NetBanker 2.0

Top 20 banks worldwide

In case you need a stretch goal for your 2006 business plan, here are the 20 largest banks in the world, ranked by assets (in US dollars on 31 Dec 2004). By country there are 4 U.S. banks, 3 UK, 3 Paris, 3 Tokyo, 2 Germany, 2 Amsterdam, 2 Swiss, and 1 Spain. The biggest bank outside North America, Europe or Japan is #53 National Australia Bank in Melbourne ($282 billion).

1. UBS AG (Zurich): $1.53 trillion
2. Citigroup (New York): $1.48 trillion
3. Allianz AG (Munich): $1.36 trillion
4. ING Group NV (Amsterdam): $1.36 trillion
5. Mizuho Financial Group (Tokyo): $1.30 trillion
6. HSBC Holdings PLC (London): $1.28 trillion
7. Credit Agricole (Paris): $1.24 trillion
8. BNP Paribas (Paris): $1.23 trillion
9. JPMorgan Chase (New York): $1.16 trillion
10. Deutsche Bank AG (Frankfurt): $1.14 trillion
11. Royal Bank of Scotland Group PLC (Edinburgh): $1.12 trillion
12. Bank of America (Charlotte): $1.11 trillion
13. Barclays PLC (London): $992 billion
14. Mitsubishi Tokyo Financial Group (Tokyo): $980 billion
15. Credit Suisse Group (Zurich): $963 billion
16. Sumitomo Mitsui Financial Group (Tokyo): $897 billion
17. ABN Amro (Amsterdam): $829 billion
18. Societe Generale (Paris): $819 billion
19. Santander Central Hispano SA (Spain): $784 billion
20. Morgan Stanley (New York): $775 billion

Reference: American Banker, 29 Sept 2005 for the 100th largest banks in the world

For the top 150 largest U.S. financial institutions, refer to the resources section of our main website.

--JB

Landing pages (part 1)

Over the next few months, we will take a long look at the marketing of loans and credit lines online. The information will be summarized and analyzed in an Online Banking Report scheduled to be published in fourth quarter. However, as we find interesting examples, we'll report them here first, along with links to the live sites.

The first example is a good one from HomeLoanCenter.com. We ran a search on Google for "home equity Washington DC." One of the two AdWords banners on the top (click on inset for a closeup) was titled "DC Home Equity."

Clicking on the link took us to the lender's landing page (click on inset for closeup). Although, the page doesn't reinforce the geographic element of our search, it otherwise does an excellent job in reassuring the user and leading them into the application process.

Along the left side are three important elements:

• Third-party endorsement from CNBC
• 3-point "what happens next" instructions
• Customer testimonials

The middle of the page includes a toll-free phone number, several brief benefits, and a prominent Start Here to begin the application process. Prospects are only asked to provide a few key data points:

• name/email/phone
• state
• home value/mortgage balance/desired borrowing
• self-evaluation of payment history from a drop-down list

The page contains virtually no clickable links. Other than the prominent Submit button, the only links offered are in fine print at the bottom (About Us, Contact Us, Business Hours, Our Guarantees, Tools & Resources, Privacy Policy). This is a good trade-off. You don't want to lose loan prospects by distracting them with navigation choices, but you want to give those that need more information an outlet.

Overall score: A

--JB

New fraud education site from the Feds

If you are looking for a spam/spyware/phishing resource for your online customers, OnGuardOnline.gov is a good resource, especially for novice users.

The site is sponsored by The Federal Trade Commission, Dept. of Homeland Security, U.S. Dept. of Commerce, and The United State Postal Inspection Service. They also had some help from the private sector, with some content provided by Microsoft and The Internet Education Foundation www.neted.org. The site also lists a number of other partners, but does not disclose their contribution. None of the listed partners are closely associated with the financial services industry.

The main content areas cover:

• ID theft
• Spam scams
• Phishing
• Spyware
• Shopping
• P2P file sharing
• VoIP

Analysis
The information is thorough and presented in a audio-visual format that is easy to digest (click on inset to see a closeup of the homepage). The videos from Microsoft are particularly well done. And surprisingly there is no plug for the software giant, they don't even have a logo on the site.

The interactive Flash games are a little on the hokey side, but they get their points across. The Stop-Think-Click: 7 Practices for Safer Computing is very well written and hopefully will become widely circulated in the popular press.   

Action items
Financial institutions should use the site either as a direct resource for customers or as a blueprint for the material which should be presented in a bank's security and privacy area. The 7-point Stop-Think-Click material is especially useful to present to users.

The only slight hesitation we have about referring customers directly to OnGuardOnline.com is that it may be somewhat overly frightening. We think it's better to cover these issues yourself so you can provide reassurances along the way as to how you are helping solve these vulnerabilities.

But for those who haven't the resources or budget to create your own security center, this is a good reference point.

-JB

American Express builds city brands

Financial institutions have done amazing things with their websites since Bank of America launched the first major commercial banking site 11 years ago (Sept. 1994). However, other than single-market credit unions and community banks, there hasn't been much attention paid to localizing the content to appeal to more narrow geographic segments, for example the customers in a single city or neighborhood.

Beginning a year ago, American Express began a campaign to bring specialized city-based cards to major metro areas. The cards are intended for the 25-to-35 year-old hip urbanites. The card design, marketing, and rewards all cater to the dining out, clubbing, and museum-going single scene.

The first card, IN:NYC <innyc.com> launched a year ago (30 Sep 2004) and was discussed in a front-page WSJ article today. The company won't disclose any results, but did say that 90% of its customers have not previously owned an American Express card, an important statistic for a company worried about cannibalizing its other products.

The IN:NYC card has its own look, website, and rewards program focusing on unique beyond-the-velvet-rope experiences in local clubs and eateries. In an interesting viral marketing strategy, friends are able to pool points in order to qualify for bigger rewards, such as a VIP table in a hot club.

The key cardmember benefits include:

• 0% Introductory APR for 6 months on purchases and balance transfers
• No annual fee
• Option to carry a balance
• One INSIDE Rewards point for every dollar spent
• INSIDE Double points on City Essentials

The second city card was launched this month (19 Sep 2005) in Chicago. The IN:Chicago website is still a static billboard (see inset). Another card is in the works for Los Angeles, IN:LA, which is expected to launch later this year, although the company has yet to secure the rights to the website, inla.com.

Action Items
Many large banks alter their website content by state. However, the customization generally does not extend beyond minor pricing differences.   

To better compete with local institutions, banks should use their websites to deliver highly-customized geographic content. Event calendars, discounts, and other local event marketing could create better brand recognition and more word-of-mouth advertising opportunities. It would also give local branch staff more ownership of "their" website. Banks could use an easily remembered URL such as <ny.wamu.com> to house their local versions.

--JB

Financial search terms

In reviewing common banking, credit and insurance search terms today (August 2005) vs. two years ago (April 2003), there has been phenomenal growth in searchs on specialty loan terms, such as (number of searches on Overture each month):

home equity loan -- up 21-fold from 82,000 searches to 1.7 million searches in August
home equity credit line -- up more than 80-fold, from less than 15,000 to 1.2 million
auto loan -- up 10-fold, from 100,000 to 1.1 million
student loan -- up 12-fold, form 110,000 to 1.3 million
credit card cash back -- up more than 50-fold, from less than 15,000 to 730,000
mortgage refinancing -- up more than 38-fold, from less than 15,000 to 570,000
payday loan -- up 7-fold, from 79,000 to 560,000

In comparison, some of the more generic terms have shown much smaller gains:

mortgage -- doubled to 1.2 million from 640,000
debt consolidation -- tripled to 700,000 from 250,000
mortgage calculator -- up 10% to 630,000 from 560,000

Another big mover: online banking, up 16-fold, from 31,000 to 500,000

Click on the thumbnail above to see all 50 top search terms or download the Word file here: Download banking_search_terms.doc

You can use Overture's keyword selection tool yourself at this link.

--JB

Improving your desktop presence

It's been three years since our last report on improving your bank's visibility on the PC desktop (Grabbing Desktop Mindshare, OBR 85). Back then, Google and eBay had just launched toolbars and we were advising banks to improve their desktop positioning through buttons, bars, and various browser plug-ins.

While there's been less progress than we anticipated, several new services this year demonstrate the potential:

• Southwest Airlines Ding service embodies much of what we envisioned
• Billeo's toolbar raised the bar (pun intended), in the bill payment arena
• Apple's widgets in its new OS X

If you are looking for inspiration, check out Yahoo's Konfabulator, a program that lets Windows  and Mac users add spiffy utilities to their PC desktop, such as a calendar or system performance monitor.

There are several widgets of interest to bankers. Two savings meters (see above and right) allow users to track progress towards savings goals. This would be a good way to support and add value to your deposit accounts.

--JB

Banking comparison sites

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

Banking perks

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

Mandatory password changes

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:

1. 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.
2. 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

E-Loan extends "employee pricing" to loans

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