NetBanker 2.0

Holiday gift ideas from my bank?

Who'd have guessed banks would become a popular source of holiday gifts, other than good old-fashioned greenbacks of course?

Now that niche audiences can be targeted with online promotions during the holidays, many financial institutions are marketing financial products packaged as gifts. Prepaid Visa/MasterCards are the hottest item, but there's also potential in other areas. 

Gift cards
The second most popular gift item this year, after apparel, is expected to be prepaid cash cards. While the majority of the $20+ billion purchased will be direct from retailers, hundreds of banks and credit unions, such as Boeing Employees Credit Union (BECU) have joined the fray (see email below). If marketed right, financial institutions could gain a significant share of total sales. See our previous post here about integrating gift cards into online banking for more information.

Credit reports
Equifax is taking advantage of the giving season to market credit reports and/or FICO score gift certificates. The cost is $20 for a three-bureau credit report, $15 for the FICO score and explanation, or $30 for both (see email below). An even better gift would be a year of credit monitoring.

Investment accounts
For years, ShareBuilder has marketed "the gift of stock" during the holidays. This year, many of its partners, such as National City Bank, are offering a $50 gift card as a bonus for new accounts (see screenshot below). That way grandma and grandpa can give junior something that's good for him, an investment account for the future AND something he'll actually like, $50 to spend at the mall.

Piggy bank 2.0
For the younger set, ING Direct has for a year been selling The Savings Machine, a toy bank/calculator/ATM machine. And judging from the note on its website,* it's proving to be a popular Deal of the Month with a lower $17.95 price tag which includes free shipping (see inset). Several years ago, ING Direct reported nearly a million dollars in sales from its online merchandise store <shop.ingdirect.com>, an inexpensive way to get its name on the street.

*Note by the "Savings Machine" product page today: All orders placed from 4 Dec to 11 Dec will be shipped out the week of 11 Dec due to the large amount of backorders.

More free ID theft insurance

Texans Credit Union <texanscu.org> has added complimentary ID theft insurance and help services to their checking accounts. The new service is promoted through a somewhat confusing "Upgrade Now" call-to-action near the bottom and a large graphic (which rotates with two other spots) in the middle section of its gorgeous homepage (see screenshot below; notice how they use drop shadows to highlight the page).

Analysis
It's an OK perk, but doesn't do anything to help members prevent ID theft. To do that, members need credit report monitoring, which is available for $70 to $140 per year from the credit union's co-branded program with Identity Fraud Inc. (see screenshot below; read the full terms and conditions here).

However, it's not clear on subsequent pages whether members must take action to get the free service and which options they should choose to upgrade to credit report monitoring. We'd like it better if the credit union were more upfront about what is and is not included, and what the member must do.   

TrueCredit email: "credit is scary"

I'm a sucker for holiday-themed messages. There's something about a big, well-timed graphic that makes an email stand out from the crowd.

Here's the latest from TrueCredit, a prolific emailer to ex-customers such as myself. I usually hear from them every week or two.

Date: Tue 24 Oct 2006 9:27 AM
From: TrueCredit [[email protected]]
Subject: Autumn Special: James's 3 credit scores

Personalization used: My first name in the subject and message body

Bank of America pitches ID-theft protection at logoff

While there's nothing unusual about the product or offer, with 50% market share in online banking, everything Bank of America does at its website is news.

After reviewing my credit card balance online today, I was greeted with a 30-day free trial offer for Bank of America's Privacy Assist Premier, a daily credit-monitoring, three-bureau service priced at $12.99/mo.

Below is the splash screen displayed after logging out from online banking:

We were a bit surprised at the lack of disclosure on this screen; not a single word about the eventual $156 annual cost, to which even the most well-heeled BofA clients may take exception.

Another surprise: Clicking the Accept button simply dropped us back on the home page with not a word of thanks or any confirmation that our selection was accepted.

However, most users will be smart enough to choose Learn More before signing up. On that landing page the cost is well documented appearing in the first bullet point in the shaded box (see below).

ID theft-protection services

Today's Wall Street Journal ran a run-down of identity theft startups. Companies mentioned:

• LifeLock: Founded by Todd Davis, the Chandler, AZ-based firm has been offering its $10/mo service since April 2005. The company also protects children living in the same household for an additional $10 per year. Its plain-language guarantee featured prominently in the upper-right corner of its home page should serve as an example for financial institutions (see inset).
• TrustedID: A Redwood City, CA-based company co-founded in January by former Fair Isaac executive Scott Mitic offers protection services for $7.95/mo.
• CardCops: The Malibu, CA-based firm scans the Internet for stolen information and for $24.95/mo alerts its customers if their data has been compromised.
• Cyveillance: The Arlington, VA firm also sifts through the online world looking for stolen data. The company resells its service as Identity Guard through Intersections Inc.

Financial institutions should be partnering with credit bureaus and/or identity theft providers to provide education and protection services to banking customers. Refer to previous articles here.

-- JB

More free credit monitoring

One day after SunTrust announced free credit monitoring for checking customers (see FMW May 8), PayPal launched a similar service for its 50+ million U.S. account holders (see landing page below for details). Both services use Equifax to power alerts based on credit bureau info.

However, SunTrust includes one free look at the customer's credit report. PayPal users would have to pay for that, or sign up separately at <annualcreditreport.com> to see their report free of charge.

While SunTrust bends over backwards trying to upsell users into a more comprehensive fee-based option, PayPal takes the high road, at least initially, simply redirecting users to an Equifax sign-up form devoid of sales pitches (click on screenshot below for closeup).

However, we expect the upsell offers will be along shortly. We'll keep you posted. As a previous Equifax credit-monitoring customer, we've witnessed the company's aggressive email marketing schedule.

--JB

SunTrust introduces "really free" credit monitoring

SunTrust launched a new checking account acquisition strategy built around free credit-report monitoring (see personal homepage right). And this is not a low-budget identity-theft "insurance" policy (see PNC Bank, FMW Feb. 3 and Washington Mutual, FMW, Nov. 7, 2005), but full-blown Equifax Credit Watch Silver costing $6.95/mo or $50/year at the Equifax website.

Credit Watch Silver includes:

• Weekly credit-report inquiry and balance-change alerts
• One initial Equifax credit report.
• $2500 in identity fraud insurance with $250 deductible

How it works
SunTrust is offering the free monitoring on most of its checking accounts, including its standard $9/mo account that is fee-free with a $1500 minimum balance. The free offer is not available to "free checking" or "senior checking" customers. However, they can buy it for a discounted rate of $3.45/mo or $35/year, a substantial discount from the regular price of $6.95/mo.

Of course, customers will have to wade through relatively gentle up-sell pitches for Equifax Credit Watch Gold, which will cost customers $6.95/mo or $70/yr, about one-third less than the list price of $11.95/mo or $100/yr; or Gold with 3-in-1 Monitoring for another $30/yr. Also, customers that want to extend the Equifax Silver coverage to both members of a joint account will have to pony up an additional $35/yr.

Credit Watch Gold includes:

• Daily credit-report inquiry and balance-change alerts
• Unlimited Equifax credit reports
• $20,000 in identity-fraud coverage with zero deductible

Checking account customers must enroll for the free service at a co-branded Equifax website. It's a jury-rigged sign-up process that requires the use of an offer code that includes the customer's 13-digit SunTrust checking account number.

New customers must first open a checking account, then enroll at Equifax at least two days later. SunTrust offers online account opening, but there is no link to an online option from the credit monitoring landing page (click on inset for a closeup).

Analysis
This is an excellent value for SunTrust checking customers and could potentially have little out-of-pocket cost for the bank. The bank's costs depend on four factors:

1. 1. How many checking customers take time to enroll for the free service
2. How many of the enrollees elect to accept credit-monitoring upgrades
3. How many enrollees opt to buy additional credit-report viewing during the course of the year
4. How often a fraud situation involving a SunTrust account is thwarted due to the service

The only real problem with the program is that it is not integrated with online banking. The separate enrollment and sign-on make it a hassle to use (of course, this holds down the bank's costs). We expect other banks to offer similar programs during the next 12 to 18 months.

--JB

Credit report marketers are faster than Google!

In thousands of searches using Google and other search engines, I've succeeded in stumping them a few times, receiving no results on my search expression.

However, today I saw something I'd never witnessed before. A Google search for "VantageScore," the new joint credit score from Experian, TransUnion, and Equifax (FMW March 14) returned the following (click on the inset for a closeup):

• Zero mentions of the term
• Two ads placed against a search term that returned zero documents (click on inset for closeup).

But I guess it had to happen: savvy credit report marketers are moving faster than Google's spider to lay claim to a new term.

--JB

New credit score creates more FUD

FUD (fear, uncertainty, and doubt) is a strong motivator, especially when it has something to do with your personal financial situation.

As much as financial institutions strive to maintain the perception of safety and soundness, they often benefit from the concerns and resulting risk-averse behavior of their customers.

Case in point: credit reports and identity theft protection. Sure, it's relatively simple to request a credit report every six months to make sure the credit bureaus have accurate info on file under your name. The problem with this approach: it takes time, you must pass rigorous authentication tests each time, you have to remember to do it proactively, and once you successfully access your report, you have to figure out what it all means.

One of the more confusing aspects of the credit report world is the various credit scores available. Each of the three major credit bureaus offer a proprietary score, but the most common one, used by 75% of mortgage originators, is from Fair Isaac, whose FICO score is almost a household word.

The new VantageScore is designed to simplify the confusing credit score landscape. Released today, it's a joint effort from the three major credit bureaus, Experian, TransUnion, and Equifax, who worked together to create a single score incorporating information in all three databases. The new product will be marketed by a separate entity, VantageScore Solutions LLC, <vantagescore.com> a joint venture from the three companies (click on inset for a closer look).

Rather than the 800-point scale in use today, the VantageScore will use a more common academic letter-grade scale as follows:

900-990 A
801-900 B
701-800 C
601-700 D
501-600 F

Analysis
While it should help bring more clarity to the credit score in the long term, the immediate effect is more confusion with a new name, additional marketing campaigns, and a new grading scale. This should be good for financial institutions that can use the raised awareness and heightened concerns to sell their own credit-monitoring services, which can be a solid source of monthly fee revenue.

We'll be taking a close look at the market during the next six weeks as we research and author an update to our 2002 analysis of the credit report-monitoring opportunity (refer to Online Banking Report #83/84).

--JB

Citibank using Google to pitch credit monitoring

Since the dawn of the online credit bureau era (1997/1998), online credit report marketing has been dominated by the specialists: Experian, Equifax, TransUnion, ConsumerInfo.com (now owned by Experian), Fair Isaac, Intersections, and others.

Now, financial institutions are becoming more involved. For example, Citibank's AdWords spot pitching its Credit Monitoring Service showed up fourth overall (and second in the right-hand column) in a search today for "credit report monitoring" on Google (click on inset right for a closer view). With 84 advertisers vying for space on the first page or two of results, that's expensive real estate.

Citi's $9.95/mo service (after one free month) is powered by Intersections <intersections.com> and includes info from all three credit bureaus, daily alerts based on Equifax info, $20,000 in identity theft insurance, and other benefits (see screenshot below for a full listing).

Another surprise advertiser in the category is Wal-Mart whose ad appears in the sixth position along the right side of the search results (see inset above). The retail giant's $7.46/mo service is co-branded with TransUnion's TrueCredit (click here for screenshot).

Analysis
We are big fans of credit report monitoring, having personally used it for more than a decade. And while the service does deliver significant value, we think the single $9.95/mo price point is too high for the mass market. Granted, ten bucks is better than the $14.95/mo charged by TransUnion's TrueCredit for a similar service (see inset for an email received today). But the $120/yr is simply too much for information that can be extracted relatively easily by consumers themselves.

Better would be a multi-tiered offering: Regular/Gold/Platinum that starts at under $5/mo and peaks at $9.95/mo for an individual, $14.95/mo for a family. That way, more customers would receive the benefits of proactive monitoring while the truly paranoid could use the pricier options for added peace of mind.

Another puzzling aspect of Citi's service: it's impossible to find it through the home page. It not only lacks its own link in the product menus, but also comes up blank in searching on "credit report monitoring" or even "credit reports." You shouldn't have to use Google to find such an important service, especially at a bank that's spent tens of millions promoting itself as a safe haven against identity theft.

For more information on credit-report monitoring, see Online Banking Report #83/84. For more on pricing, see OBR #109.

--JB