Everbank Reinforces Interest Rate Increase with Email

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, Email Marketing, Everbank

Everbank_emailThere is nothing like a long run of rate increases to make your deposit customers happier. You might as well take some credit; it probably won’t be long before they move in the other direction.

So every time you raise rates, make sure to let customers know with an email message. Of course, this assumes competitive rates. If you are increasing from 0.45 percent to 0.65 percent, you probably want to keep that to yourself.

EverBank raised checking account rates Jan. 1 from 3 percent to 3.5 percent depending on balance levels. On Jan. 3, it sent an email with the subject (click on inset for closeup view):

You’re earning more with EverBank – interest rates rise again!

Analysis
EverBank’s message is straightforward. Here’s what they did right:

  • Included security graphic/link in upper-right corner
  • Kept copy concise and to the point
  • Included a chart showing rate by balance level; subtle encouragement to add funds
  • Reinforced free online banking and bill pay (underneath chart)
  • Cross-sold its Yield Pledge Money Market and CD for those looking for better rates; Yield Pledge products are guaranteed to offer a rate in the top 5 percent at BankRate.com
  • Included toll-free phone number
  • Signed by real person with real signature; in this case, Frank Trotter, president

And a shorter list of improvements:

  • Personalization helps make a message look genuine, but there’s no personalization in the salutation: "Greetings EverBanker!"
  • Clicking through the security graphic leads to a generic page full of links to terms and conditions; the bank should create a page that specifically addresses users’ security concerns, especially regarding phishing emails
  • The bank should improve its unsubscribe function; currently, it’s an all-or-nothing choice triggered by sending a blank email with UNSUBSCRIBE in the subject line; that’s easy for users, but the bank’s just lost an opportunity to query the customer in more detail about what they do and don’t want to receive via email
  • Weak P.S.: "The FreeNet Checking Account gives you the yields and the service you deserve. Bank on it!"

Grade
Overall, we’ll give it an A-

—JB

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$28 Billion in U.S. Banking Deposits Up for Grabs Online

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, Market Research & Metrics

Forrester’s Ron Shevlin weighs in Jan 10 with an estimate of the amount of deposit balances chasing higher rates online. Using recent (Q4 2005) survey data gathered from 4700 online households, he concludes that 30 percent of online consumers have $10,000 or more in liquid assets. Furthermore, three out of four of those households (24 percent of all online households) are interested in increasing the rate paid on their savings accounts. But one in four of those wouldn’t move until they could get 3.5 percent or more in additional interest, an unlikely scenario for most consumers. That leaves 18 percent of online households (24 percent x 74 percent) ready, willing, and able to make sizable deposit moves online.

Analysis
To quantify the amount of deposits in play, a number of assumptions must be made: the amount of liquid assets held in checking accounts; the amount that would be available to move to another account; and the willingness to move balances for various rate differentials (see the Forrester report for complete details). Forrester’s conservative analysis assumed that only those willing to move for 1 percent or less in rate differential (6 percent of all online households) would take action, potentially moving $28 billion from low-interest checking accounts to high-interest savings accounts.

Taking a less conservative approach, one could also argue that with many direct banks paying 3 percent more than typical interest-bearing checking accounts, the potential deposit switchers are much more prevalent, closer to the 18 percent we derived in the first paragraph. Under these less conservative assumptions, much more would be at stake, as much as $60 billion or more. Furthermore, the Forrester estimate considers money being held only in checking accounts and does not include other liquid assets in savings accounts, CDs, and money-market funds.

Whether $28 billion or $60 billion, the total deposits at play are a small percentage (0.5 percent to 1.0 percent) of the $6 trillion in insured deposits in the United States.

Action Item
We highly recommend the report for anyone looking to reprice deposits for online customers, or even if you just want to understand what’s at stake. The report is available free-of-charge for Forrester clients, or $249 pay-per-view from its website.

—JB

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Economic Outlook 2006

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

If 2005 turned out to be a lot more eventful than anyone expected—the virtual disappearance of monoline banks and the frontal assault on interchange are only two examples—then there’s no reason to expect 2006 to be boring.

The M&A outlook alone promises to give this newsletter plenty to write about: The vast amount of private equity money now looking for a home almost guarantees it, even if the recently inverted interest rate and interest swap curves may promise some sort of recession.

Continue reading “Economic Outlook 2006” →

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Payment Cards Watershed – MasterCard IPO

By Jim Bruene Posted on
Categories: Credit/Debit Cards, MasterCard, Payment Cards

This should be a watershed year for payments cards. The approaching MasterCard IPO, and Visa’s likely response, will likely reform the sector’s fundamental business structure. Meanwhile, First Data Corp. is undergoing profound changes, and it’s unlikely that either Discover or American Express will be twiddling their thumbs while the future of the card associations is decided.

The MasterCard IPO will likely have the greatest impact on the space, thinks David Evans, founder of Market Platform Dynamics. "It will force them to become a much more entrepreneurial and different organization than it’s been in the past, partly because of changes in the marketplace, but also because of organizational changes that will change the dynamic of that entity," because of the need to satisfy its new investors, he says.

Continue reading “Payment Cards Watershed – MasterCard IPO” →

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FFIEC Will Cause Financial Network Security Confusion

By Jim Bruene Posted on
Categories: Legal

This year we can expect the computer security arms race to keep scaring the daylights out of anybody who understands what’s going on. Also: Look for confusion in the financial community about complying with the Federal Financial Institutions Examination Council’s (FFIEC) mandate to install two-factor authentication by year-end.

The main story on the hacking front is the upward spiral of money and resources on the black hat side, and the vigorous defense mounted by the white hats, now that real criminals are on the scene, says Kawika Daugio, director of Northeastern University’s information assurance program. “We’ve seen more and more professionals involved,” he says. “It’s the standard trend because, as the difficulty [to successfully attack a protected network] increases, the scale required and the sophistication required to make it pay, go up.”

Continue reading “FFIEC Will Cause Financial Network Security Confusion” →

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Federal Anti-Money Laundering Regulations

By Jim Bruene Posted on
Categories: Legal, Money Laundering

Get ready for Patriot Act II, says Peter Djinis, a former FinCEN official now practicing law in the Washington, D.C., area: The reach of U.S. anti-money laundering (AML) regulations will keep growing in 2006—from banks, brokerage houses and the like, which have been under the AML umbrella for years, and into industries like insurance, gems and precious metals, hedge funds, investment advisors, and off-shore real estate transactions.

The source of life insurance policy payments, for instance, is about to get a close look, and the ingenuity of bad guys is to blame. Djinis mentions a case broken by the U.S. Customs Service in 2003 in which Columbian drug cartels were buying U.S. life insurance policies with offshore money, cashing them out for near-face value in the U.S., and then either getting the money directly, or having it paid to third parties. “The paper trail was all messed up—(criminals) had all sorts of explanations of why they had that money, and none of the policies showed the illegal nature of the funds that bought the policies,” he says.

Continue reading “Federal Anti-Money Laundering Regulations” →

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Low Value Payments & Stored Value Cards

By Jim Bruene Posted on
Categories: Credit/Debit Cards, MasterCard, Stored Value Cards, VISA

In the coming year, low-value payments and prepaid cards will be increasingly mentioned in the same breath, especially in conjunction with off-line, contactless methods, says Gwenn Bezard, partner in Aite Group.

Pilots, and even some deployments of contactless payment cards, will be making a significant appearance, if only because banks are pushing them. The main sticking point from the merchant perspective, Bezard says, will be the cost of interchange, but he expects some banks to offer breaks on fees, if only to give the venue a running start. He is optimistic that big merchants will follow Starbucks’ model and offer rechargeable, merchant-specific stored-value cards as a means of gaining market share and promoting customer loyalty.

Continue reading “Low Value Payments & Stored Value Cards” →

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Automated Clearing House Back Office Conversion

By Jim Bruene Posted on
Categories: ACH

The automated clearing house will keep squeezing checks out of the payments system in 2006, says George Thomas, evp of the Clearing House Payments Company, LLC.

The big event this year? Back office conversion, says Thomas—converting checks to ACH debits in the retailer’s back office, instead of at the point of sale as an ARC [accounts receivable conversion] transaction.

Continue reading “Automated Clearing House Back Office Conversion” →

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Electronic Bill Payment & Presentment Predictions

By Jim Bruene Posted on
Categories: Electronic Bill Payment & Presentment

The electronic bill payment and presentment (EBPP) headlines in 2006 will be mostly about vendors offering integrated EBPP platforms, spawning in turn a clutch of M&A stories, says Ron Averette, Princeton eCom Inc.’s ceo. Expect to see the number of payments players this year dwindle.

“You’ll continue to see core processors looking to add bill pay as an ancillary capability to their other product offerings,” he says. Averette cited Fiserv’s July 2005 acquisition of BillMatrix for $350 million as an example of a big payments shop, interested in having a bill payment capability, using an acquisition as the foundation of an integrated family of EBPP products. In the coming year, he says, all of Fiserv’s competitors will be jumping into the pond.

Continue reading “Electronic Bill Payment & Presentment Predictions” →

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Pending Financial Data Protection Legislation

By Jim Bruene Posted on
Categories: Legal

Data protection is probably the biggest payments-related portion on Congress’ 2006 plate, says Nessa Feddis, the American Banker’s Association’s senior federal counsel.

Whatever law eventually emerges-as many as six were proposed last year-the topic was a natural for Congress, which has had to at least appear to respond to last year’s flood of data breaches. An industry-supported bill sponsored by Sen. Jeff Sessions was passed by the Senate Judiciary Committee in October (see Electronic Payments Week, Oct. 25, 2005), but it died  before it could come to a vote. "The enthusiasm for data protection [legislation] was a bit complicated by the fact that there are six committees involved," says Feddis.

Continue reading “Pending Financial Data Protection Legislation” →

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Voice Mail Option for Customers on Hold

By Jim Bruene Posted on
Categories: Service

OnholdFor only the second time in the 5.5 years since I became one of the first customers of online home-equity pioneer DeepGreen Financial <deepgreenfinancial.com>, I had occasion to contact customer service over an error on their end. Normally, I would use email, but this was one of those times when you need to speak to a human.

After navigating a relatively sparse phone menu, I pressed zero and found myself on hold; nothing unusual about that. After about a minute the recorded voice came on with the usual yada-yada about the importance of my call. But then I was surprised to hear the computer offer the choice of staying on the line, or leaving a voice message for a return call.

I chose to hold and my call was answered a few minutes later by a helpful service rep. Overall, I left this interaction thinking more highly of the bank, even though their error had forced me to call and spend four minutes on hold. It’s all about exceeding expectations. And it doesn’t take much to do that when it comes to banking customer service, or really any toll-free support line. So keep working on those incremental improvements, as they can pay off immeasurably in the long run.

What would be even better, given the bank’s customer base of experienced online consumers, is to also offer a special email address such as urgent@deepgreenbank.com with a guaranteed 30-minute response time. That would really leave a great impression with Internet-savvy callers (see OBR 106/106 for hundreds of more ideas to make your E-service shine).

—JB

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Bank of Internet’s Niche Banks

By Jim Bruene Posted on
Categories: Bank of Internet, Strategies

Bofi_seniorbank_1Bank of Internet <bofi.com> announced today the launch of its second specialized online bank, Senior BofI <seniorbofi.com>. While it may not be the sexiest name on the planet, it does help establish the link to the more established entity, Bank of Internet, a comfort to the market it’s going after, seniors.

This marks the second specialized online bank operated by BofI, the five-year-old, online-only bank. The other is Apartment Bank <apartmentbank.com>, which caters to owners of multifamily-housing properties.

Analysis
We like BofI’s strategy of going after national niche markets with specialized services. The ApartmentBank concept is especially unique given the small total universe it serves. Looking at the recent fundings, it appears to be gaining some traction, especially in Texas, Arizona and a few neighboring states. The website lists 12 deals worth $16.6 million, half the dollar volume from Texas (click for screenshot of Apartment Bank).

Bofi_seniorbank_amazonad_1We are less enthusiastic about the initial Senior Bank implementation. Given the competition for this segment, the bank will need to mount a stronger effort. Other than the user-friendly SMALL/MEDIUM/LARGE/X-LARGE font selection tool in the lower-left of the homepage (click on screenshot above for closeup), there isn’t much to differentiate the bank, or its products, from thousands of other banks, most of whom cater to seniors with special accounts and pricing.

For example, The Community Center is dominated by a list of DVDs for sale at Amazon, including Batman Begins, and TV shows, Lost, Firefly, and Friends (see inset). The bank loses whatever credibility it had gained on its homepage once seniors see random selections from Amazon’s inventory dumped onto the website. Seniors don’t even like to shop online, especially for DVDs aimed at 20-somethings.

The Grades
A for strategy
B for implementation of Apartment Bank
C- for implementation of Senior Bank

—JB

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