NetBanker 2.0

ING Direct books 42,000 new Electric Orange checking accounts

According to an American Banker story last week (here), as of Feb. 1, ING Direct had cross-sold 42,000 (see note 1) checking accounts to its 4.3 million savings customers, a penetration of 1%. Keep in mind, the new checking account has been slowly rolling out over the past 60 days to current customers only (see note 2), and is not yet mentioned on the bank's website. It is expected to be launched to the general public within the next 30 days. 

You can view these initial results in two ways: 

Glass is half full -- Even with just 42,000 accounts, ING Direct may have the largest "Internet only" checking account base, at least when measured by the number of active accounts

Glass half empty -- Because ING Direct's checking account pays 50 to 80 basis points (0.50% to 0.80%) more than savings on $50,000+ balances, many (most??) of the new checking account customers simply moved large balances into the checking option, providing few incremental deposits.

Notes:

1. Make that 42,001 accounts. I just opened one this morning. It took all of about 30 seconds to do it. Existing customers simply choose an account nickname, enter the dollar amount they want transferred into the account (from the pre-existing link from an outside account), and agree to the disclosures. See below for the confirmation screen.
2. I received my invitation to open an Electronic Orange account last week (screenshot here). I've had an account there since 2001.

YADB* Huntington goes direct

First reported by Bank Deals today (see note 1), Huntington Bank has recently launched a new direct bank, called DirectHuntington <directhuntington.com>. The 5.30% APR makes up for the name which is both backwards and hard to spell. Hopefully, the bank can secure domain-name rights to HuntingtonDirect.com, currently used by New.net Inc to post a couple generic banking links and throw a pop-up or two at unsuspecting users. 

Huntington chose a color palette that makes it stand out from other financial institutions, a good move. However, the yellow 5.30% APR doesn't stand out as well as it should given its importance in the purchase decision (see sceenshot below).

But once again the CashEdge-powered online application leaves a lot to be desired (see previous coverage here and second screenshot below). But before you can even see the application, you must agree to the "Consent for Electronic Disclosure," a terrible first impression for someone who's thinking of sending you ten-grand or more (see screenshot below).

The upper-right Online Guarantee is a nice touch, but it links back to the main Huntington site which might be confusing for users (see screenshot below).

There is no mention of DirectHuntington at Huntington's main website <huntington.com>. However, there's a secret code (anywheresavings) you can enter into the Special Offers box that takes you to the direct banking site. 

*Yet another direct bank

Note:

1. The Bank Deals writer had a relatively uninspiring call with DirectHuntington's customer service when he researched the account. 

ING Direct's deposit and customer totals decline as direct bank competition intensifies

For the first time in its short six-year history, ING Direct's U.S. division showed declines in both total deposits and customer accounts during third quarter, the latest data available (see the table below, originally published in our year-end industry forecast, Online Banking Report #137). Although the runoff was relatively small – $600 million in deposits, or about 1% from the peak, and 150,000 accounts, or about 4% from the peak – it's a clear indicator that the entry of Emigrant Direct, HSBC Direct, and especially Citi Direct have taken a toll on the direct banking giant.

Looking at quarterly results below, you can see that average account balances began declining in Q1 2005, as some of the hottest money, large balances held by extremely rate-conscious consumers, moved to better paying accounts; still, total deposits and customers continued to grow rapidly through 2005 and into 2006. However, in the second and third quarters, deposits began to flatten as the number of accounts grew only 230,000 compared to 560,000 in the same period a year earlier.

ING Direct appears to have deliberately slowed growth by maintaining deposit rates 50 to 100 basis points lower than the new entrants. With its marketing muscle, the bank could choose to grow deposits if it closes the rate gap. The bank's new checking account, gradually rolling out to current customers, may help stem the tide, with higher rates for larger balances (see coverage here).

Table: ING Direct Deposit and Customer Totals: 2000 to 2006 (click to enlarge)

PDF version of this table here.

Everbank takes on ING Direct with 6.01% checking account campaign

Everbank launched its "What are you waiting for?" campaign today by giving away 2,500 free subway tickets at 6:01 AM in lower Manhattan. The time was chosen to coincide with the 6.01% APR promotional start-rate on its FreeNet checking account (see Note 1). 

The campaign targets ING Direct's soon-to-be-released Electric Orange checking account, which currently pays beta users 3% on balances under $50,000 and 5.3% on balances greater than $50,000 (see Note 2).

Everbank launched a microsite called <whyruwaiting.com> with direct comparisons to ING Direct (see screenshot below).

Clicking the large Compare Banks button in the lower right leads to a comparison to ING Direct and several other major competitors (see screenshot below):

The campaign has not been extended to the Everbank website, which shows a banner for the 6.01% offer, but no mention of "Why are you waiting?" (see screenshot below). 

Clicking through the banner leads to the following page:

Notes:

1. The 6.01% is a promotional "teaser" rate is good for three months, then resets to the "regular" rate which are currently as follows: 
      Under $10,000 = 3.25%
      $10,000 to $25,000 = 3.30%
      $25,000 to $50,000 = 3.60%
      $50,000 to $100,000 = 4.00%
      More than $100,000 = 4.41%
   
   The minimum deposit is $1,500 and the maximum that earns 6.01% is $100,000.
2. ING Direct customers can also easily transfer funds into the companion savings account which pays 4.5%. ING's Electric Orange account began rolling out in waves to its 4 million savings account customers in December (see coverage here). Coincidently, I received my invitation yesterday (see screenshot below). 
   
   

HSBC Direct attracts 350,000 accounts

In a Jan. 1 case history published in Direct Magazine (article here), HSBC Direct says it has attracted 350,000 customers since the launch of its high-yield savings account just over a year ago (Nov. 2005).

Assuming typical high-yield balance levels of $8,000 to $10,000 per account (our estimate), the bank has attracted more than $3 billion in deposits (Jan. 31 update: in a CNN article yesterday, here, the HSBC said it has attracted $7 billion, a hefty $20,000 average balance). The bank has marketed its 5%+ APR account heavily, so it's not likely that the new business is making much of a profit contribution yet.

Based on the bank's reported online ad spending, its acquisition costs were $75 per account from the online spending only, not including what it spent in other media to support the direct business unit (see note 1).

The bank said it is working on new products to offer through the direct bank. This is a crucial step in the evolution. There just aren't enough customers with $10,000 savings balances to feed all the financial institutions looking for new deposits. HSBC's ability to sell other services to its 350,000 new customers will determine the long-term success of the direct banking initiative. 

Thanks to former Forrester senior analyst, Ron Shevlin, now VP at Epsilon, for the link in his Marketing ROI blog. 

Notes:

1. According to data from TNS published in American Banker here, HSBC spent $20 million online during the first three quarters of 2006. To calculate the acquisition cost we annualized the online spending and divided by 350,000. This calculation excludes the portion of non-Internet advertising that went to support the direct unit. The bank's total ad spend was $42 million during the first 3 quarters of 2006.

WT Direct takes on ING Direct at Kiplinger.com

Kiplinger published an article on the state of online banking (see article here). It's an interesting read, but it's the WT Direct ad in the upper-right corner that I found most interesting (see screenshot below). WT Direct is the new direct banking arm of Wilmington Trust (see coverage here). 

It's a Flash animation that's part parody of the whack-a-mole banner ad and part a direct shot at ING Direct.

Viewers are directed to:

"Hit the ball and get a really great rate."

That's when the humor begins. Attempting to move the cursor over the ball causes the ball to move away. So there is no way to actually click on the ball. After a few seconds, a new screen appears with two words, "Give up?" It's a not-so-subtle dig at ING Direct rates which are revealed on its homepage usually after an orange ball bounces across the screen. ING Direct is currently paying 0.75% less than WT Direct on a $10,000 balance (see note 1).   

Then finally, it's revealed who is sponsoring the ad, WT Direct: 

The landing page reinforces the banner ad with a direct comparison to ING Direct's payout with the animated graph in the lower-left corner (see screenshot below).

Nicely done.

Notes:

1. After the first 60 days, balances of less than $10,000 earn just 0.6% at WT Direct. ING Direct pays 4.5% on all balance levels.

Key Bank uses TV advertising to promote deposits in its Saveday promotion

Thursday night, as my son Tivo-ed his way through the commercial breaks on The Office, I noticed a Key Bank logo at the end of the commercial break. I had him go back and play the five-second spot which was teaser style with a brief voiceover, logo, and the URL:

KeyBank.com/saveday

Expecting to see an interesting Web-based savings-account-marketing effort, I typed "key bank save" into Google and came up empty-handed (see note 1). The first link led to a Key Bank loan application, and no display of sponsored results.

Next, I tried connecting directly to the bank using what I recalled of the URL shown in the TV spot, <keybank.com/save>. I realized it was the wrong address when all I saw was an error page, which unfortunately contained no guidance on what to do next (see inset). Finally, I went to the Key Bank homepage and found a large banner announcing the program aimed at encouraging users to curtail their discretionary spending on a designated day (your "Save day") each week (see second screenshot below).

Analysis
I like the idea of creating an interesting program to spur savings. For example, even though I didn't much like it initially (see post here), Bank of America's Save the Change does have a certain amount of appeal, at least from a marketing standpoint (see note #2).

And Centra Credit Union's <centra.org> new prize-based savings plan deserves a second look (thanks Doug True for the original post on this, here; see screenshot in note #3 below).

However, there isn't much to like about Key Bank's Saveday effort. The television spots may work as image advertising, but the website execution left much to be desired. The bank not only failed to support its television buy with search advertising, but also it landing page contains little of interest besides the standard suite of savings calculators (see screenshot in note #4 below). No incentives, contests, or benefits beckon and motivate consumers to do something as unpleasant as giving up their daily latte.

The bank does offer a handy PDF worksheet that can be printed out to calculate a monthly budget; however, no links or discussions of automated savings plans are in evidence. Putting savings on auto-pilot is a much more powerful saving system than trying to get customers to sacrifice their caffeine one day per week.

Also absent are interactive elements to help get someone started. For example, why not send customers a text message to their phone or email each Saveday to encourage them to save.

But the biggest blunder is calling attention to the bank's incredibly low savings rates. For example, for a $10,000 saving balance, a typical amount in high-yield savings accounts, Key's three options paid a paltry 0.10%, 0.20% and 1.24% (see note #5). And no, those are not typos, that's two-tenths of a percent, in the KeySaver account, or a grand total of $1.66 per month, before tax. Not even enough to buy that cup of coffee the bank wants you to forego on your Saveday.

It takes a $25,000 balance to get above 1.24% in any of Key's savings accounts (note #6). And anyone who's managed to stash away that much in liquid savings probably doesn't need a Saveday.

Notes:

1. Later we tried, "key bank saveday" and the first link was a press release on the promotion, but it was at a csrwire.com URL (see release here). Searching from a Seattle Wi-Fi IP address in Seattle.

2. Bank of America has recently been touting the Save the Change debit card benefit in its usual excellent television ads.

3. Centra Credit Union Super Savings page

4. Key Bank Saveday landing page

5. Rates quoted on Keybank.com for zipcode 98115 on 22 Jan. 2007

6. Update Jan. 30: According to a bank employee, a $25,000 deposit now pays 3% in Key Ultra Money Market, which I confirmed online. And in markets where Key Bank doesn't have a branch presence, the rate is as much as 5.25% through Key Direct (see screenshot below).

First Direct's holiday pop-up greeting

I am a sucker for holiday graphics on websites. It doesn't have to be dramatic, a few snowflakes or candy canes in the background is fine. For example, Citibank's e-Savings banner on its homepage today (see inset, click to enlarge). Just like a holiday wreath on the door of the branch, it shows your customers and employees that you have some holiday spirit.

Unlike two years ago (see prior post here), this year many banks and credit unions are running holiday promotions for gift cards and other products (see rundown here) and/or have dropped holiday sprinkles into their websites. The most dramatic is the popup from U.K.'s First Direct <firstdirect.com>. This is over-the-top, but it brings a grin, not a bad thing during the end-of-year rush.

First Direct homepage with popup showing (click to enlarge)

Close-up of popup after choosing "let it snow" option
The loud holiday music that accompanies the snow globe can be turned off with the button in the lower right. Selecting "all snowed out" or "bah humbug!" from the first screen displays a brief "seasons greeting" message before automatically closing the popup.

USAA first to offer nationwide remote deposit capture for consumers

In a press release yesterday, USAA, which serves many of its 5.6 million members remotely, announced the availability of its Deposit@home remote deposit capture service. It's the first major remote deposit capture service geared towards consumers. There are no fees for the service.

Previous services have been targeted to businesses who could justify the $300 to $700+ cost of a dedicated on-location paper-check scanner (see prior coverage here). USAA's service works with any 200 dpi or better scanner hooked to a Windows 2000/XP computer, so households with a dedicated scanner or multi-function printer will not be required to add hardware.

Deposit@home has been rolling out to selected customers since mid-November. To reduce risk, the service is only available to credit- and insurance-qualified checking account customers.

It's being positioned as a replacement to the UPS/NetBank QuickPost service that was abruptly discontinued by NetBank in a cost-cutting move (previous post here). QuickPost allowed USAA customers to overnight deposits free-of-charge from any UPS Store. There is no word on when or if it will be available to all USAA checking account customers.

Because of its limited availability, it has not been featured on USAA's website. Invitations were sent by email and the option was added to the menu within online banking. However, the feature was used in an online promotion for the Lackland Airfest 2006 a month ago (see mention in upper-left here). 

Here's a screenshot posted on the USAA thread at FatWallet:

Analysis
Assuming the service works as promised on in-home scanners, the ability to submit deposits remotely should help financial institutions compete for checking accounts outside their geographic footprint.

Winners: Direct banks, credit unions, and smaller banks with limited branch networks; also, remote deposit technology providers and printer/scanner manufacturers

Losers: Any financial institution that doesn't offer remote deposit options; branches

Yet another direct bank: WT Direct from Wilmington Trust

It may be premature to give the direct banking trend a cynical acronym such as YADB, meaning "yet another direct bank" (see Note 1). However, it's getting more difficult to distinguish one 5% high-yield offer from the 27 others (see Note 2).

The latest top bidder on Google (see End Notes) is WT Direct <wtdirect.com>, a new direct banking brand from Wilmington Trust. Its sole product is a 5.26% APY savings account. To encourage trial, the bank pays the advertised rate on any balance for the first 60 days. On day 61, the rate drops 466 basis points to 0.60% unless you've stored $10,000 or more in the account. The bank clearly discloses both rates.

The homepage is direct and to-the-point (see Note 3). While not as flashy as ING Direct or iGObanking, it communicates the benefits in an efficient manner. The landing page from its top-ranked Google ad (see Note 4) is better, with a chart showing how it beats ING Direct.

The application is well conceived (see below), with few of the problems identified in our earlier critique of iGObanking's online app (see previous post here). The one improvement we'd recommend: Divide the personal info section into two steps, first getting the "public" info (name, address, email address), then asking for the private stuff (SSN, driver's license, etc.).

End Notes

1. Modeled after YASN, a term used in tech circles for "yet another social networking site."

2. In BankDeals' weekly high-rate summary, 27 banks were identified as offering 5% or more APY on online savings accounts (see post here).

3. WT Direct homepage screenshot (click to enlarge)

4. WT Direct search ad on Google (4 Dec. 2006 search on "savings account gifts" from Seattle P.I. at 3 PM PST)