Secure Bank Message Area Grows in Importance

One way around the rapidly declining effectiveness of email communications is to prominently post new messages within the secure online banking area. Not only is it useful to create an archive of bank communications, it also provides reassurance that no message(s) have been missed.

Ebay recently added this capability to its the My eBay platform, where users can login to track account activity. Ebay keeps messages for 60 days. Financial institutions should allow storage for far longer, one year at least.

Because bank messages are often time sensitive, you should also send the message, or a message notification to the user’s standard email account. Better yet, allow users to receive message notifications at multiple email accounts, therefore increasing the chances that one will go through.

Action Item
Many banks already have this capability, but it may be overlooked by customers, as they have become accustomed to receiving messages over the Internet.

Now would be a good time to remind customers to look in their message folder periodically. You might run a sweepstakes or treasure hunt that requires looking into message folders to win.

If you’d like to learn more about the future of online bank messaging, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

How to Make Your Online Banking Customers Feel Secure

Link: Citizens Bank.

Most banks could help their customers increase their comfort level with online banking by doing four relatively simple things:

  1. Greet customers by name before logging in, so that users know they have arrived at the correct site.
  2. Post a prominent link to an online security area.
  3. Post an understandable discussion of the customer’s liability for unauthorized electronic withdrawals, preferable with a "guarantee" of zero liability if promptly reported.
  4. Provide hotline phone numbers and email addresses for reporting suspected fraud.

Citizens Bank, the U.S. division of Royal Bank of Scotland, does a good job with points 2 through 4.

Citizens_fraud_center A catchy homepage graphic for its "Online Fraud Prevention Center" directs users into a thorough discussion of online fraud and prevention techniques.

The bank’s Online Guarantee is highlighted with a graphic image and Citizens_onlineguarantee_logoa phone number and special email address, are also included.

Finally, copy writing is user-friendly and links to third-party resources, such as the National Cyber Security Alliance, round out the section.

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.

Where’s the Holiday Bank Marketing?

These days most major online retailers and consumer sites dress up their websites for the holidays.

Unless, they are bank sites.

Each year we surf major banks looking for holiday happenings. We were surprised again this year to find little creativity on bank home pages. On Dec. 21, none of the largest 30 banks in the U.S. had a major holiday theme running.

Two banks, National City (#11) and LaSalle (#15) were running prepaid gift card banners. And two others were running small holiday-themed promotions running, AmSouth Bank (#27) and PNC (#20).

PNC is running a tongue-in-cheek look at the cost of purchasing the items in the popular holiday song, The Twelve Days of Christmas. This year the total cost was $17,300, up 2.4% since last year. The bank has been tracking the cost for 20 years and provides a long-term look at the price increases. It’s very clever, providing valuable publicity and a positive impression of the bank.

AmSouth Bank has an interesting holiday promotion, one that ties directly to online banking a bill payment. Website users can personalize a holiday greeting card and send it to anyone with an email address. Users are encouraged, but NOT required, to use the cards as a notification of a check being sent through AmSouth’s bill payment system. The default "personal" message even says:

A monetary gift is being sent through AmSouth Bank, please look for it in your mail in the next 7 days.

Greeting card users do NOT have to be bank customers. AmSouth doesn’t say whether it is capturing email addresses. We would have to assume not.

Action Items

Add a holiday promotion for your 2005 marketing plan. It’s a great way to jazz up your website for the holidays and you can include a sales promotion at the same time, especially for prepaid cards or gift checks.



If you’d like to learn more about the financial interactive marketing efforts, check out the Interactive Financial Marketing Database from our sister publication, the Online Banking Report.

Self-Employed Totals 10% of Work Force

Link: SBA Self-employed Research Results

A new report released this month by the U.S. Small Business Administration, estimates that U.S workforce is now comprised of 12.2 million self-employed (9.8% of the total) and 112 million employed (90.2%) workers.

What it Means
The self-employed are a significant market segment on their own right. At approximately 10% of your customer base, they warrant attention and possible product offerings specifically geared to their needs. See Online Banking Report 107/108 for more information on creating compelling online services for small and microbusinesses.

Action Items

1. Review your website and other marketing collateral, especially small-business-oriented material, to make sure it includes references to the self-employed.

2. Create a "self-employed" area on your website.

3. Consider creating special product bundles geared to this segment. Since traditional loan underwriting often penalizes self-employment, look closely at what you might do to enhance the credit aspects of the bundle.

4. Include "self-employed" in your search engine advertising buys and in other online promotional efforts.

5. Create a quarterly or monthly email newsletter specifically targeted to the segment.


Online Referrals for Real Estate Agents

Link: – Online Referrals For Home Sales Gain a Toehold.

Here's a way to gain incremental mortgage sales, new banking customers, and potentially a bit of direct fee income from your online services.

Develop an online real estate agent referral program.

Visitors would be able to query your website to find qualified agents specializing in their target neighborhoods. You could do it as a pure marketing play, with no Amexgiftcardincentives or referral fees; or you could provide eye-popping incentives, such as $2500+ gift cards from Home Depot or American Express offered by LendingTree at their site.

In the LendingTree program, the value of the gift card depends on the size of the home purchased and/or sold (you receive an incentive for both buying and selling) as follows:

Incentive  Combined Value (bought & sold)
$250         $100,000
$500         $150,000
$1000       $250,000
$1500       $350,000
$2000       $450,000
$2500       $550,000
$5000       $1.1 million
$10,000    $2.1 million

The incentives are funded by the agent receiving the referral, who rebates a third of their sales commission to LendingTree. The consumer ends up with approximately $500 for every $100,000 in home value over $50,000.

LendingTree also tacks on an extra $100 if the buyer gets the mortgage from a LendingTree lender.

Currently, 7% of home buyers say they found their real estate agent through the Internet. (Source: National Association of Realtors study of transactions in 2003 and 2004, as cited by The Wall Street Journal, Dec. 9, 2004)

This strategy is not for the faint of heart. While consumers will love it, driving additional business to your mortgage products, most real estate agents will hate it. So you have to weigh carefully whether it's worth the potential heat. If you rely on real estate agents for mortgage leads, you might want to consider the non-incentive version, where you simply forward home sales leads to agents based on zip code.


Improving the “Look and Feel” of Bank Emails

In our most recent tests, we found great improvement in the quality and
timeliness of responses to Web-based queries. However, we found that the “look
and feel” of email responses left a lot to be desired. The typical bank response
was a few lines of text and perhaps a link or two to general information. And
because of poor choices in the FROM and SUBJECT fields, the responses looked
spam like and easily overlooked.


Compare those bank messages to email responses from leading Web-based
retailers and service providers such as GoDaddy, an Internet domain name
registrar (screenshot below). Most savvy retailers use graphically
appealing HTML messages to get their point across effectively, and when
appropriate, up-sell the user on a solution that solves their problem. In the
GoDaddy example below, I asked a question about website capabilities and
received an excellent response along with an appropriate upsell into their
$3.95/mo hosting option (see note point 4 on the screenshot below).


GoDaddy knows shows their savvy in responding to customer service inquiries.
Not only is it good looking and answers my question, it arrived eight minutes
after the question was submitted, beating by three minutes the
expected call center hold time listed on the website. That’s how to deliver
e-service, faster than alternative channels. The email response grabs your
attention with a well-designed layout including the following (see
corresponding numbers above

1.      Answer to my question (at the top)

2.      A real person responding to the question

3.      Link to a privacy

4.      Banner to select the service upgrade about which I had inquired

5.      Phone numbers for customer support

6.      Repeat of my original question (not visible on the

My only major complaint with GoDaddy’s message is that it fails to identify
itself in either the email From field (it used “Support”) or the
field (it used: “Other: One page website incident 040506-001360”). 

Bank Examples

In comparison, the typical bank response is delivered in plain text with few
helpful links. Following are examples of banks responses to a general
non-customer query via their websites.  

The question posed: Do you offer overdraft protection that does not
charge for each advance?

Email response from Chase to a question about whether they
offered no-fee overdraft protection: The speedy response, 41 minutes, answered
the question correctly and concisely and provided a phone number for more
information. However, there were no links in case I wanted to sign right up for
the account I asked about. Score: A for service, D for sales. (09 Apr 2004)

PayPal Offers Preapproved Credit Line to Members

PayPal now marketing Buyer Credit directly to buyers


Ebay’s PayPal unit already offers transaction accounts, interest
and non-interest bearing, debit cards, credit cards (through First USA),
online bill payment, person-to-person payments, interbank transfers,
merchant transaction processing, investment accounts, insurance, and
indirect lending. About the only thing missing from their line-up, revolving
credit and mortgage lending (see Timeline, Table 4, opposite).
Correction, make that just mortgage lending.  This summer the auction
payments giant added a revolving credit option called PayPal Buyer Credit
(see screenshot below). Until recently, it’s been mostly targeted to
sellers who are encouraged to offer it as a financing alternative on their
auction listings. Depending on the program sellers pay 0.50% to 3.75% of the
selling price to fund the financing. The most common offer on eBay during
the pre-holiday rush is no payments/no interest until April 2005 (see
screenshot opposite
). If the buyer takes advantage of the offer, it will
cost the seller 0.50% of the purchase price, and the seller will receive the
entire purchase price, less PayPal fees, immediately (see Table 5, for
more seller costs

Users are encouraged to apply for Buyer Credit in advance.
Assuming they are approved PayPal users can select Buyers Credit as their
funding source when checking out or sending money from PayPal. Buyer Credit
can be used to pay anywhere that accepts PayPal, it could even be used to
send money to an individual, but they must be a Premier or Business member.
Buyer Credit is provided by GE Capital Consumer Card Co. at an annual
percentage rate of 20.8%, which increases to 24.75% if the user becomes
delinquent (late twice during a six-month period). The rate is variable at
prime plus 15.5%, with a 20.8% minimum. Late fees vary from $15 to $35
depending on outstanding balance.


Table 4

Product Timeline

PayPal’s moves into banking


Table 5

Seller’s Cost to Offer Special Financing

Cost*     Purchase              Offer

0.50%      $199                     No payments for 3 months and no
interest if paid in 3 months

1.75%      $199                     No interest if paid in 6 months

3.75%      $199                     No interest if paid in 12 months

0.60%      $999                     12 fixed monthly payments at 12.9%

1.50%      $1999                  24 fixed monthly payments at 12.9% APR

Source: PayPal, 12/13/04             *Percent of purchase price




For more information


Table 6

Recent PayPal Stats

million unless otherwise stated


Source: Ebay financial statements, Online Banking Report, 11/04

Retail Delivery 2004 and Notables from BAI 2004

The biggest banking show of the year, BAI’s Retail Delivery was
held Nov. 16 to 18 in Las Vegas. Here’s what caught our attention this year.


1.   Channel integration: As mentioned on page one, we were
smitten with the “teller assist” hardware from Source Technologies .
Its vision: teller lines soon look like airport check-in counters, a mix of
touch-screen automation with human support. One teller can do the work of
two or three, as the customers do most of the work feeding deposit items
into a terminal that scans them and displays an image on the screen for
verification. The company says payback is one year.

2.   Security issues: Jim Van Dyke Principal of Javelin
delivered two sessions on the three Fs: fear, fraud, and
phishing. His new safety scorecard even made the Wall Street Journal
the day before he spoke (see WSJ, Nov. 16). Of the 39 banks surveyed
by Javelin, Bank of America came out on top with a 71 score on the
100-point scale (see Table 3 below).  One of Van Dyke’s key themes:
eliminating mailed billing and financial statements. It’s the one avenue of
fraud and identity theft that’s relatively easy to avoid while saving the
financial institution a substantial amount in paper and postage. Users
should be allowed to turn off paper statements and should be encouraged to
avoid putting any paper into the system by using debit at the point of sale
and using electronic options to pay bills. You can access a synopsis of the
research at
 or purchase the entire report for $2500.

Table 3

Top Scoring Financial institutions on Javelin’s Identity Fraud

maximum regular score = 100


Source: Javelin Strategy & Research presentation at BAI Retail Delivery,

*39 financial institutions evaluated by mystery shoppers across 44
criteria; scores ranged from 12 to 70.5,
max=105 including potential 5-point bonus, see below

**Wells Fargo had the top score of 73 across the three evaluation
categories; however they received a five-point deduction for using the
social security number as the default username; financial institutions could
also receive a five point bonus for not allowing nine-digit numerical
usernames (so users couldn’t use social security number); other than Wells
Fargo, we do not know if any of the above financial institution received
bonus additions or deductions. If so that could mean that their component
scores were different that what we deduced above.

3.   Account-to-account transfers: CheckFree (see also
number 7 below
), Yodlee, and CashEdge were on the floor
discussing their latest improvements to interbank transfers. CheckFree’s new
bill payment platform includes interbank transfers, quick payee setup, and
user-input payment reminders. CashEdge, the leader in the burgeoning A2A
field, even landed another top-10 bank at the show. They now power
, Bank of America, and several yet-to-be-announced large
banks. By next year’s show, the company expects to be powering A2A for five
of the top 10 U.S. banks.

4.   Prepaid cash: American Express and WildCard Systems
 along with Visa and MasterCard of course, were on the
floor pitching prepaid gift and travel cards. A great opportunity for online
banking operations to monetize their user bases. To see the future of gift
card delivery online, check out payment processor iPay’s system



5.   Branchless banking: Deloitte director Michael Raynor who
co-authored The Innovator’s Solutions with Clayton Christensen, used
ING Direct as an example of a potential disruptive technology in the
area of branchless banking. He said the jury was still out, but banks would
be wise to keep an eye on the ramifications from ING’s success. We couldn’t
agree more. And imagine if an ING Direct-like company sprinkled a few Source
Technologies truly automated tellers (see #1) around town, it could
be a viable business model. One that functioned as a true branchless bank
servicing transaction accounts as well as savings deposits.

6.   Automatic savings: ShareBuilder was on the exhibition floor
again, with a nice location. They are really on to something by providing a
low-cost way for investors to get involved in equity markets while
simultaneously introducing them to the power of automated savings.
ShareBuilder is marketing slick new account kits complete with a book, Smart
Money Magazine subscription, and $30 in cash for the first investment (see
screenshot below
). It’s a great product to market during the holidays as
parents, grandparents, and others love the ease and value of this
politically correct gift. Wells Fargo and ShareBuilder
have been emailing well-designed holiday sales messages for the past few

Wells Fargo is selling a ShareBuilder “Investor Starter
Kit” which includes a subscription to Smart Money, a Wall Street Journal
book, and $30 cash to invest. Total cost is $24.95, an excellent value.


7.   New CheckFree “bill management” platform: CheckFree continues to
improve its widely used platform with the goal of making it a complete “bill
management” center. Additions coming in version 4.1, available in Q2 2005

  •          user-entered payment reminders
  •          integrated inter-institution transfers
  •          quick payee-setup that can be set up with just a payee phone
  •          integrated checking account balance


Still lacking: security preferences for setting up a “firewall” around the
user’s payment system.


CheckFree’s consumer site leads with a powerful benefits-oriented graphic
and headline,
”Delete: Paper bills. Add more life.” Then immediately to the right is someone
reading a book on the porch, obviously enjoying their extra leisure time.

Categories: BAI

OBR Special Report on New Safe Banking Initiative

Fed by media reports, often wrongly implicating online banking in fraud
problems the public is becoming exasperated with the growing assault on
their computing. Spyware, adware, spam, viruses, worms and phishing are
enough to drive consumers back to that comfortable spot on the couch where
all they have to worry about is what show’s on next.*


At Online Banking Report, we’ve watched the growing backlash with great
concern. Although we’ve written about it, we want to do more. We’ve been
telling reporters for years that overall online banking is safer than
the paper processes it replaces. To get that message out to a broader
cross-section of consumers, we are launching the Safe Banking Initiative
(SBI) to foster education and awareness of safe online banking practices
within the industry and to educate the marketplace, especially the media, as
to the real risks of various banking and payment options, both online and
off. Its business model will be similar to the Underwriter’s Lab in
the electrical appliance field. The SBI website (under construction) will
contain educational information along with a database of certified banks.

Safe2Bank Online (S2BO) Certification

One of the first efforts will be the deployment of the Safe2Bank
Online Certification
program that will allow regulated financial
institutions to apply for a safe banking logo that can be displayed on their
websites. The idea is help consumers know when they are visiting a financial
institution that adheres to the Safe2Bank guidelines. We plan to make
the scorecard criteria open to the public via the Safe2Bank website, but the
weightings, actual scores, and score cutoffs will remain confidential
(although participating financial institutions will receive a full copy of
their weighted scorecard and comments).


The guidelines are still in development, and we are looking for your
input. The first draft is listed on pages six and seven. To become
certified, financial institutions must achieve a yet-to-be-determined
minimum score across the 80 items. Financial institution will not have to
pass all 80 guidelines to become certified, although there may be certain
required items such as a visible privacy policy, secure password-reset
procedures, and so on. Certified financial institutions will have their
names, Web addresses, and contact info listed on the Safe2Bank website. They
also have the option of licensing the mark to display on their own websites
and marketing material  .

To become certified, financial institutions must answer a questionnaire
on their online banking features and processes (all questions related to
publicly available material). Answers will be verified by an SBI employee
and scored using the criteria in Table 2 . Each factor will be weighted, and
partial credit will be available on certain guidelines. The resulting score
and comments from the evaluator will be shared with the participating
financial institution. The audit deals only with publicly visible features
and processes: it is NOT a back office or network security audit like the
SAS 70 or other regulatory reviews.






*As we were going to press, another story ran on The NBC Nightly News
about $90,000 lost by a small business apparently aided with information
obtained from a personal computer (reference:



Table 1

Safe Banking Initiative Timetable

Dec 2004 Industry announcement
Q1 2005 Online scorecard criteria
  Certification applications
Q2 2005 Safe Banking Online audits
  First financial
institutions certified
  Safe2Bank Online public
awareness campaign launched
Q4 2005 Safe2Bank Online scorecard

Source: Online Banking Report, 12/14/04

Timing & Cost 

Financial institutions are encouraged to apply now for certification. The
first wave of certified financial institutions will be announced at the
launch of the consumer education campaign, currently slated for second
quarter 2005. Financial institutions will be certified in the order of
application, so the earlier you return the reservation form, the sooner
you’ll be eligible. The cost for the certification audit is $500 payable
with your reservation form (see enclosed). The fee is not refundable,
but those not passing may reapply within 12 months for half price.

Licensing the Safe2Bank logo

Financial institutions passing the S2BO audit will have the option of
licensing our Safe2Bank Online logo for inclusion on their websites
and marketing materials. Licensing cost will be no more than $1000 annually
during the launch period. Final pricing will be announced in first quarter

Consumer Awareness Campaign

As the certification process unfolds, we will initiate a far-reaching,
consumer-awareness campaign. Part of that effort will be to help each
certified bank make a splash in their home market. SBI will assist in
issuing a joint press release and will participate in other media events as
well. Online promotional efforts will also be used to raise awareness of the
Safe2Bank designation.

Reservation Form

We have enclosed a signup form with this newsletter. Receive one via
email by sending a request to


Organizational Structure

The SBI is a wholly owned division of Financial Innovations, publishers
of Online Banking Report since 1995. The managing director is Kate Schultz
who brings to SBI a long track record of organizational leadership in the
nonprofit sector along with 10 years of contributions to Online Banking
Report. All guidelines will be reviewed by an industry advisory board
(below) before being finalized.

SBI Advisory Board

We consider every OBR subscriber to be an unofficial SBI advisor. So
please provide your input on the S2BO scorecard and any other aspect of the
initiative. We are also assembling a more formal advisory panel from the
industry to review the criteria and submit comments. If you would like to be
on the official panel, please email
. The position is voluntary and unpaid with a
relatively small time commitment**
(no meetings!). Membership is limited with preference to financial
institution employees.


Although all the information obtained in the audit will be publicly
available, we understand the sensitivity of the industry to the threat of
hacking and leaks. Therefore, all audit results will be kept in
password-protected files on computers not connected to the Internet.

*Financial institutions are encouraged to obtain an opinion from their
compliance and legal staff on the ramifications and implied liabilities,
if any, of using the Safe2Bank logo.
**The time commitment should be no more than a few hours each quarter.


Safe2Bank Online Scorecard Beta Version 1.0

Table 2

Safe2Bank Online Scorecard

Source: Online Banking Report, 12/04

References: Security and Privacy Report, OBR 93/94


FraudEliminator – Online Security Toolbar

Because lack of trust and other security issues consistently rank first on the list of reasons why people don't bank online, we will continue to devote a seemingly inordinate amount of attention to this subject.

Fraudeliminator2That said, another new browser toolbar was recently released by FraudEliminator, LLC, a company founded just this year according to its website.

The toolbar is one of the better we've seen, combining excellent design with good functionality. Like eBay's toolbar, the FraudEliminator, monitors your and warns if a suspicious or flagged URL is entered in the address bar.

Fraudeliminator_toobar It's a good tool, but how does a user know that the FraudEliminator is not some malware in disguise? Unless the company spends millions educating the marketplace, this particular plugin will have trouble gaining a following.

However, if a bank were to partner with the program, releasing a co-branded or private-branded version, it could be a hit. The bank would provide the needed credibility while FraudEliminator LLC provided the technical expertise and support.


TowerGroup posts Realistic Estimate of Phishing Fraud Losses

Link: TowerGroup

The financial services analyst continues to weigh-in on the estimated losses due to phishing and identity theft, with the latter becoming a catch-all for all financial fraud. Estimates from the FTC, Gartner, and Javelin have run into the billions.

Many media outlets have jumped on these estimates and made the incorrect leap that the losses were due solely to online fraud and phishing. Now, much more slowly the story is emerging that the actual online portion of these fraud losses is much smaller. Some even argue that online banking has reduced the total amount of fraud since consumers are able to pay closer attention to their accounts.

TowerGroup‘s latest report on phishing losses pegs the 2004 loss at $140 million worldwide; or about $1 per online banking household. That’s still a big number, and one that seems a bit high in our view, but it’s far less than the billion-plus implied by Gartner earlier this year. It’s also much less than the $500 million figure (for US only) recently released by the Ponemon Institute in a study commissioned by NACHA and Truste.

So is the online channel a help or detriment to the age-old battle against crime? From a monetary perspective, we believe it’s been a net loss so far. As Tower pointed out, it’s not just the actual losses, financial institutions spend far more in prevention and detection than they lose to the crooks.

But long-term, we are absolutely convinced it will be a much safer environment for banking compared to the paper-intensive processes it replaces.

— JB,