NetBanker

Mobile Banking Forecasts (U.S.): TowerGroup vs. Online Banking Report

2009-07-03T10:16:44Z

TowerGroup has just released a new research note discussing the growing adoption of mobile banking in the United States. The research unit of MasterCard is predicting a five-fold increase in active users (note 1) between year-end 2009 and year-end 2013.

In comparison, we (note 2), are projecting a four-fold increase. But either way, it's a phenomenal growth curve and is a market that financial institutions must pay attention to.

Following are the numbers Tower released, more details are contained in the full report (purchase here). I also compared to those that we projected in our Jan 17 Online Banking Report.

Please note: TowerGroup is forecasting active USERS, we forecast active HOUSEHOLDS. There are about 1.9 adults (18+) per household in the United States, but often, not all the adults in the household will be active banking users, so it's a bit hard to compare the two figures. But if you assume 1.2 to 1.4 mobile banking users per household (note 3), we are pretty close this year, but TowerGroup is a bit more bullish five years out.

	TowerGroup (May 2009)	Online Banking Report (Jan 2009)	Online Banking Report (Jan 2009)
Basis	Active U.S. users	Active U.S. Households (HH)	Active U.S. users assuming 1.2/HH now, 1.4/HH in 2013
2008	4.6 mil	3.5 mil	4.2 mil
2009	10 mil	7.5 mil	9.0 mil
2013	53 mil	30 mil	42 mil
CAGR (08 vs 13)	63%	54%	58%

Sources: Online Banking Report, Jan 2009; TowerGroup, May 2009

Notes:
1. Active mobile users have used the service within the past 90 days.
2. See our Online Banking Report: Mobile and Online Banking Forecast or the Online Banking Report: Banking on the iPhone for complete details.
3. We assume the number of mobile users per household will grow over time starting with 1.2 per household in 2009 to 1.4 per household in 2013.

M&I Bank's Understandable Online Guarantee

2009-07-02T09:39:43Z

While reviewing M&I Bank's Metavante-powered online application for our latest report (note 1), I noticed the bank's Online Security Guarantee (first screenshot below).

It's important to post reassurances prominently on banking websites, especially on product application pages. It helps users overcome their security and trust fears and move forward with opening new accounts online.

Often the explanations of guarantees are full of legalese and exceptions in the fine print, reducing their effectiveness. But M&I's does a good job with concise and easy-to-comprehend copy (see second screenshot).

Here are the four parts to the guarantee, taken directly from the website:

Zero Liability Protection: You will not be responsible for any withdrawals which result from unauthorized online access to your personal M&I deposit accounts.
Bill Payment Promise: If we fail to process a payment in accordance with your instructions, we will reimburse any late charges assessed by the payee.
Security Commitment: We use data encryption to protect you when applying for accounts, conducting transactions or paying bills online.
Privacy Protection: As further detailed in our Privacy Policy, we are committed to protecting your personal information.

M&I also includes a short section outlining the customer's responsibility to monitor their account and safeguard passwords.

We congratulate both the bank's product group, and its attorneys, for keeping legal language to a minimum .

M&I Bank's Platinum Checking application (7 June 2009)

M&I Bank's Online Guarantee page (link), 7 June 2099)

Note:
1. For more info, see Online Banking Report: Opening Accounts Online, published June 21, 2009.

Alpine Bank Emphasizes Service with Animated "Escape" Banner on Homepage

2009-06-30T08:18:40Z

Business runs in cycles and right now many of the large financial brand names are a bit tarnished. Over the next few years, we'll likely see community banks and credit unions turn up the volume on marketing campaigns emphasizing their low-key, low-risk community-based services.

We ran across this good example two weeks ago at $930-million (assets) Alpine Bank of Illinois. The bank uses a clever escape theme that should resonate with hard-core computer users and novices alike (see screenshot 1 below). The eye-catching banner sequence (see screenshot 1a) asks a serious of three questions, then culminates in an escape key (ESC) inviting users to click to a landing page with more info.

Then on the landing page, the "Esc key" in the lower right (screenshot 2), takes users to an online Contact Me form (screenshot 3) that includes simple contact info to be used for a followup call or email (customer's choice). This is a nice high-touch alternative to regular online app, that can take 7 to 10 minutes to complete and are abandoned at alarmingly high rates (see note 1).

Analysis: Overall, the campaign is clever and well presented (note 2). But the bank could make several landing-page changes (screenshot 2) to improve conversion rates:

Increase the visibility of the $25 account-opening bonus. It's currently buried in the first paragraph. I didn't even notice it until the third time we looked at the page (note 3).
The account opening link on the landing page should be enhanced with one or more brightly colored Open Now button.
While the "escape key" is clever, users may not realize that's how they are supposed to request more info. The bank should add a More Info button and/or add "more info" to the Esc key graphic.
On the Contact Me form, their should be an Open Now button for users who decide they are ready to open immediately.

For more info on improving your online account opening results, see our latest Online Banking Report: Opening Accounts Online, published last week.

1. Homepage (16 June 2009)

1a. Homepage banner ads (they cycle through in this order)

2. Landing page (from homepage banner; link)

3. Contact Me form (link)

Notes:
1. For more info, see Online Banking Report: Opening Accounts Online, published last week.
2. One small nitpick on the design: The banner ads should only cycle one or two times per visit. There's no need to keep cycling the banner ads over and over, it's annoying for someone trying to find something on the homepage.
3. The $25 bonus does have a small banner on the homepage, lower right. But visitors attracted to the large escape banner could easily miss it.

SmartyPig Deposits Up Ten-fold with High-rate Strategy

2009-06-25T12:21:46Z

Maintaining one of the highest rates in the country, currently 2.75% (see note 1), SmartyPig's deposits have grown ten-fold since January (see chart 1, below). And the company plans to continue its aggressive pricing and marketing, hoping to grow another five-fold to a half-billion by year-end (see chart 2, below) or 50x what they started the year with.

Deposits in the United States are held by part owner, Des Moines, Iowa-based West Bank. Australian deposits are held by SmartyPig partner ANZ Bank.

To help fund their growth objectives, SmartyPig announced today that Red McCombs, co-founder of Clear Channel Communications, has invested an undisclosed amount. McComb Enterprises lists one other financial services company in its portfolio, asset-based lender, Propel Financial Services.

Founder Jon Gaskell is pleased with the aspect of goal-based saving at SmartyPig. In an email yesterday he told me:

Of our customers who have reached a goal, more than 80% of them have started a new goal. The average SmartyPig goal length is nearly 4.5 years, and our average user is depositing a little more than $200 per month toward his or her goal. Fifteen months after launch, our data suggests that a vast majority of our customers are staying focused on their predetermined goals, and the deposits are "CD-like" in nature.

The half-billion-dollar question, assuming they meet their 2009 projection, is how sticky are the deposits when rates come down off the top of the chart?

Chart 1: Actual deposit growth at SmartyPig

Chart 2: Expected deposit growth through Dec. 2009

Source: SmartyPig, 25 June 2009

SmartyPig homepage (24 June 2009)

Notes:
1. In Bank Deals weekly list of highest savings rates, SmartyPig was number one on June 20 at 3.05%. The rate was lowered on June 22 to its current 2.75%.

New Online Banking Report Published: Online Account Opening

2009-06-24T06:26:58Z

We just completed our latest Online Banking Report. It will be mailed to subscribers this week.
It's also available online here. There's no charge for current subscribers; others may access it immediately
for US$495.

---------------------------------------------------------

Improving Online Account Opening ROI
Ten strategies to increase online application conversion rates

102 pages (published 21 June 2009)

In this report (abstract PDF), we focus on ways to increase conversions and improve your results when opening financial accounts online or over a mobile phone.

The online application is the new branch new-accounts desk. And, just as you provide ongoing support, training and incentives to branch-based sales staff, you must continually fine-tune your online sales process.

In our experience, this is an area that needs attention at most financial institutions. Things have greatly improved during the 10+ years we've been tracking online applications. However, during the research for this report, we reached dead-ends at three of the 10 applications tested (note 1). That just can't happen.

The report outlines a 10-step approach to improving the process:

Direct users to the application
Set expectations
First things first
Guide customers
Bundle mobile access & alerts
Upsell
Fund
Ask for referrals
Stay in touch
Humanize the process

We reviewed the online applications of the following companies:

Bank of America
BECU (powered by uMonitor)
Capital One
Chase Bank
First Arkansas Bank & Trust (powered by FirstROI)
Flagstar Bank (powered by uMonitor)
HSBC Direct
Huntington Direct (powered by CashEdge)
M&I Bank
National City
Verity Credit Union (powered by Andera)
Wells Fargo
Zions Bank

Finally, a 10-year forecast for online account-opening volumes in the United States is presented.

M&I Bank has an attractive and informative application start page (9 June 2009)
Note: The online banking guarantee at the bottom is a good way to improve user trust.

Note:
1. Granted, user error was the problem in two of the three failed apps; however, we weren't purposely trying to make mistakes. The online application should have provided assistance in correcting them, rather than leaving us hanging.

Chase Bank Pitches Credit Card Balance Transfers at Login

2009-06-23T07:16:13Z

Chase has great graphic design panache (see previous post here and here). As I was logging in to my account last week to see what the bank had done with a pesky $2 balance remaining from my payoff a month ago (see note 1), I was presented with an eye-catching offer to transfer a balance (see first screenshot below).

The balance-transfer options weren't quite as enticing as they've been in the past:

0.99% for six months plus 3% balance-transfer fee
5.99% for a year plus 3% balance-transfer fee

This time last year, the 5.99% offer would have likely been for the life of the balance. However, under new regulations approved by Congress, where monthly payments must be allocated to the highest rates first, it no longer makes financial sense to offer a low rate for the life of the balance.

Note: Chase provided real-time chat support as I considered their balance-transfer offer (see second screenshot below).

Chase Bank's login interstitial (16 June 2009)

Chase offered online chat via a popup window

Notes:
1. Kudos to the bank for automatically eliminating the $2 in extra interest accrued between the day I paid my balance in full online (at the Chase site) and when the payment posted. When I logged in I was afraid I might see a $39 late fee on the $2 remnant balance.

2. For more info on post-login marketing, see our recent Online Banking Report on Selling Behind the Login.

Why Mobile Banking/Payments will be Highly Profitable

2009-06-18T18:29:30Z

My credit card number was stolen again. It's the third or fourth time since the Internet came along. It's annoying, and a little disconcerting, but not a major problem, thanks to efficient card issuers who take the info, credit my account, and send me a new card. On a ten-point "hassle scale," where 10 is having your hard drive crash, it's only a 2 or 3.

And my previous stolen cards resulted in little financial loss to the issuer, other than the cost to process the chargeback and reissue the plastic. In those cases, either the issuer caught the fraud before anything was shipped, or the items purchased were digital (online subscriptions) and didn't result in any lost inventory.

But this time was different. Someone used my card number to buy a PS3 gaming console and three games at a Best Buy in the Bronx. Assuming Best Buy follows proper procedures, Wells Fargo will be out more than $600 just for the merchandise. All told, with the cost of the investigation and processing, it's probably an $800 to $900 loss to the bank and merchant.

Wells Fargo is generally very good about suspicious charges and usually calls us. I've had the card for almost two decades, and it's been othe primary card for both my wife and me for much of that time. WF knows our purchasing habits better than we do.

Yes, we get to NYC at least once a year, but our charges are usually travel- and tourist-related ones in Manhattan. And we probably visit Best Buy in Seattle a couple times a year (we have teenage boys), so the gaming system charge is understandable. But it's highly unlikely we'd buy a system while visiting NYC, and we've never visited the Bronx, so the authorization request likely triggered flags.

But unless there was inside theft, the bank's authorization system evidently decided the $10 in interchange was worth the risk. Bad call this time, but probably right 99%+ of the time; otherwise, they'd be out of the card business.

What's mobile have to do with it?
But if Wells Fargo had a real-time connection to me via mobile phone, they could have texted me for an OK (similar to the screenshot above, which is a text-based activity request to Wells Fargo). If it really had been I who stood at Best Buy's register, it would have taken a second to reply "yes," and the transaction would have gone through.

Of course, in this case, I would have said 'no, I'm in San Francisco right now.' Or even better, in the not-so-distant-future, if I'd allowed the bank to track me via GPS, they would have known, without even contacting me, that I was 3,000 miles away from that store. Either way, the bank saves nearly a grand from that single text message. Multiply that by the millions of fraud purchases every year and you have serious money, billions by most estimates.

So yes, mobile banking (really mobile payments) does have a robust and tangible business case from fraud reduction and customer service savings. The technology is in the hands of the users now, and most know how to use it. So, let's get moving.

Note: For more information see our Online Banking Report on iPhone Mobile Banking.

Finovate 2009 Update and Super Early Bird Tickets

2009-06-17T16:47:36Z

As soon as we wrapped up our second successful FinovateStartup09 in April (Have you checked out the videos from it yet? They're awesome and free to watch.), we ramped up the search for demoing fintech companies for our flagship Finovate 2009 conference (9/29 in Manhattan).

As part of that process, over the last two months, we've looked at hundreds of diverse financial technology companies (some brand new, some very well-established) to find the most innovative, biggest and best new ideas. Those companies were invited to apply for a

demo spot. And those invites generated a slow trickle of applications that became a flood as this Monday (the early-bird application deadline of 6/15) approached. The quality of the applications is very high this year, and it's going to be hard to pick.

From here, we'll spend weeks reviewing the applications we've already received, accepting last-minute ones (until 7/15), and agonizing over which great companies to showcase on stage. But, regardless of the final roster of demoing companies, it's clear that fintech innovation just keeps accelerating. It's very exciting to watch and to get to share with you at Finovate 2009 this fall (and via NetBanker and via OBR).

We'd love to have you join us at the fall event and watch the future of finance/banking unfold onstage. If you register today you'll save $300 via the super early bird tickets. Please note that those prices expire at the end of June.

Eric Mattson is CEO of Online Financial Innovations, the parent company of NetBanker, Online Banking Report and the Finovate Conference Series. He can be reached at eric@netbanker.com or 206-331-1178.

Bank of America promotes retirement planning at logoff

2009-06-17T00:52:56Z

After viewing my credit card statement (personal and business) I was greeted with the following retirement planning pitch from Bank of America. I've recently seen similar banners on the bank's homepage (though not today).

It's not easy getting consumers interested in looking at their retirement situation when they are in the middle of an Internet session. There's always something more pressing or entertaining to be done than worry about some distant event.

So it takes extra effort to entice clicks. BofA has a good approach. The "Stop Guessing About the Future" hook is a good way to grab attention. And the colorful slider-based tool is easy to use and, most importantly, takes only a few seconds to deliver some meaningful results.

1. Bank of America logoff screen (2:25 PM, June 16)

2. Landing page of promo (link)

The BofA tool uses a short bit of audio to get your attention and explain how to complete the short, five-step wizard. Users may turn off the audio using the button in the upper right.

3. Step 1 of 5

4. Results page

Calculates your "retirement number," the amount you need to have to bring your cash income during retirement to 85% of today's value (similar themes have been used by Wells Fargo (here) and ING (here))
Shows range of possibilities based on a range of potential investment returns
Has two handy boxes showing when you'll run out of cash and how much you need to add to your monthly savings to avoid that (also expressed in ranges)
Action plan in the lower right leads to some suggested courses of action, that the bank can help with, such as rolling over a 401(k)

Note: For more information see our Online Banking Report on Selling Behind the Password, published in April.

Out of the inbox: Great call-to-action from E*Trade, "Re-Plan your Retirement"

2009-06-12T16:16:00Z

Over the years, E*Trade has been consistently innovative in both product development and marketing, two areas that provide natural synergies. The company didn't disappoint with its latest missive to existing customers.

An email arrived yesterday afternoon (Thurs., 11 June 2009) and immediately grabbed my attention with its clever and timely subject line:

Re-plan Your Retirement with E*TRADE and Get Up to $500

Analysis
One thing I've heard consistently from my friends, no matter how secure their jobs, is that they will "be working forever" now that the Great Recession has slammed their net worth with the double whammy of a bear market and home-price declines.

So this is a great time to get in front of customers with new efforts to help them re-plan retirement with new investment ideas, asset rebalancing and just a general reboot of their portfolio. And it's also an excellent time to discuss 401(k) rollovers, as E*Trade did in this message, with an "up to $500" (see note 1) incentive to roll over a retirement account to the company (see landing page, third screenshot below). As Americans change jobs by necessity, there will be millions of retirement accounts in play.

Security features in email
E*Trade also demonstrates another best practice to improve trust in customer emails: personalization. The company includes customer name and last four digits of their account number to help distinguish the message from fraudulent phishing attempts. E*Trade draws attention to the feature with a Security Enhanced icon on the top-right (see first screenshot below).

Clicking on the Learn More link drops readers to the bottom of the email message where product URLs provide direct-navigation alternatives to paranoid readers (see second screenshot below). I hadn't seen that before, a nice touch.

E*Trade email promoting 401(k) rollovers (received 11 June, 3 PM Pacific)

Security "fine print" at bottom of above message

Landing page for email offer (link)

Note:
1. Detail on the rebate:

$500 for rollovers of $250,000 or more
$250 for $100,000 to $250,000
$100 for $50,000 to $100,000
$50 for $25,000 to $50,000

FinovateStartup09 Demo Videos Now Available Online

2009-06-11T20:21:05Z

In April we featured more than 50 great startups at FinovateStartup09 in San Francisco. We are happy to announce that full-length videos of the demos from the event are now available at our conference website. These are live, 7-minute demos of each company's latest technology; no Powerpoint slides are allowed. The videos are available in QuickTime and Windows Media formats and are free of charge.

Finovate 2009
If you enjoy the videos, consider registering for our third annual Finovate conference to be held September 29 in New York City. Finovate 2009 will showcase the best new financial and banking technology innovations from both established companies and startups. You can save $300 if you register before June 30.

Microsoft to discontinue selling Microsoft Money immediately, end online service in two years

2009-06-11T00:14:55Z

Microsoft will stop selling its Microsoft Money packaged personal finance management (PFM) software at the end of this month (FAQ here). Online services will expire Jan. 31, 2011, or earlier depending on when users activated their program.

The company will continue its online-only account management and bill pay services at MSN Money. Banks supporting direct downloads to the program, such as US Bank and Wells Fargo, will have to migrate users to other options, most likely Intuit's Quicken.

For me, it's an end of an era. The main reason I became involved in the online banking industry was to participate in a four-bank group that worked with Microsoft to add online banking and bill pay to Microsoft Money 3.0 (note 1), released in Feb. 1994 (see inset). It was an industry milestone and a major coup for the company at the time, bringing online banking to its PFM more than two years ahead of Quicken.

So, after 15 years of using the program, I'll finally have to make the long overdue move to QuickBooks to manage our company finances. But to be safe, I'm going with QuickBooks online, which I'm guessing will not become obsolete in my lifetime.

Microsoft Money Plus page announces the end of the line (link, 9 June 2009)

Notes:
1. According to Wikipedia, Microsoft Money is currently on version 17.

Zions Bank also offers Trusteer Rapport

2009-06-11T00:01:08Z

In yesterday's post, I missed an important client of Trusteer's anti-malware software. Zions Bank, a leader in showcasing its online security efforts (see 2006 post on multi-factor authentication), is the only Trusteer client to feature the program on its homepage (see below).

Zions Bank home page (10 June 2009)

Zions Bank security page (link)

Zions Bank Rapport page (link)

PSECU offers free Trusteer anti-malware browser plug-in

2009-06-10T00:38:11Z

Pennsylvania State Employees Credit Union is the latest big-name client for Trusteer's anti-malware Rapport browser plug-in. The CU's 350,000 members, or anyone else for that matter, can now download the free program via a link on the PSECU security page.

Current clients of Trusteer:

ING Direct (USA and Canada)
RBS (RBS, NatWest, Ulster)
Pennsylvania State Employees Credit Union
Central Bank (Kentucky) was announced Feb. 23, but the program is nowhere to be seen on its website today
(Updated 10 June): Zions Bank, which is the only client featuring the program on its home page (screenshot here)

For more information and analysis, see previous posts on Trusteer and our Online Banking Report on New Security Techniques.

Trusteer homepage showcases ING Direct and PSECU (8 June 2009)

PSECU "security software" page (link, 8 June 2009)

Notes from the Mobile Commerce Summit (day 2)

2009-06-05T20:45:59Z

Day two of the Mobile Commerce Summit ran just for the morning (see Day 1 highlights), but anyone who overslept missed the highlight of the conference: the much-too-short panel discussion on revenue opportunities that started at 8:15 AM and ended at 9:00 (note 1).

Panel: Mobile revenue opportunities

Drew Sievers, founder & CEO, mFoundry
Joe Salesky, chairman & chief strategy officer, ClairMail
Cameron Franks, director, Mobile Commerce Americas, Sybase 365
Jayatsu Bhattacharya, SVP business development, Mobile Money Ventures (Citigroup & SK Telecom joint venture)
Mustafa Patni, former director of mobile banking, WaMu

Observations from the panel:

POS payment services: NFC at point of sale
Value-added services
Fees for mobile banking services: transaction, monthly, or annual
Premium accounts with a rich mobile feature set
Stock/investment trading (Citi Hong Kong is able to charge a premium for mobile trading)
Bill pay: expedited payments
Person-to-person (P2P) payments
Much of the revenues will be indirect, from deepening and improving customer relationship
Remote deposit capture for businesses
Merchant advertising: offers to customers as they shop
Loyalty programs: driving customers to certain merchants with alerts, offers, and discounts
Lots of cost-saving opportunities: self-service customer service, moving bill payments to on-us transactions, loyalty program management, security, fulfillment, marketing, call deflection

Panel: Smartphone impact on the customer experience

Armin Ajami, VP retail Mobile channel, Wells Fargo

Almost half of smartphone users use the mobile Web daily (source: ABI research, Feb. 2009)
18% of U.S. consumers have smartphones
263,000 apps now available for smartphones, predicted to grow to about 700,000 by 2013
There are 27 different app stores today
Mobile-optimized website launched in July 2007, text banking launched Oct. 2007, native iPhone app launched May 2009
Funds transfer on mobile-optimized websites takes 2 minutes with 5 clicks, no zooming or scrolling vs. 10 minutes via iPhone mobile browser with 7 clicks, 5 zooms, 7 scrolls and 10 minutes

Alain DeSouza, sr. mgr., market development solutions marketing, Research in Motion

Globally, 12% to 14% of mobile phones sold now are smartphones; in North America, it's now above 20% (22% to 26%)
Blackberry app store officially launched April 1, 2009
Not excited about putting NFC chips into handsets (adds cost); will do it when it makes business sense (last year it was a top-5 opportunity, this year more of a top-20)
P2P transfer is not a killer app, but could be important for adoption
Be careful not to waste bandwidth in your app development

Note:
1. Note to conference organizers: Never start a session at 8:15 AM after a Thursday night in Las Vegas.