Jim Bruene, Author at Finovate

Bank of America Sponsoring Free Wi-Fi for Smartphones on Alaska Airlines Flights

By Jim Bruene Posted on August 9, 2011
Categories: Account opening, Advertising & Promotion, Bank of America, Credit/Debit Cards, Mobile Banking

A few days ago I was on a Chicago-Seattle flight on Alaska Airlines and was surprised to hear an overhead announcement about Bank of America sponsoring free wi-fi on the flight. But it came with a catch, the free access applied only to smartphones (notes 1, 2).

While I’m a big user of airborne wi-fi on my laptop, there isn’t much I want to do on a smartphone connection at 35,000 feet. But my curiosity got the best of me, so I gave it a shot and found the free connection was delivered as promised. I had simply to type in my email address, agree to the terms and conditions, and hit the big blue button (see first screenshot).

It didn’t take me long to figure out why BofA was being so generous. The second page of the sign-on process included a full-page ad for the bank’s Alaska Airlines affinity card (see second screenshot).

My take: Sponsored wi-fi is an effective way to reach the lucrative smartphone-carrying market. But the credit card application user experience was flawed. The bank dumps the whole app and disclosures onto a single mobile webpage, which required scrolling down about eight screens’ worth of info (see screenshots 3, 4, and 5). And the fonts were way too small to engage most users.

If BofA were to build a proper mobile-optimized credit card application form, they’d likely increase app volume two- to three-fold. In the meantime, the bank should add an option for the user to request a full-sized app to be completed later on their laptop.
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1. First screen of free wi-fi promotion on Alaska Airlines (7 Aug. 2011)

2. BofA credit card solicitation on page 2 of the login process

3, 4, 5: The rest of the mobile application (click to enlarge)
Note: This shows only the beginning of the disclosures; the full text ran several more screens down the page.

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Notes:
1. I didn’t test it, but I assume it would have been free on the iPad as well.
2. I believe they said the offer would continue through the month of August.

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Chase Bank Offers 0% Balance Transfer and Easy Online Transfer

By Jim Bruene Posted on August 4, 2011
Categories: Chase Bank, Credit/Debit Cards, Login/logoff marketing

(Ed. note: The original promotion shown below was made by Chase in early April, right before U.S. income taxes were due. But the bank is still offering similar balance-transfer options, as outlined below).

When I logged in to my Chase credit card account, I was greeted with an attractive interstitial ad promising to save me money if I transferred a credit balance to the bank (see Figure 1).

The bank offers two or three choices of terms and rates. Obviously, you can’t beat 0%, but evidently some customers prefer to lock in a lower rate longer. Last week, we had the following choices:

0% for 11 months (thru June 2012)
1.99% for 17 months (thru Dec. 2012)
5.99% for 22 months (thru May 2013)

Each choice also required an immediate 1% fee on the transferred amount (note 1).
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Analysis
_____________________________________________________________________

The interstitial ad grabs your attention and the pricing is aggressive, so I expect Chase is getting good takeup. More interesting to me is the actual online transfer process which appeared flawless, though I didn’t actually move any money. My only major criticism is that the prices are a little hard to find, especially the transfer fee.

It’s a great offer and lets the customers see the total price right away. Overall, I give it an A-.

Good:

Great, eye-catching graphics
Copy is very concise, passing the 25-word “Google homepage” mark
Clear benefit, “save/saving” used twice in the 15-word ad
Clicking through leads directly to the transfer page where users can accept the offer (see Figure 2 and 3)

Not so great:

On interstitial ad (Figure #1):

Not super clear where to click to take advantage of savings
The actual value of the “Great low rate” is not disclosed until after you click-through to transfer page (second screenshot)
The laptop graphic image is not particularly interesting

On the transfer page (Figure #2), :

Two choices are virtually identical (0% though Feb. 2012 or 0% through March 2012) and one that’s clearly less appealing (2.99% through Aug. 2012).
There is no specific disclosure on the first page of the transfer fee (which I believe is 4%), just the famous “additional terms apply” (the fee comes in step 3, Figure 5)

Recent offers: On my original April 1 test (Figure 1 & 2), I didn’t go through the entire process. So I went back last week to see when Chase discloses the transfer fee. The user is told about the 1% transfer fee (see note 1) during the second step (Figure 5) when they are asked to agree to terms and conditions. The go-to rate after is also listed.
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Figure 1: Chase interstitial ad at credit card login (1 April 2011, 8 PM Pacific)

Figure 2: Landing page to begin balance-transfer process (1 April 2011)

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Retesting the service (21 July 2011; 10 PM Pacific)
Figure 3: Step 1 — Select an offer

Figure 4: Step 2 — Enter transfer details (card number and amount)

Figure 5: Step 3 — Agree to the terms and conditions

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Note:
1. Chase’s 1% transfer fee is much lower than the 4% seen in most other offers. The bank should highlight that number since it’s a selling point.

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Mobile Banking Changes Everything, or Nothing

By Jim Bruene Posted on August 2, 2011
Categories: Mobile Banking, Strategies

I’ve been thinking about mobile delivery a lot in the last few years. Two years ago, I opened presentations with “mobile is the new online.” But lately I’ve changed that line to:

Mobile is ~~the new~~ a better online

Equating mobile banking to online is selling it short. Really, it’s much better than online. I believe that in the not-too-distant future (i.e., 10 years out), we’ll come to look at online as an extension of mobile, not the other way around.

Here’s why mobile is not only better than online, but also changes everything about remote delivery:

Mobile knows where you are
Mobile is with you all the time
Mobile has a voice option (duh)
Mobile can be more secure
Mobile can interrupt you (text message, on-screen alerts)
Mobile can use the accelerometer (shake to log in)
Mobile has a camera and an input device
Mobile will be able to communicate directly with other devices (NFC)
Mobile will allow you to pay at the POS and be your primary wallet and ID too

No doubt, your product folks have their work cut out for them integrating mobile into all that you do. Yet, despite all the hype, mobile changes nothing about your underlying banking business:

Everyone will offer it, so you won’t gain market share
Everyone will price it the same, so you won’t gain incremental profits
Customers will expect it, so you won’t improve customer satisfaction

Bottom line: Ultimately, banks will win or lose based on how well they execute on gathering deposits, making loans, facilitating transactions/payments, servicing customers effectively, and pricing it all correctly (note 1).

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Notes:
1. Graphic image from Chase (click on it to go to the site)
2. And I thought of adding, “keeping regulators happy.” But that probably goes without saying these days.

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Out of the Inbox: Bank of America’s "Irregular Credit Card Activity" Alert

By Jim Bruene Posted on July 28, 2011
Categories: Alerts & Messaging, Bank of America, Email Samples, Security, Service

Several months ago (previous post), I wrote about Bank of America’s online fraud-warning resolution center for consumer cards, MyFraudProtection. It’s a great service, though a little hard to use.

At that time, I showed only the online functions. The more important piece is the email alert (below). It’s a great way not only to reduce fraud, but also maintain good customer relations.

But it’s still read-only. What I’m really waiting for is a truly two-way email, or better yet, text message. That way I can simply respond to the bank’s question in a few seconds and both of us can get on with our business.

Email alert from Bank of America: Irregular Credit Card Activity (11 Jan. 2011)

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Note:
1. See our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.

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Finally, a Facebook Credit Card Connection to Really Like (Thanks American Express)

By Jim Bruene Posted on July 26, 2011
Categories: American Express, Credit/Debit Cards, Facebook, Rewards Programs

Since Facebook became the de facto social operating system a year or two ago, I’ve been a little surprised the financial powers haven’t jumped on board more aggressively (note 1). But the card companies have had their hands full dealing with the credit meltdown, so it’s understandable.

But now that “big cards” are moving forward again, we’ll see a burst of activity leveraging Facebook and other social networks during 2012 and beyond (note 2).

Link, Like, Love from American Express is a great example of what’s to come.

Here’s how it works (1 thru 5 illustrated in screenshots below):

Step 1: Go to the American Express Facebook page
Step 2: Add “Link. Like. Love.” to your Facebook profile
Step 3: Link your AmEx card to the app
Step 4: Sign up for offers you like
Step 5: Visit the merchant (whenever you like) and pay with your AmEx card
Step 6: The discount will automatically appear as a statement credit on your card

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Analysis
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The AmEx program is very similar to bankcard-based, merchant-funded rewards, except for one huge difference. Instead of “liking the offer” during infrequent visits to your bank/card statement, you do it while on Facebook, which the typical user visits approximately a zillion times more than their bank (note 3).

MasterCard/Visa issuers will follow the same path, but AmEx bagged a ton of free publicity along with the first 2 million users. Like it, a lot.
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Step 1: Visit American Express Facebook page
Note: 2 million “likes” (note 4)

Step 2: Add the AmEx app

Step 3: Link card

Step 3a: Complete form on AmEx webpage

Step 3b: Share with friends (optional)

Step 4: Activate offers with two clicks

Step 4a: Confirm

Step 4b: More optional sharing

Final: Offer now shows “Added”

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Notes:
1. Chase had the first “1+ million likes” financial promotion in early 2010 with its brilliant Community Giving program
2. We’ll see some great Facebook integration at FinvoateFall in two months.
3. Presumably, I’ll be getting all kinds of Facebook and/or email messages from AmEx; although 2 hours post-signup, nothing was in either inbox.
4. During the 2 hours or so (4 to 6 PM Pacific) that elapsed while I was working on this post, the number of likes increased by more than 300. That translates to 3,000+ per day, or close to 100,000 per month. I don’t know how many likes AmEx had when the program launched, but it sounds like reasonable traction.

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Verity CU Asks "What are the Ten Most Interesting Products of 2011"

By Jim Bruene Posted on July 22, 2011
Categories: Strategies, Verity CU

I try not to ride the coattails of someone else’s blog post, but here I go doing it anyway, because it’s a great mid-year question.

Shari Storm, published author, Filene i3’er, and grand master financial marketer, asked the Internet to help her round out the list of ten most interesting (financial) products of 2011.

Here’s what she’s found so far (note these aren’t necessarily new in 2011, just interesting this year; parenthetical comments are mine):

Mobile banking (note 1)
Mobile remote deposit capture
Personal financial management tools
Personal bookkeeping (e.g., Balance Financial)
Rewards checking (including in-statement merchant-funded rewards)
Mobile apps that encourage you to build your savings account
Short-term fixed-rate second mortgages

For what it’s worth, in the comments I suggested (alpha order):

Anti-virus for your card charges (e.g., BillGuard)
Bill statement storage online (e.g., doxo, Manilla)
Buy online/pay offline services (e.g., PayNearMe at 7-11)
Mobile barcode scanning for shopping comparison
Tablet banking
Tween/teen banking/prepaid services

Give Shari some ideas here, so she won’t be mad that I’m stealing her post.

Notes:
1. Verity launched May 2 and already 1,500 of 25,000 members are using it (about 6%).

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U.S. Peer-to-Peer Lending Hits Record High for Seventh Month in a Row

By Jim Bruene Posted on July 20, 2011
Categories: Loans & Credit, P2P Lending

This guest post was written by Peter Renton, (@SocialLoans), Editor & Publisher of peer-to-peer lending blog, Social Lending Network.

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With the launch of Prosper in Feb. 2006, peer to peer (P2P) lending arrived in the United States with great fanfare. Borrowers no longer needed banks. Individual investors could be the banker and earn great returns.

But, there have been challenges along the way. In 2008, the SEC decided P2P lending should be regulated as a securities business and both Prosper and Lending Club, which launched in mid-2007, were shuttered for half a year as they retooled. Both companies also initially struggled with higher-than-expected default rates.

It is only now that P2P lending appears to be living up to that initial promise. Last month was the best ever as lending volumes broke the record for the seventh month in a row. The combined volume of Prosper and Lending Club amounted to $25.6 million in June compared with $12.2 million a year ago, a 110% gain. As you can see in the chart below, the growth curve has been getting steeper.

Source: Companies, July 2011
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What is driving the growth?
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1. Credit card interest rates remain high
The most common type of loan by far, on both Lending Club and Prosper, is debt consolidation. People are trying to dig themselves out of credit card debt where rates can climb north of 30% if a payment is missed. In comparison, someone with good credit can get a 36-month P2P loan at 12% to pay off their credit cards in three years.

2. Home equity loans are very difficult to get
Before the real estate bust, banks pushed home-equity loans aggressively. No more. It now takes great credit and substantial equity to qualify. Last month Lending Club reported that 14% of its loans were used to fund home-improvement projects. Prosper said that number was 12%.

3. Investors can earn double-digit returns
It has been two-and-a-half years now since the Federal Reserve dropped its target-funds rate to zero. Fixed-income investors have been stuck with returns in the low single digits. Investors are looking for yield and some are considering alternative asset classes like P2P lending where returns are averaging around 10%, though it’s yet to be seen if that return holds as the loans season.

Prosper CEO Chris Larsen attributes the high investor returns to the startup’s five years of experience. He said, “Since re-launching our platform in July 2009, we’ve delivered returns of 10.4% and default rates of 5.3% and lenders are responding favorably.” Their recent performance backs up these statements.

4. Institutional investors are taking notice
Lending Club says that currently about one-third of investor money comes from institutional investors. In May, Prosper took on a new institutional lender who has invested close to $2 million in just two months and has pledged a whopping $150 million in the future. Prosper expects the balance of individual to institutional investor to resemble more of a 50/50 split as the category continues to grow. Clearly some of the big-money players are starting to allocate assets to P2P loans.

5. The IRA option
For a couple years now, Lending Club has offered an IRA option they say has proven to be popular. “Investors planning retirement are less concerned with near-term liquidity and are more interested in consistent returns and the ability of an investment to generate cash flow,” explained Scott Sanborn, CMO at Lending Club, “and we find existing investors who have been pleased with their returns who are opening larger IRA accounts to let their investment grow tax deferred.” Prosper does not officially offer an IRA although it is possible to set up a self-directed IRA with Prosper.

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New Online Banking Report Published on Youth Banking: Attracting Tween, Teens, & Under-25 via Online/Mobile

By Jim Bruene Posted on July 18, 2011
Categories: Online Banking Report, Strategies, Youth market

We were still in the Web 1.0 world when my kids (teenagers now) started their first savings accounts. So there were few youth banking services available to facilitate online savings and spending.

Fast forward 10 years. We have Facebook, we have Twitter, we have mobile weather info. But we still have virtually no youth banking tools at the major U.S. banks (Wells Fargo is furthest along, see screenshot below).

And that makes no sense.

There are 100 million people under age 25 in the U.S., and obviously, 15 to 25 years from now, a good portion of your profits will come from this group. However, in the next five years, this cohort will generate exactly zero percent of profits.

In the branch-based past, it made business sense to wait another five years to start selling to this group. After all, high-school graduates closed their bank accounts when they moved to college. College graduates closed theirs when they moved to their first job. And first-time job holders switched accounts when they landed a better job, and so on.

But that was a different time. In today’s remote-banking world, THERE IS NO REASON TO EVER CLOSE YOUR ACCOUNT. You just send in a change of address and keep logging in to the same place.

A 12 year-old girl today is expected to live another 70 years (boys, only 65 more). So if those kids won’t ever need to close their accounts, it stands to reason that getting them hooked to their parents’ online banking becomes pretty important.

That’s why we are seeing interesting startup activity in this area including (from recent Finovates):

Bobber Interactive
Kiboo
MatchFund
MoneyIsland (from BancVue)
Thwakk
Tile Financial

And there is a rush to social media, such as the brilliant Young & Free campaigns invented by Canada’s Currency Marketing.

Finally, the report includes articles from two industry experts:

Justin Hosie of Chambliss, Bahner, & Stophel PC on the importance of bank compliance with the Children’s Online Privacy Protection Act (COPPA)
Matt Cullina, CEO of Identity Theft 911, writes about the importance of protecting your kids against identity theft

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About the report
______________________________________________________________

Family Banking: Online/Mobile Services for Tweens, Teens & their Parents (link)
In a remote banking world, your most-promising prospects aren’t even driving yet!

Published: July 15, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 52 pages (10,000 words), 52 Figures, 7 Tables

Cost: No extra charge for OBR subscribers, $495 for everyone else (here)

Abstract here

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Wells Fargo offers up solutions for four age groups (18 July 2011; link)

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PerkStreet Financial Targets USAA Debit-Rewards Customers with Ads on Facebook

By Jim Bruene Posted on July 15, 2011
Categories: Advertising & Promotion, Debit Cards, Facebook, Rewards Programs

Every once in a while I stumble onto Facebook, usually by following a link from a credit union or banking site. It happened a few days ago, when I clicked a link in the middle of Visions FCU Rocks, a cool youth banking microsite from Visions Federal Credit Union.

The Visions Facebook page was fine, but it was the little ad in the lower-right that grabbed my attention (see inset and screenshot below).

PerkStreet Financial, which has perhaps the richest debit-rewards program in the nation, with 1% to 2% cash back, is targeting USAA customers who just lost their debit card rewards program altogether. The landing page (see screenshot below) does a good job laying out the financial benefits and funneling visitors to the online app.

Bottom line: It’s a good time to tout debit card rewards, if you are sure you are keeping it. And targeting USAA customers specifically seems worth testing.

But if I was a USAA customer doing whatever people do on Facebook, I think I would find the, “Your USAA Account Changes” headline vaguely misleading. It might be better to use a headline more like the first sentence of the ad, “USAA is ending debit card rewards” or even, “Be glad USAA ended debit rewards.”

That’s it for my attempt at teaching “headline writing 101.” Class dismissed. Have a great weekend.

PerkStreet Financial targets USAA customers with Facebook ad (12 July 2011)

PerkStreet landing page (link)

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MoveNbank: Can it Out-simplify BankSimple?

By Jim Bruene Posted on July 11, 2011
Categories: Launches, Mobile Banking, Mobile Payments

I’ve been accused of falling for the Bank Simple hype. Just to prove that I don’t discriminate, I bring you MoveNBank, a mobile-optimized banking startup founded by Bank 2.0 author and consultant Brett King.

From what little is disclosed on its Facebook page, Twitter feed and Startuply profile I’ve assembled the following facts:

Timeline:

Founded July 2010
Private beta to begin soon (per 1 July 2011 Tweet)
Soft launch scheduled for July 2012

Company:

Global startup with HQ in NYC (Madison Square Park, 25 W. 31st)
Founder and Chairman is Brett King
8 employees

Product description:

Mobile only, with no paper or plastic
NFC-enabled app
Incorporates “gamification” in UX
According to Startuply, “reinventing credit scores and more with an open, social transparent, and viral model” (sounds P2P lending-esque)

Bottom line: MoveNbank is looking to leapfrog the competition by removing all vestiges of old-school banking. No branches (of course). No paper (no surprise). And no plastic (what?).

That’s how ING Direct got its start (they did have paper statements), so it’s not unprecedented. But if MoveNbank plans on offering payments, it will be harder to pull off. But with a soft-launch still a year away, it should be able to ride the NFC wave expected to roll across the globe in the next five years.

Are there any other remote banking startups I’m missing? Drop me an email (jim@netbanker.com).

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MoveNbank placeholder page (11 July 2011)

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PSECU’s Remote Deposit Honor System Has Processed $1.4 Billion with Only $74,000 in Losses

By Jim Bruene Posted on July 7, 2011
Categories: Best of the Web, PSECU, Remote Deposit Capture

Sometimes the best ideas are the simplest ones. Ten years ago PSECU launched the Upost@home deposit service. It allows members to manually enter their deposits in the CU’s online banking system for immediate credit, then mail them to the CU in a postage-paid envelope.

The service, launched in late 2001, was little publicized outside of PSECU’s member base during the first two years. We first heard about it in late 2003 when a second credit union licensed the service. We gave it our highest honor, an OBR Best of the Web award (note 1), one of only five given during the post-bubble dark days of bank-tech innovation (2001 through 2004).

At the time, it seemed an almost crazy idea. An online/offline honor system for deposits. But the CU knew what it was doing. It limited the amount that could be deposited and which members were allowed to use the service.

Now the results speak for themselves (see annual totals in table below):

4.5 million items deposited worth $1.4 billion (avg. of $310 per check)
$74,000 in losses
= 0.0053% loss rate (0.5 basis points)
or 1.6 cents per item

Upost has turned into the least loss-prone method of accepting deposit, including the branch!

Another interesting data point: The CU is processing almost 50,000 Upost@home deposit items per month, about one per month per member enrolled in the service, a pace that’s stayed remarkably consistent over time.

Bottom line: We’ve listed PSECU’s Upost@home on our annual list of top online/mobile innovations of all time (it was ranked #24 of those invented in the past 10 years and #42 of all time). But in terms of “bang for your buck,” it’s probably in the top-5.

Source: PSECU, 5 July 2011

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Notes:
1. The original article published in Online Banking Report (OBR #103) is reprinted in the Netbanker archives here.
2. The list of top innovators was published in OBR #188.

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TD Bank Uses Interactive Online Banner Ad to Capture Mobile Numbers

By Jim Bruene Posted on July 5, 2011
Categories: Advertising & Promotion, Mobile Banking, TD Bank

I was reading one of my favorite personal finance blogs today, Lazy Man and Money, and I noticed an intriguing ad from TD Bank. Actually, the blog is covered in TD ads, with the faces of spokescouple Regis & Kelly peering out from every corner.

But originally I noticed only the ad in the upper-right corner (see first screenshot below). The mobile interactivity, along with the 10 spaces asking for my number, grabbed my attention.

The text-message campaign is powered by Cielo Mobile, whose URL was displayed in the browser status bar after I clicked the banner.

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How it works
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1a. Users type their mobile number into the interactive banner ad (upper-right).

1b. The banner returns this thank-you message:

2. The link in the text message (left) opens the mobile webpage (right).

3. The app is downloaded from the iTunes App Store and this is the first screen at launch:

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Analysis
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Apparently, I’m not the target audience for this banner ad since I don’t have an account at TD Bank. But if inclined to change that, I’d like a little more help opening an account. The bank does better than most by including links to its call center and webpage on the first screen of its native iPhone app (see #3 above), but there should be a direct call to action, or even a different app, for non-customers.

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