Online Financial Services Scorecard: February 2008


According to data from Compete's consumer panel, both applicants and shoppers in all segments dropped in February. Recession fears appear to be negatively impacting sales activity. However, conversion rates stayed relatively constant except for credit cards, indicating that those still shopping are serious buyers. 


  • The credit card industry saw a slight decline in both shoppers and applicants (note 1). This has been the case for the past few months following the large holiday push by the credit card companies. Conversion dropped significantly to 23%, down 6% from January and down 9% from December. However, it's back to where it was in second quarter 2007, so it may be more of a seasonal drop than a falloff in demand. 
  • Deposits saw losses across all three segments, especially high-yield savings which was down 25% in applications, as the Fed's rate cuts trickled through the banking industry. In checking, all but two competitors tracked saw decreased application volumes. 
  • Refinance mortgages had the biggest drop in February, posting a 30% decline in shoppers and 19% in applications. Purchase mortgages saw a similar decline in applications (down 18%), but only an 18% drop in shoppers. 
  • The home equity segment fared the best in the home loan category with 10% fewer applications and an 8% drop in shoppers.

About the Financial Services Scorecard
In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

1. There was a change in Compete's methodology for measuring credit card shopping activity, so February's count January's cannot be compared. However, the 4% decline shown in the chart is correct, reflecting the change from what January would have been under the new methodology. 

Q1 Prosper/Lending Club Loan Volumes Up 55% (Y/Y)

lendingclub_logoLast week's post on P2P lending traffic prompted several comments on how worthless website traffic is as a metric, especially when the two major players make their loan-production numbers public. With that in mind, I present the Q1 total loan production for Lending Club and Prosper.

prosper_logoWhile Prosper still had twice the overall loan volume of Lending Club in Q1 ($21 vs. $10 million), Lending Club is closing the gap in the prime/near-prime market (FICO 640+) originating two-thirds the volume of Prosper in March ($4 vs. $6 million). But if you take into account Lending Club's more stringent debt-to-income requirements (max 30%), the newcomer actually surpassed Prosper in these lower-risk loans ($4.1 vs. $3.7 million in March).  

While the two-horse race is an interesting sidelight, the more important statistic is industry growth. In Q1, Prosper and Lending Club combined for more than $30 million in originations, up $10.7 million (55%) compared to about $20 million in Q1 2007. Only $3.4 million of the Q1 total (17%) was subprime, compared to $7.0 million (36%) a year ago.

Loan originations doubled in the prime/near prime (Prosper grades AA to C and all of Lending Club) ending the quarter at just under $27 million.

Why so much attention to a tiny sliver of the $2.5 trillion U.S. consumer loan market? It's new. It's different. It's social. And it's an experiment in online finance we get to watch in real time thanks to the transparency of the lenders. For more info on the market, see our recent Online Banking Report on P2P lending.

Q1 2008 Loan Volume: Prosper vs. Lending Club
in $ millions (U.S. only)

All Grades
Prosper AA-C
Low DTI**
Lending Club*** Total
Q1 2008 $20.5 $17.1 $10.7 $9.8 $30.3
   March $7.3 $6.0 $3.7 $4.1 $11.4
   Feb $6.0 $4.9 $2.9 $2.9 $8.9
   Jan $7.2 $6.1 $4.0 $2.8 $10.0
Q1 2007 $19.6 $12.6 $8.0 n/a $19.6
'08 vs. '07 +$0.9 +$4.5 +$2.7 +$10.7
% change +4.6% +36% +34% +55%

Source: Online Banking Report compilation of company data, 2 April 2008
*Loans made to Prosper grade AA through C borrowers (FICO 640+)
**Loans made to Prosper grade AA through C borrowers with debt-to-income (DTI) less than 30% 
***Lending Club only makes loans primarily to the "prime/low DTI" segment (FICO 640+, DTI <30%)

1. These prime/near prime/subprime distinctions can help financial institutions compare their prices to the marketplace rates.

Prosper, Lending Club Traffic Up 100,000 in February

Looking at February's Compete data, estimated traffic (see comment 3) at the three major U.S. person-to-person lenders grew by approximately 100,000 unique users compared to January, a 16% gain. Prosper still dominates the category with nearly 10 times as many unique visitors as its nearest rival, Lending Club

Update: In terms of funded loans, Prosper had double the volume of Lending Club in February: $6.0 million vs. $2.9 million. In January, the volume was $7.2 million vs. $2.8 million.  

Lender Launch Feb. 2008 Jan. 2008 Mo. Growth % Growth Feb. 2007
Prosper Feb '06 650,000 570,000 +80,000 14% 650,000
Lending Club May '07 70,000 50,000 +20,000 40% * Dec '07 16,000 14,000 +2,000 14% *
Total   740,000 630,000 +100,000 16% 650,000

Source:, estimated unique site visitors during Feb. 2008                                         *Not launched

Prosper vs Lending Club site traffic

Online Financial Services Scorecard: January 2008

Compete monthly online finance application and sales statistics

According to data from Compete's consumer panel, the deposit and home loan categories experienced significant increases in both shoppers and applicants during January (with the exception of home equity). Credit cards took a big hit as both shoppers and applicants dropped by double digits. Conversion across the board stayed relatively constant across the three segments, with credit cards moving the most with a drop of 3%.


  • The credit card segment experienced a decline in the new year as both shoppers and applicants dropped significantly at several large issuers. All but one of the major issuers being tracked experienced downturns.
  • Mortgage refinance continued its upward trend from last month with a 16% jump in shoppers and 57% increase in leads/applications. The pushed the conversion rate up 2%.
  • Purchase mortgages performed the best out of the home loans segment as more than half of the providers received at least 30% more applications during the month of January.
  • Even though home equity jumped significantly in terms of shoppers to their sites, there was still a 7% drop in leads/applications. Home equity had a similar trend last month when leads dropped 6%. Even though home equity lenders were seeing getting their shopping traffic back, they were not successful in converting them to applications in January.
  • Deposits saw the most growth of the three segments as it grew in shoppers and applicants across all three categories. Three major checking providers turned in 50% growth in both shoppers and applicants. Only one financial institution tracked showed a significant increase in conversion. This created an increase in conversion for the market of +1% with a similar growth rate in both shoppers and prospects.
  • Savings performed even better than checking as all but two companies saw a significant jump in applications as well as shoppers. Because of the increases, conversion stayed stagnant at 6%.
  • High-yield savings followed the same path as the entire competitive set saw double-digit increases in shoppers, and only one had a decrease in applications.

About the Financial Services Scorecard
In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Online Financial Services Scorecard: December 2007


With the exception of refinance shoppers, most financial products experienced a downturn in both shopping and applications compared to November (see November chart below). This is not unusual during the busy December holiday period. Other observations:

  • On the bright side, the mortgage refi category experienced a sharp spike, up 27% in shopping volume, as mortgage rates dropped for conventional loans. However, that activity did not lead to an increase in applications, as that total dropped 17%. The busy holiday period may be to blame for the lack of follow through or consumers may have held off anticipating further rate drops.
  • Surprisingly, mortgage applications for home purchase actually increased 8% even though shopping activity dropped 5%.
  • There was no good news with home equity, as shopping declined 10% and application/leads went down 6%. Several companies experienced double-digit drops in conversion and leads/applications.
  • Credit card applications decreased 6% overall and with all but two of the tracked companies experiencing declines. The only good news: shopper-to-applicant conversion was up more than 3 points compared to November.
  • On the deposit side, the number of shoppers and applicants was down across-the-board. Several large financial institutions saw double-digit drops in prospects and applicants.
  • The biggest decline, most likely due to rate cuts, was in the high-yield savings category, which posted a 23% month-over-month decline in application volume. Conversion rates also slipped for all but two companies indicating that shoppers may have been disappointed with the posted rates.


Compete Financial Services Scorecard Nov 2007

About the Financial Services Scorecard
In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

New Online Banking Report Available: 2008 to 2017 Forecast

image The latest Online Banking Report: 2008 to 2017 Online Banking & Bill Pay Forecast, is now available. It was mailed yesterday to subscribers. It's also available online here. There's no charge for current subscribers; others may access it immediately for a charge of US$395.

The report includes our latest 10-year online banking and bill pay forecast. This year we bumped our long-term usage forecast by 10% to 15% due to a more robust outlook for adoption, especially from mobile-only users (see note 1). For example, we are now projecting 64 million U.S. households banking and/or paying bills online by 2012 compared to last year's forecast predicting 56 million in the same period.

We're still not quite as bullish as Forrester, who's calling for 72 million online banking households by 2011 (post here), but we've closed the gap (note 2). 

In addition to the forecast, we summarized the top ten innovations of the past year. Thanks for the input from all the readers who answered our call for nominations in late December. We'll publish the list here in a few weeks, after subscribers have a chance to see it first.


  1. While we show mobile usage as a separate line item in the forecast, mobile-only banking users are included in the overall online banking forecast. 
  2. By comparison, our forecast for 2011 is 62 million. 

June Online Financial Services Scorecard from Compete

Compete June scorecard

In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked. 

Overall June highlights:

  • Traffic of financial shoppers was up across all product types except high-yield savings which dropped 2%.
  • More important, applications were up across all products ranging from 3% in savings to 26% in mortgage refinance.
  • A total of 2.9 million product applications were booked; 200,000 more than the 2.7 million last month.

Specific financial institution performance:

  • Bank of America improved its credit card conversion rates dramatically, booking a 30% increase in applications despite only 10% growth in shopping traffic.
  • In checking accounts ING Direct, WaMu, and Wells Fargo all increased the volume of prospects looking at checking account options. 
  • Emigrant, HSBC and ING Direct were all able to increase application volumes despite a flat or declining volume of potential prospects.
  • Home equity prospect traffic grew at 12 of 16 providers and conversion rates were improved at 10 of 16. Bank of America, Citibank, Countrywide and had the largest month-over-month percentage gains in both prospect and application volume (note 1). 
  • In home-purchase mortgages, nearly doubled its prospect traffic compared to May, while significantly improving lead conversion.
  • In mortgage refinance, also posted the largest percentage gain in prospects but grew applications at a lower rate, resulting in a significant decline in conversion. Quicken Loans showed greater efficiency, almost doubling application volume with roughly the same number of prospects as in May.


1. For loan products, leads from lead-generation sites such as are combined with actual applications at financial institutions into a single "lead/application" category shown in the table.

ING Direct Adds 220,000 Accounts in Fourth Quarter

The FDIC database has been updated with Q4 numbers, allowing all the data miners to slap on their hard hats and get to work. Since reporting on the tepid third quarter of ING Direct (U.S.) (here), we've been looking forward to the year-end data.

The biggest surprise is that the bank not only reversed the Q3 account run-off, it managed to add 220,000 new accounts, its best fourth quarter ever. However, things weren't so rosy in terms of deposit balances, which increased just $800 million, the lowest Q4 increase since 2001 when the bank had less than $3 billion in total deposits.

For the full year, ING added $7.2 billion in deposit for an 18% increase, the first time the bank had less than 40% year-over-year growth. And almost the entire increase came in first quarter. The bank essentially had no deposit growth in the final nine months of the year (see table below).  

It will be interesting to see what impact its new high-rate Electric Orange checking account will have on deposit and account growth. The account was growing rapidly during the final stretch of the invitation-only launch period, growing from $1 billion on deposit Dec. 31, to $2.2 billion by mid-February (see coverage here).

Small Business Payment Research

Bai_logoAt its annual TransPay Conference, BAI unveiled new research into small business payment needs and opportunities. The most dramatic finding: More than half of small businesses (annual sales of $500k to $10 million) would be "likely" or "very likely" to switch banks for "better payment services." In comparison, only about 10% of businesses with sales between $50 million and $250 million felt the same way.

Obviously, there are some serious, unmet needs among small businesses. Some of the things they most wanted (percentages indicate how many small businesses desire each feature):

  • Straight-through processing of payments from business to bank (70+%)
  • Identity-management platform that safeguards the business identity and protects your accounts when conducting business electronically (70+%)
  • Electronic payments package integrating accounts payables, accounts receivables, and expense tracking (65+%)
  • Live intraday financial position (55+%)
  • Bank services that can easily be integrated into your payroll and HR systems (60+%)
  • Automated card-based, expense-processing system that ties in key partners (50+%)

Sizing the small business payments market
BAI Research also assembled an excellent summary of "payments by business size," shown below. It's interesting to note that the number of payments made by larger businesses is less than one-third of all business payments. The other two-thirds comes from small businesses, including almost 16% from the micro-business market (under $100,000 in annual sales).  While most of these businesses use consumer payment services, there is clearly an opportunity for more targeted micro-business payments. For more information, see Online Banking Report #107/108, Small and Microbusiness Banking 4.0.


Do the World Bank’s Remittance Estimates Add Up?


Venture capitalists have reason to love the remittance business: Official estimates of overseas money-flows from the United States range upwards of $30 billion a year and are growing. The World Bank's estimate of overall remittances to developing countries is $167 billion for 2005, up 73 percent since 2001.

As a result, investment capital has been feeding innovative companies using modern technology, all planning to take market share away from industry leaders Western Union and MoneyGram International. There’s only one problem: According to a recent study by the Government Accountability Office (GAO), those estimates are at best optimistic, and at worst, wildly inaccurate—perhaps by two-thirds.

Continue reading “Do the World Bank’s Remittance Estimates Add Up?”