering
interface with minimal distraction and confusion.
ICEIS 2005 - SOFTWARE AGENTS AND INTERNET COMPUTING
44
Figure 5: Schwab Trader’s personal trading advisor
For those who have traded extensively, they require
a more complex interface that allows for further
refinement of the purchasing conditions.
Binck, has implemented this concept by providing
two different trading interfaces (see figure 6), a
simple view and a complex view. The simple view
provides high-level guidance and literally 'walks"
the user through making trade transaction. The
advanced view allows the user to make extensive
use of stock purchasing conditions. The advanced
view also provides little help of guidance and hence
minimal interference.
4.5 Custom reports (5a & 5b)
Trading activity is profitable, but is highly risky.
The firm (agent) simply implements the trade on
behalf of the customer (principal). This can lead to
the principal-agent problem of the firm (agent) not
acting in the best interest of the customer (principal).
Records of trading activity in the form of reports
ensure the clear definition of responsibilities
(Mishkin, 2001). For reports of portfolio
performance to be of use, they have to be easy to
interpret. The user often does not need to see all the
data, so something is needed for sorting the data into
relevant information.
Figure 3: Schwab Trader’s fully customisable trading
interface
Figure 4: Schwab Trader’s interactive charting
E*Trade and Schwab Trader use customisation
techniques to create an interactive report which lists
the relevant information for the user to interpret and
use. E*Trade's P&C technique in sorting stocks
displays the stocks held according to different
requirements including "performance", "research"
and "trader".
Schwab Trader's applies the same technique and
allows the user to sort stocks in its watch list.
Sorting conditions include "company name",
"volume of stocks", and "level" and "percentage" of
change. These views can be saved to be retrieved at
a later stage (5b).
4.6 Caveats
Comparing the e-trader rankings in section 3 with
the examples of P&C techniques, there is a clear
warning that the sole use of P&C techniques does
not imply high usability. Although E*Trade and
Alex were ranked as the highest firms providing e-
trading services, they were not central of discussion
in P&C techniques. This suggests that extensive use
of P&C techniques is not a substitute to good
interface design based on the five ratings criteria.
Additionally users may make mistakes that are
recorded, or fill in wrong personal information that
generates bad profiles (Esteban, 2000). This could
render profile based and behaviour customisation
techniques useless. Only the monitored use of these
PERSONALISATION AND CUSTOMISATION - A strategic leverage to sustain e-trading market share
45
Choice of level of details
in transactions
Choice of level of details
in transactions
Figure 6: Binck’s Stock Transactions interface
techniques will add value and foster customer trust,
which will build on exciting customer-firm
relationships. This will lead to the retention of e-
trading market share.
5 CONCLUSIONS AND FUTURE
WORK
Customer retention is an extremely important factor
to a firm in remaining competitive. P&C techniques
are an important means of achieving this goal. The
research of top performing e-trading companies has
suggested a series of efficient methods in P&C for e-
trading. Most of which have built P&C techniques
into the interface of the company’s application
The increased use of P&C techniques suggests that
these techniques add value to the interaction
between the customer and the supplier, i.e. the
financial institution. Models describing the pre-
transaction process of e-commerce, such as the
Landscape model developed by Verhagen
(Verhagen, 1999) originally presented P&C
techniques as “adaptation” of the website and “
customisation” of the product on offer. The new
P&C techniques we investigated show that P&C
takes a more central role in de pre-transaction
process: both the supplier and the customer have the
ability to further tailor the transaction process to the
needs of the customer. The supplier can customize
the pre-transaction process based on customer
characteristics and previous actions of the customer.
Even product characteristics (fees and payment
conditions) may be customised to specific customer
characteristics. The customer can customise using
his or her own user profile, and can increasingly
“adapt” the product on offer – in this case the stock
purchasing order – to his or her preferences.
Further research in other fields of e-commerce may
be necessary, but based on this research it seems fair
to conclude that the current pre-transaction models
describing e-commerce are too limited in describing
personalisation and customisation. Information and
interaction currently take a central role in these
models. On the other hand the research suggest that
the progress in P&C techniques will take a more
central role.
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PERSONALISATION AND CUSTOMISATION - A strategic leverage to sustain e-trading market share
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