Virgin Money to Enter U.S. Market Through Acquisition of CircleLending

By Jim Bruene Posted on
Categories: Mortgage, Refi & Home Equity, P2P Lending, Prosper, Virgin Money, Zopa

This is a very interesting bit of news today. Virgin Group PLC, the high-flying UK-based company run by Richard Branson, says it will be using Waltham, MA-based CircleLending to enter the U.S. financial services market. Virgin's financial services are marketed under the Virgin Money brand in the UK (see screenshot below) and several other markets.

If you take a broad view, CircleLending was the first pure peer-to-peer lender in the U.S., five years before Prosper got its start (see previous coverage here). However, CircleLending has historically limited its involvement to servicing loans made between family members, not brokering the deals or vetting the applicants like Prosper and Zopa.

However, from the sounds of it, that will be changing under the new majority ownership by Virgin USA. According to Asheesh Advani, CEO/Founder of CircleLending:

"(CircleLending will be the) launching pad to brand Virgin in the U.S. in financial services"

According to the American Banker article here, the new venture's first product, sold under the Virgin name, will be a direct mortgage that blends "friends and family" funds with capital from a financial institution and/or the secondary market. They also said they will have a credit card and are looking at student loans.

It will be interesting to see how they use peer-to-peer finance in its efforts. Anthony Marino, Virgin USA's SVP Corporate Development told American Banker:

"(the CircleLending platform) provides a broad opportunity to address consumer needs, and the Virgin brand allows us to bring a unique tone of voice to the market,"

And,

"We are … building a major, Virgin-branded financial services company in the U.S."

Analysis
These are not new concepts, but with the Virgin marketing muscle behind them and the integration of peer-to-peer tools, the newcomer could carve out a significant niche in the massive U.S. mortgage lending business. The new entity could also leverage the CircleLending platform to compete directly with Prosper and Zopa in the U.S. and  importing the resulting product into the UK to compete with Zopa there.

Virgin Money UK homepage

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More Long-Term Archives at Tech CU, WaMu, and Citibank

By Jim Bruene Posted on
Categories: Electronic Statements, Tech CU, Washington Mutual

In response to my post last week about online archives (here and here), I heard from Citibank and WaMu, who both support online requests for statements going back seven years (see note 1). The statements are delivered online, free of charge, and in WaMu's case, generally within five minutes. The customer receives an email notification when the statement is available. That's slightly less convenient than real-time access, but it still provides 98% of the value (see note 2), which is quite acceptable.

But the new winner, with the longest online archives, is San Jose-based Technology CU which provides free online access to statements going back to 1993. That's 14 years and counting. Tech CU also requires an online request for the back statements, but with the archives hosted in-house, they are readable within seconds. In response to my question, SVP Michael Luckin timed the query for me, and was able to login, request and receive an older statement, and logout in 20 seconds. That ought to satisfy most members.    

Notes:

1. The Citibank archives were included in our previous summer 2005 report, but at that time we did not know of WaMu's expanded archives which became available in March 2005, but were evidently not discussed on its website when we did our research.

2. None of the statement archive systems mentioned here allow the customer to search for specific transactions or to manipulate/download the actual data. Only Whitney Bank offers seven years of searchable online data.  

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Prosper Advertising on BankRate.com

By Jim Bruene Posted on
Categories: Advertising & Promotion, P2P Lending, Prosper

After posting yesterday about the apparent traffic spike at Prosper (here),* I ran across this ad this morning at BankRate.com (here). Prosper’s excellent landing page is shown at the end of the post.

Prosper ad on BankRate.com

I’ve seen Prosper advertising a bit on Google (here), but this takes the lender’s marketing to a whole new, and expensive, level. At BankRate, a site littered with 5% APY come-on’s, this orange 12% rate offer will attract a lot of attention. But given the typical acquisition costs of $100+ for advertising at BankRate, it will be tough for this to pan out from an ROI perspective. With Prosper’s 1% loan fee plus 0.5% servicing charge, it would take roughly $7,000 in lending volume per new customer to break even in the first year, if acquisition costs average $100.

But after visiting with Prosper’s founder, Chris Larsen, at the recent Net.Finance conference, I have a renewed respect for what they are doing. We’re working on a Prosper 2.0 report, as a followup to last year’s initial look at person-to-person lending (here).

Prosper landing page after clicking through the above BankRate.com banner ad

Prosper landing page from BankRate.com banner

* Compete told me they are looking closer at the data to see if there were any anomalies in the latest estimates for Prosper.com traffic. 

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Long-term Archive Update: Chase Credit Cards Provides Six Years

By Jim Bruene Posted on
Categories: Chase Bank, Credit/Debit Cards, Electronic Statements

The folks at Chase Bank were on the ball today. Less than an hour after I wrote about Whitney Bank joining the long-term statement archive club (here), I received an email from a subscriber* at Chase letting me know they offer six years of online statements for credit cards. 

Below is the bank's announcement to cardholders. It's nicely designed with a green touch. And it reminds cardholders they will receive an email both when the statement is ready and when payment is due. And note the call to action: "TRY" paperless. That lets customers know they can always go back. Now that's the way to get fired up about saving trees, and the bank's cash. The only thing missing: a simple guarantee.

Grade: We score it an "A" 

Chase has been working hard to move customers out of paper. So far this year, the bank has run a $35,000 sweeps to go paperless (see post here) and they currently have a popup on the credit card homepage pitching estatements (see screenshot below).

January 2007 email to Chase credit card customers

Email to credit card customers pitching electronic statements

Popup at credit card site

Popup pitching paperless statements at Chase's credit card page

*He earns a Starbucks card for his responsiveness. Anyone else have five or more years of statements online? Add your comments or email me.

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Prosper Traffic Spikes, Hits Major Bank Levels

By Jim Bruene Posted on
Categories: Metrics & Market Research, Prosper

Prosper homepage Preparing a table for our upcoming report on social finance, we were slogging through website traffic at Compete.com and discovered a startling statistic. In March, traffic to the person-to-person lender Prosper.com was four-fold that of January, growing to more than 1 million unique visitors. That puts it in rarefied company, approximately the same as a top-20 bank such as SunTrust, which according to Compete had just 10% more traffic in March (see chart below).

If those numbers are accurate, and they weren’t driven by unsustainable events such as a a mentions in major blogs or media, Prosper may have moved past the early adopter stage, and into the more mainstream web-based financial services arena.

It appears the traffic is converting to registered users. The last time we checked, April 25, the homepage said it had 240,000 registered users. Today, it says 270,000. That’s 12% growth in 15 days.

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Whitney Joins the Short List of Banks with Seven-Year Archives

By Jim Bruene Posted on
Categories: Whitney Bank

With the disastrous floods of 2005 still fresh in the minds of its customer base, New Orleans-based Whitney Bank became one of the first banks to offer customers seven years of online archives (press release here). In past research (here), we found that major financial institutions provided an average of 11 months of online statement storage (see background below). 

Whitney's expanded storage should help it increase its estatement penetration past the already-healthy 33% mark (of online banking users). The bank wisely reminds users that statements are stored online with an "estatement archive" link in its online banking area (see screenshot below). 

However, the bank is missing an opportunity to differentiate itself by not mentioning this important feature on its website. Even the online demo mentions the previous 2-year retention policy. 

Whitney Bank online demo showing estatement archive

Background
In our 2005 report on the subject (here), we reviewed the online archive capabilities at 50 major banks and credit unions and found only two banks offering more than three years of online storage:

  • E*Trade Bank provided seven years images, but only 18 to 24 months of transactions and statements
  • ING Direct archives all transactions since inception, currently 6.5 years ago, but only a year's worth of statements

At that time, Whitney provided 2 years worth of statement storage, the longest in our survey of 50 banks. 

If anyone knows of other financial institutions offering more than 3 years of online storage, please leave a comment below, or email me and we'll add you to the list. Please include a link to the place on your website where the storage information is documented.

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1995 Web Pioneer, Salem Five Launches Mobile Banking

By Jim Bruene Posted on
Categories: Loans & Credit, Mobile Banking, Salem Five Savings Bank

Salem Five morgage coupon in use from 1995 to 1997+Twelve years ago I spoke at the very first for-profit conference on online banking. It was held in San Francisco and put on by IQPC. One of the handful of bankers taking the stage was the marketing director from a small Massachusetts-based bank, Salem Five Savings Bank. 

In 1995, Salem Five was one of the first 100 banks in the world to launch a website and continued to pioneer website functions during the last century, even launching a dedicated direct bank <directbanking.com> which has now been rolled back into the parent.

One early innovation was a mortgage lead generation tool consisting of an interactive $100-off closing costs coupon. It was still in use several years later when we named it an Online Banking Report Best of the Web winner in 1997 (see circa 1997 screenshot above, and the Online Banking Report article archived here).

It was "interactive" because in order to print it, the customer was required to first enter  their name and phone number into the on-screen coupon. It was a great promotional idea, especially for 1995. And I still remember receiving a phone call the Saturday morning after I tested the coupon from the cheery Boston-based loan agent, wondering if I was moving to their area and interested in a mortgage. To this day, one of the best follow-ups I've experienced to an online lead.

Mobile Banking Launch
In April, Salem Five took another pioneering step, becoming one of the first community banks pushing mobile banking (here). However, its mShift-powered service is a WAP solution, not likely to be widely adopted in its current form. Last week another mShift client, Cardinal Bank, launched a similar mobile offering (here). 

The bank is making sure its customers know about it with a page-dominating banner in heavy rotation on its homepage. Note: Salem Five uses both "wireless" and "mobile" to describe the service.

Salem Five homepage (8 May 2007)

Salem Five homepage with wireless mobile banking banner

Salem Five mobile banking landing page

Salem Five mobile banking page

For more information on mobile banking see our full report at our sister publication, Online Banking Report (here).

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Here’s a Financial Institution Blogger that Does it Right

By Jim Bruene Posted on
Categories: Blogs, Credit Unions

 

Link to Piedmont CU homepage One of the biggest questions surrounding financial institution blogging, is whether anyone would actually want to read one. We are firmly in the camp that EVERY bank, credit union, and financial services company should have a blog (see our Online Banking Report on blogging here). But with so few actually doing it, it's hard to find examples that provide a good mix of community news, financial advice, along with that right "tone" that makes it readable and believable. 

Here's one to watch. After just two months bloggin, Dan Veasey, Director of Marketing and Biz Dev at Piedmont Credit Union in Danville, VA, looks like he has what it takes. When I first looked at his blog (here), there were only a few entries, and its credibility was hampered by the limitations of the Blogger template. Well, Dan took the advice of several industry observers and moved it to a WordPress template several weeks ago.  

With the conversion behind him, Dan has been concentrating on the content, which is really what it's all about. For example, in the past week Dan had a great content mix with local news (Starbucks opening), humor (sponsoring a digit of the number pi), CU business (annual meeting invitation), and serious financial subjects (budgeting for a family). He uses a friendly tone that establishes his credit union as the kind of place you want to like. And he drops in a picture or two to break up the text. 

Now, all this takes time, so he may need to bring in another author to keep up the pace; but so far, it's great work and a good example to follow.  

Here are the previous five posts: 

Piedmont CU blog posting

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Finally, Someone Explores the Downside of Going Paperless

By Jim Bruene Posted on
Categories: Electronic Statements

First National Bank estatement graphic I was glad to see Eleanor Laise explore both the pros AND cons of turning the paper off  in Tuesday's Wall Street Journal (here). Sometimes, we in the industry get so excited about the supposed win-win of estatements (save trees, save money, save clutter, thwart dumpster divers, and so on), that we forget about the very real consumer behavior issues that work against going completely paperless.

For example, here are some of the potential pitfalls of paperless finance: 

  • Statements and notices lost in overflowing email in-boxes
  • Email address changes that are not communicated to the financial institution
  • Spam filters trapping financial notifications and alerts
  • Hard drives crashing and erasing records
  • New computers being installed and records lost in the process
  • Laptops being stolen along with the digital papertrail
  • Computers infected with viruses rendering them inoperable or worse, sending financial data to the thieves 
  • Stress at tax-time trying to remember web addresses and login credentials to access last year's financial info
  • Finding out on April 14 that your credit card issuer only stores 12 months of records online, so Jan/Feb/Mar of the last tax year are no longer available online, and will take days to retrieve through customer service
  • Forgetting to rebalance your investments because you never take the time to login and look at your online statement
  • Forgetting to report investment income/losses on your taxes because you had no paper trail and forgot about the account
  • Trying to explain to the tax auditor that you don't have paper copies because you "are saving trees" 
  • Backup files being lost, forgotten, or corrupted

At one time or another, everything on this last has happened to me. That's why, even though I prefer trees to be alive, I've resisted going paperless for most bank and credit card statements (note 1). Also, as an industry observer, I like to see the statement stuffers for research purposes. 

Action Item
However, most of these problems can be solved over time by a single online banking improvement:

Guaranteed, long-term storage of financial transaction records, statements, check images, and other financial documents. 

By long-term we mean at least five years to cover tax audits. But much better would be life-of-the-account storage, which we believe is a tremendous retention tool and much less costly than free bill payment. See our Online Banking Report, "Lifetime Statement Archives," for the full business case.

Update: Gonzobanker published a how-to on going paperless today (here).

Note:

1. Of course, I'd save many more trees by turning my newspaper subscriptions off. A few days worth of newspapers at our house weighs more than a year's worth of financial statements. But I still like the scanability and serendipity of browsing a printed publication.   

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Jupiter and Compete Reach Opposite Conclusions on Current U.S. Demand for Mobile Banking

By Jim Bruene Posted on
Categories: Metrics & Market Research, Mobile Banking

Market research is an amazing thing. You can take the same study and reach two entirely different conclusions. Or you can achieve totally different results by the way the question is worded, what multiple choice answers are provided, what questions preceded it, or even the tone or style of the interviewer. Then there are issues with how the sample was selected, online vs. phone, whether it is representative of a national audience, whether incentives were provided, etc. etc. etc.  

That's not to say that market research should be ignored. Just that you need to be careful with it. And if you make decisions based on market research, you need to understand how and when it was collected, what the exact questions were, and who underwrote the study.

Case in point: Mobile banking demand

In the past two weeks, two reliable research companies, Jupiter Research and Compete, Inc. released research finding on whether U.S. consumers think they will want to use mobile banking when it becomes available. This type of "what if" question is even more problematic than other types of market research. Because the participant doesn't use the service in question, the interviewer first has to paint a picture of what it might look like at some future point, then ask the respondent what their level of interest is. So, the results are highly dependent on how the hypothetical service is described, and if it's a telephone interview, how enthusiastic the questioner is about it. Imagine the difference in response to these two questions:

1. How would you like to press a button on your cellphone that gave you instant, secure, free access to your bank account balance so you didn't ever bounce a check again?

or

2. At some point in the future, you might be able to download and install a Java application over the air for your mobile device that provided a subset of the functionality of online banking ported to a 2 inch screen. And, as long as you never left your phone somewhere by mistake, it should be as secure. How excited would you be about that?

Unfortunately, I haven't seen the exact questions or methodology used to produce the following press releases, so I can't say exactly how the companies reached their conclusions. However, Compete will be presenting their finding in a free webinar Thursday, so you might want to listen in. If you can't make it, I will file a followup blog post. Full disclosure: After spending much of Q1 researching and writing about mobile banking and payments, and yes, selling reports of my findings, I'm firmly in the pro-mobile banking camp (see previous coverage here). 

Finding 1: Considerable interest in Mobile Banking

Author: Compete, Inc.

Link: http://blog.compete.com/2007/05/01/mobile-banking-rebirth/

Synopsis: In an April survey of online banking users, only 19% said they would definitely not use it, while 11% said they definitely would. The vast majority (70%) between the extremes need more info before they decide. There is a measurable advantage for the negatives (38% won't/probably won't use) over the positives (29% will/probably will), but that's doesn't seem particularly negative for a service that does not yet exist.

Note: Compete will be presenting the results in a free webinar Thursday, May 3, at 2PM Eastern. Presenters: Paul Zeckser, Director Financial Services Practice & Ryan Burke, Director, Telecommunications and Media Practice

Compete results


Finding 2: Little interest in Mobile Banking

 Author: Jupiter Research

Link: http://www.jupiterresearch.com/bin/item.pl/press:press_release/2007/id=07.04.23-mobile_banking.html/

Synopsis: Limited data was released to the public, but in a press release last week, with the title, JupiterResearch Finds Limited Consumer Interest in Mobile Banking, the company said only 8% of consumers were interested in mobile banking. No supporting data was provided. We will invite report author Asaf Buchner, who I respect greatly, to provide more background on Jupiter's findings.

Note: Below is the exact quote from the press release. The specific scenario here, "using mobile browsing to check account balances," may be part of the reason for the lower interest. Only about 10% of U.S mobile phone owners use mobile browsing today.  

Just eight percent of online consumers who own a cell phone are interested in using mobile browsing to check account balances.

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Washington DC-based Cardinal Bank Launches WAP Mobile Banking Site

By Jim Bruene Posted on
Categories: Uncategorized

Cardinal Bank mobile bank home WAP sites, mini websites that can be viewed on mobile devices, may lack in usability, but they are inexpensive to build and keep you in the game with the BofAs and Citibanks. And a shot of a mobile phone looks good on the homepage (see note 2), probably a bigger benefit than the actual service itself.

The latest bank to officially launch mobile banking is $1.7 billion Cardinal Bank <cardinalbank.com>, who's WAP site has its own URL: <gocardinal.net> (note 1). The WAP site consists of four main tabs  (see inset):

  • Home
  • Rates
  • Find Us
  • Sign On

The secure signon leads to full-service online banking including balance and data access, funds transfers, and bill payment (see screenshots below). While the bank may not get a lot of users, at least they have eliminated one reason for a heavy mobile user to look elsewhere for a bank. Nice work.

For more information, see our Mobile Banking Report (OBR 138/139).

Cardinal Bank mobile bank signon  Cardinal Bank mobile bank rates Cardinal Bank mobile bank find us 

Note:

1. While the .net address has two less keystrokes on a phone keypad than .com., it still a relatively cumbersome address for those without an QWERTY pad. If possible, invest in a URL with just a few characters and/or one the maximizes the use of the first letter of each key's triad (A, D, G, J, M, P, W). And don't ever use X, which is not on standard 10-key pads.

2. Cardinal Bank leverages the cachet of mobile banking with a prominent graphic on its homepage. It would be more effective if it was a closer shot, so the Cardinal logo was  visible on the Treo screen. 

Cardinal Bank homepage with mobile banking

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