Blog - Page 1167 of 1183

Banking Comparison Websites

By Jim Bruene Posted on September 14, 2005
Categories: Search Engine Marketing

Comparison shopping has been in the news lately. General consumer sites, Shopping.com and Shopzilla (formerly BizRate), and financial services specialist LowerMyBills.com, were purchased this year for a combined total of $1.5 billion (source WSJ, 9/14/05). And of course, Google entered the fray last year with its Froogle service.

Experian bought LowerMyBills for $330 million
Ebay bought Shopping.com for $620 million
E.W. Scripps bought Shopzilla for $525 million

Consumers like the shopping comparisons, with 60% of Internet users having used one according to Jupiter Research. The popularity, and merger activity, will attract more entrants such as Become.com, each looking for a new angle.

One new twist is to add value through shopping guarantees. BuySafe recently launched an online marketplace <www.buysafeshopping.com> where users can choose from 1.5 million products covered by the $25,000 BuySafe guarantee. Merchants pay for the protection with a 1% transaction fee.

One area that has seen relatively little activity considering its popularity with online users is financial services. For one thing, financial services, especially loan products are more difficult to compare, because the credit quality of the applicant determines which products are appropriate.

We expect more financial comparison sites to join the ranks of BankRate.com, FISN.com, Banx.com and others. The mainstream shopping comparison sites will also add financial services to their coverage. Already Shopping.com, PriceGrabber.com and others have mortgage comparison services (click on inset for closeup). We’ll look at these service in more detail next month in Online Banking Report.

For price leaders, these sites have the potential to be wonderful sources of qualified leads. But if you are a premium-priced provider, you’ll have to work that much harder to keep your share.

—JB

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Banking and Coffee?

By Jim Bruene Posted on September 13, 2005
Categories: Strategies

Blame it on my Seattle location, but I continue to believe there are good synergies between banking and the so-called coffee culture, both on- and off-line (full disclosure, I’m writing this in a coffee shop). I’m not talking about converting bank branches to coffee shops like Exchange Bank Coffeehouse (left); but using espresso and other coffee and tea tie-ins as a perk for banking online and/or other product usage.

Here’s why banking and espresso go well together:

Brand image: Thanks to Starbucks, coffeehouses have developed into a pop culture phenomena that is unlikely to fade in our lifetime (evidence: nearly 10,000 Starbucks locations worldwide, growing 1300+ per year). The community-building, relaxed, and relatively wholesome image of the modern coffee shop fits well with the brand images many financial institutions are attempting to convey.
Traffic patterns: Banking is usually a daytime activity, correlating well with coffee consumption.
Real estate: Whether located in a city center, suburb, or small town, bank branches are usually located in high-traffic locations. They often have enough extra space to squeeze in an espresso station and a few small tables.
Promotional opportunities: For years Horizon Air, a regional provider owned by Alaska Airlines, used its Starbucks beverage service to attract customers to its routes. Banks could do the same thing.

Examples

This is not a new concept. Umpqua Bank has had great success with its retail model that included coffee service and no teller line. The bank’s website carries a subtle coffee theme throughout with terms such as, find your own blend and savor. It’s Experience Umpqua Flash presentation starts with a close-up of a coffee mug on a table in the branch.

ING Direct operates four urban cafés in the United States that serve coffee and pastry along with financial advice. No transactions are processed on-sight, but customers have access to Internet terminals and ATMs.

But the bank closest to what we have in mind is Charter One Bank. Prior to its being bought by Royal Bank, the Cleveland-based bank embarked on a co-location program with Starbucks (see inset, Post & Washington, Indianapolis).

Financial institution opportunities
Partner with Starbucks or a local chain to create a joint banking and beverage program

Develop a usage program with free coffee as the perk, for example, paying two bills online each month and/or estatements instead of paper
Offer a prepaid coffee option that allows coffeehouse purchases to be charged directly to credit or debit card, or deducted directly from checking
Consider expanding the concept beyond transactional banking, with coffeehouse tie-ins for investments (see, The Coffeehouse Investor, OBR 49)
Use the book, The Coffeehouse Investor, as an incentive/premium
Use it as an incentive for going totally online, for example, "Go to XYZ Coffee Shop instead of the branch"

—JB

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Mandatory Online Banking Password Changes

By Jim Bruene Posted on September 9, 2005
Categories: Security & Privacy

Katie Kuehner-Hebert looks at the issue of mandating consumer password changes in today’s American Banker. She cited only a single bank doing it, West Georgia National Bank <www.wgnb.com>, which recently began requiring new passwords every 45 days. None of the financial institutions we are familiar with force password changes, although NextCard did when it first launched in 1997, but later it did away with the annoying requirement.

Analysis
This is one of the least effective ways to improve security. In fact, it may have exactly the opposite effect for two reasons:

Customers cannot memorize a new password every 45 days, so they will have to write it down somewhere near their PC where it can be seen by others.
Once users begin to realize what a hassle it is logging in to your website, they will forgo online access altogether or use it much less frequently, therefore reducing the frequency of account monitoring which can reduce the impact of identity theft and other fraud.

And even the method did reduce fraud, it’s unlikely to be cost effective due to the increased burden on customer service and decreased customer satisfaction.

Offer choice
Some customers do like the idea of periodic password changes, but forget about mandatory changes. We like the M&T Bank <www.mandtbank.com>. The Buffalo-based banks allows customers to choose whether to have mandatory password changes at either 30, 60, 90, 180 or 365 days. They can also choose NOT to have a mandatory password change (click on inset for a closeup).

An even simpler way to give customers the choice is to allow customers to program an alert reminding themselves to change their password. The alert should NOT have a link back to the bank, otherwise it will look like a phishing message.

—JB

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E-Loan Extends “Employee Pricing” to Loans

By Jim Bruene Posted on September 2, 2005
Categories: E-Loan, Loans & Credit

In a logical extension of the auto industry’s "employee pricing" gimmick, online lender, E-Loan launched a similar program for loans. This email arrived in our in-box yesterday morning. We are not customers, but have signed up for marketing messages (click on inset for closeup).

According to the email message, the discount on an auto loan amounts to 0.25%. On a mortgage, the savings are 0.5% of the loan amount. The sale runs through Labor Day weekend only, ending Sept. 6, 9am Pacific Time (click on inset on right, for an archived copy of its landing page).

In addition to the email blast, the special is splashed across its website (click on inset for archived copy of E-Loan’s homepage, Sept. 2, 2005).

Note also, the prominent Red Cross link in the middle of the page for making donations to aid Hurricane Katrina victims.

—JB

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Bank Websites Should Provide Secure Connections to Legitimate Fund-Raising Sites

By Jim Bruene Posted on September 1, 2005
Categories: Chase Bank, Public Relations, Service, Wachovia, Washington Mutual

When natural disasters strike, such as the Southeast Asia tsunamis or Monday’s Hurricane Katrina destruction in New Orleans and the Gulf Coast, banks should use their considerable web reach to help their customers make safe and secure donations to sanctioned relief agencies such as the Red Cross.

With all the concern about online phishing and fraud, consumers need a trusted conduit to make donations. And the sooner the link is posted, the better. As bad as it is, for much of the country, it will no longer be top-of-mind in a few days or weeks.

Major banks fail to respond thus far
Granted its only been three days, but we were surprised to find that of the largest 50 U.S financial institutions only three, Chase (Chase.com and BankOne.com), Wachovia (Wachovia.com and Suntrust.com), and Washington Mutual (wamu.com), have posted links to the Red Cross to make online donations (see Wachovia banner above).

Seven others had hurricane-related information, but no links for donations:
– Regions, AmSouth, Navy FCU, Compass Bank, and of course New Orleans-based Hibernia all had information on branch closings
– USAA posted tips for dealing with the aftermath of a hurricane
– Commerce Bank (NJ) ran a headline ticker on the top of the homepage offering to match donations up to a total of $50,000 (which strikes us as bit stingy if you are going to blast it across your homepage)

Action Items
The best response, from a customer service and PR perspective, is to announce a corporate contribution and provide secure links to the Red Cross and other relief agencies. Contributions should also be accepted via mail or in-branch.

Wachovia does it right, with a small, but highly visible homepage link explaining its efforts and providing the important message, You Can Too (see inset above). Clicking on the link leads users to a landing page that explains Wachovia’s $250,000 corporate commitment along with two important links (click on inset for a closeup look):
1. Donate Now link to a Red Cross store established on Yahoo handle Katrina donations
2. Email this page to spread the word

Even if your bank is not prepared to make a corporate contribution, it can still support fund-raising efforts with a link to the official donation site.

—JB

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PayPal Launches Micropayment Pricing

By Jim Bruene Posted on August 31, 2005
Categories: Epayments, PayPal

The so-called micropayments market has been one of the most hyped non-issues of the Internet era. First, it’s not a monumental problem; there are many workarounds available, such as ACH processing, monthly billing, and so on. Second, the market, by definition, is not huge. Even a billion 99-cent downloads generates just $100 million in interchange revenue at PayPal’s new prices (see below).

Nevertheless, it’s good to see solutions evolve. Today’s PayPal announcement should help continue that natural progression. Ebay’s online payment arm announced that it wil provide a micropayment option priced at 5 cents per transaction plus 5% of the transaction amount. That means a dime in interchage for a 99-cent song compared to closer to $0.25 to $0.30 under industry standard pricing today.

It won’t change the world, but as they say, every penny counts.

—JB

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Marketing Bank Accounts to Students

By Jim Bruene Posted on August 29, 2005
Categories: Advertising & Promotion

Although the profitability is marginal due to low balances and frequent transactions, we subscribe to the conventional wisdom that it is worth going after college student accounts for three reasons (in order of importance):

1. Cross-selling to the parents
2. Student loans and other credit products
3. Future business from the graduate

While your branches may want to use point-of-sale material targeted student traffic, online promotions should be pitched at parents who will likely make the banking decisions for incoming freshman.

To test our theories, we took a spin around the web to see assess the state of back-to-school bank marketing. Here’s the good, bad, and ugly of what we found.

Top 25 Banks
We took a look at the 25 largest U.S. retail banks, and surprisingly only Bank of America had a prominent promotion. Wells Fargo had a small banner running for student loans and Key Bank and M&T Bank each had text links to a student banking offer. The other 21, showed no special student banking copy or graphics on their homepages.

1. Bank of America www.bankamerica.com

Bank of America’s homepage (see inset), devotes most of its promotional real estate to a student banking promotion. The picture grabs your attention and the Learn More links drops visitors onto a landing page that does a good job selling the account benefits.

Grade: A

2. Wells Fargo www.wellsfargo.com

Wells Fargo doesn’t put near the emphasis on student banking as does Bank America. Instead, the bank uses one of its two small banners in the lower right to sell student loans (see inset). However, the banner is rotated with several other promotions, so it’s not always visible.

The graphic image isn’t particularly attractive, but the copy, Which Student Loan is Right for You? and Use our loan selector are good draws. However, upon clicking, users are forced into a selector tool with no option for general information first.

Grades:
B+ for the promotional graphics
C- for the landing page

3. Key Bank www.keybank.com

Key Bank uses its Highlights box in the lower right to promote student checking (click on inset for closeup). With many users trained to ignore banners, this is an excellent way to gain attention. After clicking through, the landing page does a good job of selling account benefits, although the initial headline about its ATM rebates, Get up to $6* back each month, strikes us as a confusing way to start things off. It would be more effective to highlight the key benefit, FREE, right at the outset.

Grades:
A for the homepage promotion
A- for the landing page

4. M & T Bank www.mandtbank.com

M&T’s approach is similar to Key Bank’s, a text link on the right of the homepage (see inset). It’s not quite as effective because the copy just floats on the page, there is no box to draw the eye to it. But with a relatively sparse homepage, the promotion should get noticed. The promised bonus should also improve click-throughs. However, the landing page needs to be reworked. Not only is there no mention of the promised free gift, there are too many navigational choices and no clear path for the user.

Grades:
B for homepage promotion
C for landing page

Outside the Top 25
Since we weren’t overly inspired by what we saw at the big banks, we decided to dig deeper in search of the ultimate back-to-school offer. Here’s what we found:

1. Tennessee State Bank www.tnstatebank.com

After a Google or two we ended up at Tennessee State Bank, a $480-million asset bank headquartered in Pigeon Forge, TN. The bank’s homepage (click on inset) is dominated by a back-to-school promotion with a picture of its checkbook cover in the foreground with textbooks, a tennis ball, and maybe an adding machine in the background.

Not a great photo, but acceptable.

However, the copy is terrible.

Textbooks, Folders, Pens, Pencils,

Floppy Disks and…

a FREE CHECKING account from

Tennessee State Bank!

The free checking will get the attention of parents, but folders and floppy disks? That’s so 1990s. How about laptops, cell phones, or DVD players? Better yet, remember the medium. How about instant online transfers, free online banking, and 24/7 online service?

One final note: There is no hyperlink with the promotion. Neither the headline, photo or copy are clickable to another area to signup or even learn more.

Grades:
A for timeliness
D for execution

Update 9/1/05:

National City added a small banner on the right promoting free student checking accounts.
Citizens Bank (Royal Bank) is running a medium-sized banner in the lower portion of its homepage for student loans

—JB

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HSBC Joins the U.S. High-Rate Savings Account Race

By Jim Bruene Posted on August 26, 2005
Categories: Deposits, Checking, Savings, CDs, HSBC

HSBC’s U.S. unit launched a 3.50% APY savings account that competes directly with ING Direct (currently 3.30%) and other high-rate financial institutions. The rate is featured in an eye-catching red box smack dab in the middle of HSBC’s homepage (click on inset for a close-up).

For more information on high-rate savings products, select Checking & Deposit Accounts from the navigation in the right-column of this newsletter. Also, read our latest Online Banking Report devoted to the subject, Lessons from the High-Rate Marketers (OBR 120/121).

Update 9/1/05:
The rate was raised to 3.75% today vs. 3.30% at ING Direct

—JB

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Citibank’s Security Pop-Up

By Jim Bruene Posted on August 23, 2005
Categories: Citibank, Security & Privacy

Under the "every little bit helps" theory, Citibank’s popup window when registering for online credit card access is a nice touch.

The popup (click on inset for closer view) reassures users that they are entering information into a secure site. The well-crafted verse goes like this:

Secure.
A little word that that means a lot–especially online.
Rest assured, this registration process is just that.

The window closes itself in about 10 seconds, if the user hasn’t done so already.

—JB

To learn more about how to promote online security and peace of mind, check out Marketing Security: The sensitive issue of publicizing security and authorization enhancements from our sister publication, the Online Banking Report.

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Netbank Wallflowers Concert Promotion

By Jim Bruene Posted on August 18, 2005
Categories: Advertising & Promotion, Deposits, Checking, Savings, CDs, NetBank

Maybe I’m biased as a fan, but I think Netbank’s Concert Connection, sponsoring a free Wallflowers concert, is a great stunt. Especially if the bank can leverage it to gain exposure in more than just the Austin market.

Here’s the offer (click on inset below to see landing page): Customer’s who plunk down $500 into a new checking account, or $1500 into a CD or Money Market, get two free tickets to a private Wallflowers show in Austin, TX on Sept. 17. The money must be kept on deposit for at least 90 days or the bank will deduct $85 to cover the tickets.

The bank’s press release says it will be promoting the offer with a mobile vehicle along with billboards, print and radio ads. The concert venue holds 5,000, so Netbank can use the offer to attract a maximum of 2500 new accounts.

Analysis
This is an expensive promotion for a single market, with the concert alone cost an estimated $100,000 or more, not to mention the cost of promoting it in the Austin market. It might make more sense to sponsor an entire Wallflowers tour, providing tickets to new Netbank customers around the country. That would be even more costly, but would guarantee broad exposure to the offer.

Yet, we still like the Austin promotion for several reasons:
1. Free publicity: There’s nothing like a free event to garner media exposure.
2. Lasting brand impression: Unlike other media campaigns, this event should provide a more lasting brand impression, especially with the 25-35 crowd attracted to this music.
3. Dylan connection: The Wallflowers, led by lead singer Jakob Dylan, son of rock legend Bob Dylan, is an especially good choice for this promotion. Along with its younger fan base, the band will also attract attention from an older crowd that might drop $1500 into a CD to see if Jakob can carry on dad’s legacy.
4. Concert tie-ins: Even though the event is primarily oriented to Austin-area consumers, it will pull in business from Wallflowers fans all over Texas. But to reach beyond Texas, Netbank should consider negotiating rights to offer the concert as a free download for all its customers. Other tie-ins with merchandise, fan clubs, and so on are also possible.

The downsides:
1. Demographic mis-match: Alt-rock fans aren’t usually old enough or wealthy enough to be parking big cash piles in a bank. Many will deposit the bare minimum and pull it out after 90 days or when their CD matures.
2. High acquisition cost: As you can see by the mini-business case below, the acquisition costs are hefty. Assuming Netbank ends up with 500 new accounts that remain open after the 90-day minimum, the cost per new account is $2000 or more.
3. Extra customer service load: The first law of marketing applies here: for every customer delighted with your offer, another is mad because they missed out on it for some reason. We can already see brewing discontent on the Wallflowers bulletin board from rabid fans that don’t have the extra cash to plunk down into Netbank to earn the tickets (we have one word of advice for them: eBay). Also, there can always be headaches when third parties are involved. As we were researching this article, we noticed that the ticket fulfillment site, Tickets.com, was not functioning properly. We were able to download two Wallflower tickets without fulfilling the offer requirements. We notified Netbank right away who will likely have it fixed within hours. Now if we could only find a business reason to be in Austin on Sept. 17….

Back-of-the-envelope business case:
Cost = $150,000
$100,000 for the concert + $50,0000 out of pocket promotional expenses (assumes radio exposure is bartered for with free tickets)

Accounts generated initially: 1500 x $2000 average deposit = $3 million in deposits worth $30,000 to $60,000 per year assuming a 1% to 2% spread (will depend on deposit mix)

Long-term accounts generated: 750 assuming a 50% fallout after the first year

Acquisition cost: $150,000/750 = $2000 per long-term account

—JB

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Everbank’s MarketSafe CD

By Jim Bruene Posted on August 16, 2005
Categories: Deposits, Checking, Savings, CDs, Everbank, Investment Products

When I was a deposit product manager in the late 1980s, I worked on a project to bring out an equity indexed certificate of deposit. That project died, one more merger casualty, but I've always been intrigued by the product.

Over the years, a number of banks have offered market-indexed CDs, but they've never been much more than a niche product. That's OK. More than half of Amazon's book sales are from titles not found at retail bookstores. The Internet is a great place to mine the niches. Everbank has already proved that by moving nearly $1 billion worth of foreign currency-denominated deposits.

Analysis
The problem with equity indexed CDs is that they are crummy investments. By the time you pay for the hedging, marketing, and bank overhead, there's not much left over to pay the investor.

Let's look at Everbank's latest incarnation. The MarketSafe CD provides a total return based on a relatively complicated formula that averages S&P 500 prices at six-month intervals during the five-year term. In an up market, the CDs typically return 40% to 60% of the S%P gain (click on inset below).

The main selling point: Investors are guaranteed a minimum 5% total return over the five years (APY = 0.98%). The CDs are FDIC insured up to $100,000 with a minimum investment of $1500.

By Everbank's own figures (click on inset), its CD would have only beaten the S&P 500 index eight times during the previous 31 five-year periods beginning with 1970-1975. And by our estimates, the return would have beaten a normal 5-year CD more than half the time, 17 out of 31 periods. But only twice did the MarketSafe CD beat both the S&P and a regular CD.

Expected returns would be higher if the investor simply bought a mix of regular CDs and S&P indexed funds. The most conservative would be an 82% CD, 18% S&P mix that would still return all principal even if the S&P went to zero (assuming 4% CD APY). For the less conservative, a 67% CD, 33% S&P split would still return the principal even if the S&P dropped 40%. You get the idea.

But the target market for MarketSafe CDs is probably someone that never invests in equities. For that person, the MarketSafe is a reasonable way to put a little money "in the market." From Everbank's perspective, it's a nice addition to their unique deposit product line.

Addendum: View full screenshot of MarketSafe CD page

—JB

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What Not To Do: Verity’s 10% APY Come-On

By Jim Bruene Posted on August 11, 2005
Categories: Deposits, Checking, Savings, CDs, Verity CU

Normally, we don’t pay much attention to radio ads, usually pressing the Seek button as soon as one comes on. But today, a particular ad caught our attention. It was for a 10% APY CD offered by Seattle-based Verity Credit Union (see inset) which accepts any resident of Washington state as a member. The term was 10-months and the maximum deposit was $1000.

While we admit this rate did get our attention, we don’t like this tactic for several reasons:

1. Bait-and-switch: Sophisticated depositors know it’s a teaser rate; and they will only leave their money on deposit long-enough to grab the $83 interest check. However, it’s the less-sophisticated that actually think this might be a real rate, that get sucked in only to be deeply disappointed once rates ratchet back to the standard 3.25% rate.

2. Too expensive: Depositors receive $83 in interest instead of $27, a before-tax difference of $56. We think the credit union would be better off providing a straight $50 incentive for new deposits of $5000+ and/or $25 for $1000+. Not only is this a lower cost for the financial institution, it’s more straight-forward for the customer, and could bring in a higher average balance.

3. Too exclusive: Only applies to new members or existing members that convince a non-member to open one of the CDs. Blasting an offer across the airwaves and homepage that applies to new customers only is a sure way to disappoint existing members. Furthermore, the website has no explanation of how to refer a customer or how to take advantage of the referral bonus. As a matter of fact, the website has no more information about the special other than what’s shown in the homepage graphic (see inset above). The graphic image is NOT clickable.

4. Cannot apply online: Maybe we’re biased, but we strongly believe that red-hot products advertised on the radio and on the middle of the homepage, should have an online application. Verity’s promotion directs interested parties to its branches or call center.

—JB

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