NetBanker 2.0

Financial mashups

In the musical world, a mashup combines music from one song with lyrics from another, often mixing two very different genres. One of the more famous examples is the Grey Album by DJ Danger Mouse that put words from Jay-Z's Black Album on top of chords from The Beatles White Album.

Programmers have their own definition: combining content seamlessly from two different sources. For example, Kayak <kayak.com> is a powerful travel site that pulls price quotes out of hundreds of websites and displays them in tabular format and locates them visually on a Google Map (click on the inset to see a Las Vegas hotel search). 

In online finance, we have seen mashups from Yodlee, uMonitor, and others that marry account information from a number of sources to create an aggregated view. But the most successful financial mashup yet is PayPal, which put an email/Web interface in front of two established electronic payment mechanisms, ACH and MasterCard/Visa.

Who will launch the next successful mashup? There is quite a bit of activity in the payments space, many trying to mimic PayPal's success using a cell phone interface. For example Obopay and TextPayMe (FMW, April 26), and BillMyCell from Black Lab Mobile <blacklabmobile.com>.

Another company, BillMonk <billmonk.com> has created a Web-based system of sharing expenses designed for the work-hard, play-hard urban singles set. Users can send expenses to be shared to their account at BillMonk using text messages, and then log in later to finalize the payment split and let everyone know who owes what (see example right). The company doesn't yet facilitate the actual payment, but they are looking for a partner to power the financial transactions.

We're still not convinced the market for "splitting expenses among friends" is big enough to sustain one, let alone four service providers (see FMW, April 26). But we ARE sure the enterprising founders of BillMonk will find a niche somewhere in the payments space.

BillMonk has added more new features to its bill-sharing platform in the past four months than most companies implement in four years. It reminds us of the pace at another small payments company that we were watching closely six years ago as they morphed from a closed PDA-to-PDA payment system to the primary platform for eBay buyers (see Online Banking Report #54 for a view of PayPal in the early days).

To get an idea of the pace at BillMonk, read a few entries from their blog <billmonk.wordpress.com>. Then realize that this is not the work of a vast team of programmers, PR agents, and marketers. It's just two guys in a Seattle apartment who are also answering customer queries, paying the bills, building the website, taking out the trash, and talking to reporters (see the profile in the Seattle Times, April 24).

Action Items
My advice for financial institutions:

1. Hire these guys
2. If that's not practical, then behave like them; constantly improving your website and to the extent you control it, your online banking and bill pay system

I will bring you an update on the company as soon as I can corner one or both of the founders in a coffee shop.

--JB

Bankers making fun of bankers

David vs. Goliath has been a popular theme for a few millenia. Everyone likes the underdog. And when the established player is also seen as stodgy and clueless, the advertising opportunities multiply.

Credit unions and community banks have taken market share for decades using a variety of similar themes: local vs. outsiders, small vs. big, member concerns vs. shareholder profits, and so on. It was only a matter of time before this tried-and-true strategy went online.

Campaign #1: HomeStreet's My Bank Doesn't Get It
The first campaign to catch our eye was from Seattle's HomeStreet Bank, which sent teaser postcards to local businesses in mid-April. The cards featured an image of a face and an intriguing URL, <mybankdoesntgetit.com> (see right). We've also seen the campaign running on the side of city buses.

After logging in to the unbranded site, users were encouraged to post a rant about something they disliked about their bank (see screenshots below).

#1    #2   #3

The site is about as soft-sell as you can get; users aren't even asked for their email address. The only sales message is an unbranded, lower-left link prompting users to click to go to a bank that does "get it" (see inset upper left and screenshots above).

Users clicking on the link are taken to a HomeStreet landing page that reinforces the "get it" theme (see screenshot right). First, users see a welcome page that reveals the name of the with-it bank. Then users move to a more traditional product page with subtle reinforcement of the "gets it" theme (see screenshot below).

However, once at the bank site, the sales momentum rapidly loses steam, and there's little in the way of compelling benefits to convince a business owner to go to the next step. Obviously, the bank's branding agency gets it, but not necessarily the website designers.

For viral marketing, HomeStreet includes an email-to-a-friend link. But what's missing is an email-capture device for visitors making the online rants. All the bank needs to do is add an inexpensive prize to the pitch, such as a free iPod Nano, and they'd have hundreds, if not thousands, of opt-in emails to market to.

Campaign #2: Washington Mutual's Trapped Bankers
Surprisingly, the second campaign is not from an up-and-coming community bank or credit union, but from behemoth Washington Mutual. The company has a long history of anti-banker advertising going back to the days when it actually WAS the underdog and not the sixth-largest retail bank in the country.

It was brave enough to provide a look at its new campaign at BAI's SmartTactics conference earlier this week in Las Vegas. Unfortunately, I was busy with another session and missed the joint presentation from Chris Matthews, the bank's brand & advertising SVP and its agency, Leo Burnett. 

The campaign was a hit with the crowd of 30-something bank marketers, especially the television spots depicting various methods to trap bankers such as baiting a trap with a plate of steaming lobster. The campaign has a Web component at <trappedbankers.com> where users can view one of the television spots, ask questions of the bankers trapped in a basement holding pen, and review the benefits of WaMu's free checking offer. The only lead capture device is an opt-in email address required to download a screensaver (click on inset for closeup), a huge 3MB offering that incidentally wouldn't load onto our Windows XP laptop.

While the edgy advertising is likely to be popular with its younger target audience, I don't think the website is particularly appealing (click on inset left for closeup). The Flash-based presentation first required a download of version 8 to run, then used hard-to-read fonts on a black background.

There are several HTML remnants in the black background that if accidentally clicked, take you to a garbage page at <pointroll.com>, a rich media design house that must have had something to do with the WaMu site. And there is no way the site works on a dial-up, and even on broadband the use of streaming video creates some lag that makes the presentation a bit choppy. This is one of those high-tech websites likely to win design awards while turning off users.

Finally, I find the whole concept of "trapping" a bunch of fat old bankers and then teasing them in an underground holding pen to be slightly disturbing. Maybe it's that the banker profile hits too close to home, but I think they went too far. Instead of a positive, "we get it" message, there is an underlying theme of negativity, one that is borderline abusive, which turns me off. While it will generate massive traffic, I wonder what impact it will have on account growth and brand image. There must have been quite a debate in the boardroom on this one.

Even if you like the creative, as in HomeStreet's campaign, I don't think the Web designers quite "get it." The bank should have a way to capture email addresses from the hundreds of thousands, or millions of visitors, and there should be a more direct link to sign up for an account. Currently, the bank just drops you onto their default personal banking page when clicking on the tiny WaMu link at the top of the trapped banker page.

Grades
We'll give each of them an A for effort, although we prefer the simpler design of HomeStreet Bank's campaign. However, both get downgraded on execution. HomeStreet gets a B- due to its lack of sales emphasis and failure to capture email addresses. WaMu, which also fails to capture email addresses from most visitors, receives a C- due to the overly complex website, lack of a custom landing page, and lack of a good, direct-marketing design.   

--JB

 

Events calendar

There's still time to take in a conference before the summer hiatus. Click on the link below to see the calendar for May and June.

Payments via text messaging

In today's WSJ, there's a good roundup of the text-message payment systems attempting to find traction in the United States. The article looks briefly at TextPayMe, Obopay, and PayPal Mobile. The article does a good job of contrasting these systems to the more common "mobile wallet" where a cellphone is used in place of a credit/debit card.

Analysis
We see much promise for the latter. In fact, it's almost inevitable that today's plastic-based payments systems morph into cellphone-based services using radio frequency (RFID) technology as the enabler. For many people, especially younger cellphone-toting debit card users, it will be easier to point their phone at the POS terminal and press # than to swipe a card and enter a PIN or sign a receipt. Arthur D. Little projects $37 billion in mobile wallet transactions in 2008, a twelve-fold increase from the $3 billion in 2003.

However, text-message-based services, designed to send money to individuals, are a solution seeking a problem. Even the WSJ couldn't dig out a rational anecdotal example, though the writer tried. The "splitting the dinner bill" straw man was trotted out, but it just doesn't fly. Imagine you had a group splitting a $100-tab four ways. The vendors want us to believe that one person will pay the entire bill, then his or her three friends will each text-message their $25 share.

Not only is this a hassle (what if the phone call is disconnected, or the wrong button is pushed in a dark eatery), but each of the three parties will likely incur one or more transaction fees (from the payments gateway, the cell phone provider, and possibly one or more financial institutions along the way). Finally, the person receiving those payments then has to initiate some type of transaction to tap the $75 sitting in their cell phone.

This makes about as much sense as ordering dog food online. Current methods of sharing costs, either with cash, having the restaurant apply it to two or more debit/credit cards, or by agreeing to "get the next one" works just fine.

Mobile Wallets
Obopay and PayPal both offer a linked debit card for spending the money sitting in your payments account. But it's not as powerful as a true mobile wallet where the bank offers its debit card base a cell phone preprogrammed to link customers to their card and online banking account. The device could be used to check bank account balances (a walking ATM), transfer money between the user's own accounts, or send money to others using the bank's bill pay system or inter-institution funds transfer (A2A); and, if equipped with RFID, the device can be used to pay for purchases at the point of sale.

The bank-based mobile wallets have significant advantages over the start-up, non-financial systems:

1. Trust
2. Integrated online banking features (balance lookup, transaction history)
3. Integrated bill payment (use pre-existing bill pay merchants)
4. Mobile payment transaction history integrated with online banking history

As cool as the mobile wallet sounds, it will not replace cash or plastic until RFID-equipped POS terminals are widespread. Until then, you'll still need to carry plastic. That brings to mind a practical interim solution, a plastic clip that attaches an RFID-enabled mini-credit card to the back of a cell phone. Users would have the convenience of waving their cell phone to pay, but could also easily swipe the mag stripe through a conventional terminal.

--JB

Notes from BAI's SmartTactics Conference

Several interesting tidbits surfaced from today's presentations at BAI's SmartTactics conference in Las Vegas:

Citibank online account acquisition
In 2002, 6% of Citibank's new checking accounts were generated online; in 2005, the number was 20%.

Our comments: Keep in mind that Citi's experience is unique. It has a huge brand and relatively small branch network, so many of its new accounts have no choice but to open online, or over the phone. And part of the growth can be attributed to non-checking products, such as its high-yield savings, that REQUIRE a companion checking account.

Bank of America's SiteKey rollout
The rollout of mandatory two-factor authentication is complete, except in Oregon and Washington where it is expected to go live in June. Prior to becoming mandatory, users had a period of time where it was an optional feature; however, only 8% opted in during this phase. When the PassMark-powered system became mandatory, users were served notice during their first two logins that they needed to sign up before it became required on the third login. Only 4% signed up during the first two warnings, and 96% put it off until the third try.

Note: PassMark was acquired by RSA Security today.

Our comments: Taken together, only 12% of users opted for stronger security before it was required, far below the 60% or so that say they want more security in consumer-research studies.

Zions remote deposit-capture results
Zions Bank has grown its remote-deposit client base from 364 in January 2005 to 3,697 in January 2006, and they are adding nearly 100 clients per week. The bank has bagged more than $200 million in incremental deposits and has increased loans and fee income. The Utah bank is now looking for new business worldwide with clients in 49 states and five countries outside the United States. It has clients of all sizes, from the Fortune 500 to small businesses that use it for just one check per month.

Our comments: If you needed ammunition to move this up the priority list, keep your eye on Zions: It said that its main problem now is just keeping up with the all the requests.

Research results from Yahoo Search Marketing
A Forrester study of all U.S. banking customers (not just online bankers), commissioned by Yahoo and OgilvyOne Worldwide, found that 61% of all banking-product research is being done online vs. 5% via phone and 30% in branch. Similarly, 64% of account monitoring is now down online vs. 16% via phone and 13% in-branch. But account opening at branches still dominates at 84% of new account openings, compared to 14% online and 2% via phone. 

Yahoo also said they expect 50 million online credit card applications in the United States this year.

Our comments: Wow, time to pull out all the stops in your online account-opening initiatives.

Brokers Push Margin Loans

Flipping through the latest issue of SmartMoney magazine, it came as no surprise to see a full-page advertisement from Fidelity. But what caught my eye was the subject matter. Margin loans.

And this was no soft-sell pitch with smiling 50-somethings sipping Chardonnay on their deck. It was all business, showing how Fidelity's margin-lending rates fared against those of its major competitors. The hard-hitting approach isn't carried through to its website though, which opts not to show any comparative data.

E*Trade, one of the best financial marketers, is said to be offering teaser rates as low as 3.99% to encourage investment clients to transfer higher-rate debt to their margin accounts (WSJ, 4/20/06). However, its published rates vary from 6.74% to 9.74%. The retail banking sweet spot, loans of $50,000 to $250,000, are priced at 8.74%.

Fidelity doesn't go quite that low. Rates vary considerably depending on the balance, but under $500,000, borrowers pay 8.5% to 10.5%. Only those borrowing more than $500,000 pay an ultra-low rate of 5.5% (see inset for current rates).

Analysis
What's going on here? Brokerage firms are finding that customers are willing to borrow against their securities to finance all types of non-investment purchases. UBS AG's wealth management unit says that 75% of its $10 billion in margin-loan outstanding has been used to purchase things other than securities.

Expect more competition from brokerage firms as empty nesters and younger retirees finance portions of their lifestyles with loans against their investments. Deferring tax liability on portfolio gains is a big part of the decision to borrow. But there's also the psychological aversion to seeing investment balances decline.

Financial institution loan officers should be well versed on the risks of margin loans, and instead offer home-equity loans and cash-out refinances with similar rates and no risk of a potentially disastrous margin call.

--JB

Making the "back" button a profit center

Nothing frustrates a Web user more than clicking the browser's back button during the middle of an online form, only to be hit with a browser-error message, followed by losing all the data previously entered.

There are a number of website-design techniques to reduce this problem, such as disabling the browser navigation, but those solutions can impact overall usability.

We like GetSmart's approach (click on inset for closeup). Rather than hiding the back button, the LendingTree unit (owned by IAC/InterActive), delivers a pop-up message with two choices:

1. Continue: Users that inadvertently used the browser's back button are provided instructions on how to use the navigation tools within the webpage.
2. Exit: Those truly wishing to leave the application are transported to the About Us page in case they need reassurances about the authenticity of the company.
3. Search: Users not opting for doors one or two can go directly back to searching the Web through an Ask.com search box. GetSmart earns a few pennies on the transaction and keeps their name in front of prospects with a co-branded search screen at sister company Ask.com.

Action Items
Financial institutions could use a similar strategy on their forms. Any customer abandoning a form, either on purpose or by accident, should be greeted by a pop-up screen containing several of the following choices:

• Talk to a specialist via phone, chat, or email
• Go back to read more about the product's features and benefits
• Save the form to complete later
• Review other product options
• Go to a special landing page designed to encourage completing the application
• Search the bank's website for more info

Finally, one of the most important functions of the popup, something missing from GetSmart's, is snagging the customer's email address and permission for follow-up communications.

--JB

Wachovia's "free checking" marketing

Everyone wants free checking. So it's no surprise to see Wachovia the top bidder on the term at Google (click on screenshot right). The bank also managed to snag the top organic listing (directly below the paid ads), a coup for its search-engine-optimization consultant.

As much as Internet users love a good deal, they are skeptical when they see "free," especially when a company is spending money to advertise on the term. Wachovia wisely meets the skepticism head-on with a landing page entitled (click on inset for closeup):

Free checking. No catch.

The page also includes six bullet points, three of which relate to online banking. And there are two "Apply Now" buttons, at the bottom of the bank and the upper right.

Analysis
While this landing page won't win any Webbys, it's fundamentally sound. The first three bullet points meet the likely customer objections by affirming that there is no minimum balance, no monthly fee, and no direct deposit requirement.

Clicking on the Apply Now button leads to a page explaining the process and what's needed to apply. Unfortunately, the user is forced through three screens of disclosures, the last one a record-setting 69-screen monster before the application begins. With such a tedious first phase, the bank is losing most of its prospects before they've even entered so much as an email address.

To avoid massive application abandonment, you must get customers engaged in the application before the trip down disclosure lane. Wachovia also stumbles by offering too much product choice. The customer that started at Google looking for free checking is forced to choose from 12 checking account options on that same 69-screen testament to the power of a large bank's compliance department.

Grades:
A for search-engine marketing
B for landing page design
C- for application design

--JB

PassMark passes 20 million mark

As we predicted almost a year ago (OBR 119), PassMark Security's two-factor authentication system is proving popular. We've heard the usability arguments, we've read the security blogs pointing out the weaknesses, and we even had doubts ourselves after using the system on our Bank of America account.

But the overriding fact of the matter is, if it's good enough for Bank of America and its 15 million users, it's good enough for anyone. While no other major U.S. bank has signed on, the announcement today that Fiserv would make the system available to its 5,000 clients, coming on the heels of the Feb. 28 endorsement from S1 Corporation with 1,000 clients, means the system may win the small and midsize markets.

As further evidence, the company recently announced several new clients including North Island Credit Union <myisland.com> (125,000 members) and Schools Financial Credit Union <schools.org> (100,000 members), who touted their pioneer status with this PR-quote-of-the-year candidate:

"...Schools Financial Credit Union will be one of the first financial institutions in the country to act on Federal Financial Institutions Examination Council guidance that strongly recommends banks and credit unions implement multi-factor authentication by the end of 2006."

Finally, the company made a splash on the other side of the Atlantic by aligning with Alliance & Leicester <alliance-leicester.co.uk>, a major financial institution in the United Kingdom with five million customers. It's a company we've previously singled out for its flashy website and marketing prowess (FMW Feb. 23, 2005).

With the launch of the Alliance program last month (see screenshot right), Passmark is now in front of 20 million users worldwide, demonstrating a spectacular first year for the Silicon Valley startup.

--JB

Previous articles:
Online Banking Report: June 30, 2005, Marketing Security
FMW Oct. 12, 2005: Scottrade to use Passmark
FMW May 26, 2005: Bank of America unveils multi-factor security for consumer accounts

ING Direct's "unmortgage"

When  everyone is swimming upstream, sometimes the best strategy is to head down. In the soft drink world, 7-Up's "uncola" campaign is legendary. The J Walter Thompson campaign launched in 1967 ranked 61st on Advertising Age's Top-100 All-Time Advertising Campaigns (compiled in 1999). In that spirit, ING Direct Canada's "unmortgage" campaign is bound to grab attention <ingdirect.ca>, even without the fizzy water.

How often have you seen "the best mortgage is no mortgage" at a lending site? The direct banking pioneer doesn't even use the word mortgage on its homepage, instead posting an "unmortgage toolkit" along the bottom navigation (click on inset for a closeup). To further reinforce the unmarketing strategy, an unmortgage sweepstakes promises $20,000 to two customers to assist in paying down their mortgage balance (see screenshot below).

Analysis
Unfortunately, the bank does not make good on its homepage promise. Clicking on the Unmortgage Tool Kit, simply drops users into a relatively standard mortgage page with information on new mortgages, refis, and home equity (see screenshot below). Where's the "help me unmortgage my home" button, or the "five steps to eliminating your mortgage" worksheet, or even a "talk to one of our unmortgage officers today" graphic.

After a great tease, the company leaves users hanging. Hopefully, they'll remodel their mortgage page with ways for prospective customers to follow through on the unmortgage promise. Since ING trademarked it, you may not be able to use that clever name. But anyone can follow the powerful strategy of working to get your customers out of debt and back into the savings habit.

In the United States, as baby boomers head into retirement often loaded with mortgage debt, "mortgage retirement" is likely to become a major focus in the personal-finance press for decades. Now is a good time to make your mark as the unmortgage expert in your area. While it may not land you on Ad Age's Top-100 list, it could keep your mortgage officers busy for years to come.

--JB