NetBanker 2.0

Prosper's year-end numbers

Prosper, the first, and so far only, person-to-person loan marketplace in the United States, ended the year with 140,000 members and $27 million in loans booked (see screenshot below).

It's a good start for a company yet to see its first birthday and is slightly above our projections made last March (see Online Banking Report #127). However, the company will have to do something to boost revenues (see note below) if it hopes to see its third birthday. We expect to see a broadening of its products and services in 2007 (see previous coverage here).

Note:
Prosper's revenues in 2006 are estimated to be approximately $300,000, primarily from the 1% loan-origination fee assessed to borrowers.

The one-million club: 31 U.S. financial institutions with seven-figure site traffic

There's finally a simple and free resource for determining website traffic at most domains. Compete Inc. uses its panel of two million users to estimate traffic at hundreds of thousands of websites.

Compete's Snapshot service shows the traffic trend over the past 12 months plus a more detailed snapshot of the current month that includes pages viewed and length of stay (see Emigrant Direct example below).

Using Snapshot, we found 31 financial institution sites with one million or more unique users in September:

Rank/Unique Visitors (millions)
1)   17.1  Bank of America
2)   16.7  PayPal
3)   11.9  Chase
4)   11.4  CapitalOne
5)   11.3  Citibank
6)   10.0  Wells Fargo
7)    6.2   Discover Card
8)    5.6   American Express
9)    5.3   WAMU
10)   5.0   Wachovia

11)   4.1   LendingTree
12)   4.0   Fidelity
13)   3.8   US Bank
14)   2.9   Geico
15)   2.3   ING Direct
16)   2.2   Countrywide
17)   1.9   Progressive
18)   1.8   National City
19)   1.8   MBNA (Bank of America)
20)   1.8   Vanguard

21)   1.7   USAA
22)   1.6   FirstUSA (Chase Bank)
23)   1.5   Allstate
24)   1.4   Fifth Third
25)   1.3   Suntrust
26)   1.3   State Farm
27)   1.2   E*Trade
28)   1.2   Schwab
29)   1.0   Navy FCU
30)   1.0   HSBC
31)   1.0   BB&T

Also, PNC Bank and Key Bank both had just under 950,000 unique visitors. 

Source: Compete Inc., 6 Nov. 2006, <snapshot.compete.com>

Bank of America adds 760,000 users in third quarter

Although growth has slowed, as it must when you have the penetration of Bank of America, the company still managed to add 760,000 active* online banking users and 430,000 active* bill pay users in the latest quarter. The bank's $15 enrollment bonus surely helped boost the total (see Aug. 11 post).

Excluding PayPal with 31 million active users (includes international accounts, see previous post), Bank of America continues to hold a large lead over the next largest U.S. online banking base, Wells Fargo's 8 million.

Although the bank posted an impressive 6.3 million gain year over year, about 4.5 to 5 million of that appears attributable to the MBNA acquisition (see chart below).

Bank of America Active* User Base
Qtr  Online Banking   Bill Pay
2006 (includes MBNA)
Q3....20.6 million   10.8 million 
Q2....19.8 million   10.4 million
Q1....19.6 million   10.1 million

2005 (excludes MBNA)
Q4....14.7 million    7.3 million
Q3....14.3 million    7.0 million

*BofA defines Active as having used the service in the past 90 days.

On the bill-pay front, the bank processed $49 billion in payments for its users during the quarter, up $2.1 billion over the previous quarter (+4.5%). The average payment amount was $4,500 per active bill pay user, or $1,500 per month with 84% of the payments delivered to the payee in electronic form (ACH).

The bank also reported e-bill delivery volume of 21 million in the quarter from 370 billers.

Thanks to Scott Loftesness at Payments News for digging through the bank's 47-page earnings supplement for these gems (see pp. 18-19).

Blogging coming to corporate America

While the number of external blogs at U.S. banks and credit unions can be counted on your fingers today, that won't last. Here's the eight we've heard about:

• Bank of Internet (MyRVBank and Senior BofI)
• First Tech Credit Union (began April 2006; see screenshot below)
• Forum Credit Union
• Savings & Loan Credit Union (Australia)
• Service One Credit Union
• Vancity Credit Union (Canada)
• Verity CU (began Dec. 2004)
• Wells Fargo Bank (began March 2006)

Source: OpenSourceCU.com, Online Banking Report

Trends
The New York Times reported last Wednesday on the expected explosion of business blogging. Citing statistics from Nancy Flynn, director of the ePolicy Institute and author of Blog Rules, it is estimated that only 4% of major corporations operate external blogs today. However, 85% more plan to do likewise. Among small business, 10% have already incorporated blogs into their marketing plans. 

Bank blogging forecast
We are in the process of developing a blogging forecast for release in November's Online Banking Report. Our preliminary estimate is that within two years, there will be at least 500 bank and credit union blogs.

It's no suprise that credit unions would jump on this trend; it fits right in with their membership and community focus. For example, Seattle's Verity CU has been blogging for almost two years (see 29 Aug 06). The unexpected first mover among major financial institutions is Wells Fargo (see 23 Sep 06 and 5 Sep 06), which has two blogs and six months' experience under its belt.

Action Items
If you pride yourself on having a state-of-the-art website, you'll want to add a blog in 2007. You can start with something relatively simple, such as First Tech Credit Union's news and announcement service. Then you can graduate to the more advanced versions with real personality, such as Verity Credit Union's and Wells Fargo's Student Loandown.

Forrester says 24% of Gen Y reading blogs

In a new Forrester study on Gen Y consumers (must be a Forrester client to access), Analyst Charlene Li tracks the growing influence of blogs. The company's research shows that one in four Gen Yers regularly reads one. Here's blog readership by generation:

24% Gen Y (ages 18 to 26)
12% Gen X (ages 27 to 40)
7% Young Boomers (ages 41 to 50)

We've seen studies that show even higher usage; it depends on whether you count social networks such as MySpace as a "blog." The influential Pew Internet & American Life Project <www.pewtrusts.org> released a blogging report this summer. In that study fielded in January, Pew found that 39% of Internet users, or 57 million, were reading blogs and 9%, or 12 million, were writing them.

Financial institutions thinking of starting a blog might want to tune into Charlene's teleconference next week (Sept. 22, 1:00 PM Eastern; cost = $250) when she looks at the criteria companies should use when choosing a blogging platform, including a review of nine providers.

She's also summarized the vendor comparisons in a $995 report which looks at Drupal, iUpload's Customer Conversation System, Roller, Six Apart's Movable Type and TypePad, Telligent Systems' Community Server, Traction Software's TeamPage, UserLand Software's Manila, and WordPress. Her report abstract names iUpload as her favorite.

Keyword frequency from AOL

The privacy furor that erupted August 6 over the 20-million Web queries posted by AOL has distracted from the useful information contained in the database. While AOL removed it a week ago, numerous search-engine researchers had already downloaded the file and have reposted it with front-ends for research purposes.

SEO Sleuth <seosleuth.com> has posted the top-2000 search terms from the AOL sample. Click the continuation link below to see a list of all banking terms that made the top 2000 list. Here's the first 10 with their overall rank among all search terms:

40. bank of america
86. bankofamerica
114. fidelity
159. bankofamerica.com
170. paypal
174. www.bankofamerica.com
202. free credit report
215. american express
259. wachovia
264. wells fargo

What's striking about the AOL search data is the overwhelming preference to search on brand names rather than product categories. Also, that Bank of America has an extraordinary share of mind with searchers, with its various forms accounting for four of the top six most-searched financial services terms.

--JB

Best Internet banks from Global Finance Magazine

In its seventh annual Internet-bank "beauty contest," Global Finance Magazine <gfmag.com> named Bank of America the best consumer Internet bank in the United States and Citigroup the best corporate Internet bank. Apparently, the magazine loves Citigroup's work, naming it the best corporate Internet bank in 46 countries and best consumer Internet bank in 11 countries including Germany, United Kingdom, and Indonesia (see list of complete winners, by country, by clicking on the link at the bottom of this article). 

The magazine also named winners in specific categories. In the United States, the winners were:

Consumer Internet Banks:

Best investment management services: Bank of America

Best bill payment and presentment: Bank of America

Best online consumer credit: Wells Fargo

Best website design: Wells Fargo

Best integrated consumer bank site: Bank of America

Best information security initiatives: Bank of America

Best online deposits acquisition: TD Bank Financial Group
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Corporate/Institutional Internet Banks:

Best online cash management: Citigroup

Best trade finance services: Citigroup

Best website design: Wells Fargo

Best integrated corporate bank site: Wells Fargo

Best information security initiatives: JPMorgan Chase

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Top U.S. financial brands

Last week (July 17), Advertising Age <adage.com> published its annual list of U.S. "megabrands" as defined by total measured advertising expenditures in 2005 (see Note 1, click on link at bottom). The top six, and eight of the top 10 were phone or car brands.

1. Verizon >>> $1.7 billion
2. Cingular >>> $1.3 billion
3. Sprint >>> $1.0 billion
4. Ford >>> $980 million
5. Chevrolet >>> $880 million
6. Nissan >>> $810 million
7. Dell >>> $780 million
8. Toyota >>> $770 million
9. McDonald's >>> $740 million
10. Honda >>> $640 million

Financial megabrands
The biggest financial brands were American Express and Citi, tied at number 14 with $590 million in 2005 advertising. Seventeen other financial services brands made the top 200, including what has to be one of the biggest surprises in the top-200 list, LowerMyBills.com which spent an estimated $130 million in advertising last year, more than Time Warner, The Gap, or Johnson & Johnson.

  14.  American Express >>> $590 million
  14.  Citi >>> $590 million
  31.  Visa >>> $360 million
  35.  Capital One >>> $350 million
  36.  MasterCard >>> $340 million
  40.  State Farm >>> $320 million
  48.  Allstate >>> $290 million
  56.  Progressive >>> $250 million
  66.  TD Ameritrade >>> $220 million
  72.  Chase >>> $210 million
  72.  Bank of America >>> $210 million
  99.  Wachovia >>> $170 million
  99.  Washington Mutual >>> $170 million
113.  Fidelity >>> $150 million
122.  E*Trade >>> $140 million
134.  LowerMyBills.com >>> $130 million
146.  Schwab >>> $120 million
159.  Ameriquest >>> $110 million
177.  LendingTree >>> $100 million
----------------------------------------
Total >>> $4,820

Industry spending
These 19 financial services megabrands spent $4.8 billion in 2005 (see Note 2, click on link at bottom). The financial services sector was the fourth largest, trailing automotive, retail, and telecom. In all, financial services account for about 10% of $49 billion in total measured advertising expenditures across 200 so-called "megabrands."

-- JB

Online banking by businesses surpasses 50%

Break out the bubbly. Twenty years after online banking became widely available, and ten years after it migrated to the Internet, more than half of U.S. small businesses (sales between $500,000 and $10 million) bank online. And one-third of the laggards say they'll move online within the next year.

Online banking usage
Here's the breakdown of online banking usage by business size as reported by BAI Research at the company's recent TransPay Conference:

Small business
48% >>>$500k to $1 million
51% >>>$1 mil to $5 million
54% >>>$5 mil to $10 million

Mid-size
61% >>>$10 mil to $50 million
67% >>>$50 mil to $100 million
89% >>>$100 mil to $250 million

Satisfaction with online banking
These companies are relatively satisfied with the service. Only 2%, a remarkably low number, report dissatisfaction. However, there is room to move users into the very satisfied category occupied by 44% of the sample.

Here's the breakdown, again courtesy of BAI Research:

44% >>> Very satisfied
46% >>> Somewhat satisfied
8%   >>> Neither satisfied or nor dissatisfied
2%   >>> Somewhat dissatisfied
0%   >>> Very dissatisfied

Online banking features
And what are they doing online?

91% >>> Deposit tracking
86% >>> Balance reporting
48% >>> Wire transfers
45% >>> Stop payments
38% >>> Tax payments
36% >>> Initiate ACH transfers

Finally, if you need some market sizes for your spreadsheet, click on the link below to see a good breakdown in payments by business size.

Online advertising spending

American Banker released figures for 2005 online advertising expenses for financial services companies. Among banks, Bank of America was first with $20 million spent online in 2005, no surprise there. Five others spent $10 million or more including two direct banking efforts, ING Direct and Emigrant Direct, which spent 96% of its media budget online (click on the table below for a larger version).

2005 Advertising Expenses, in millions