Sometimes it helps to see how NOT to do something. Today's victim: Chartway Federal Credit Union <chartway.com> which has been running a clever, but poorly executed, 8.00% APY certificate-of-deposit special on its website for the past month (see screenshot below).

Analysis
The good news: It's a great offer. Any member making a successful referral gets to put up to $8,000 in an 8-month CD earning 8% (notice a theme there?). To qualify, the referral must bring in a new credit union member that opens a checking account along with the certificate OR initiates a $500-minimum direct-deposit relationship. The new member also gets to put up to $8,000 in an 8-month CD.

Members can make up to three referrals for a total deposit of $24,000. With the CU's normal 6-month rates at 3.4%, its more than double the normal rate of return, earning both the referrer and referee an extra $31 per thousand over the 8-month term or almost $250 extra per certificate (pre-tax). The eye-catching offer is featured front and center on its webpage.

The bad news: There is no hyperlink. Clicking on the logo, headline, or text does absolutely nothing! There aren't even any instructions on how to participate. Viewers are simply left hanging. The only extra info provided are the disclosures delivered via mouseover (see screenshot above).

It harks back to websites of the mid-90s that were put together by the "ATM guy." Unless you are trying to entice users to go on scavenger hunt through your website, this is a major mistake, and it's been that way for nearly a full month.

--JB

One key dynamic of the banking market is the "stickiness" of customers. You have to really mess up to motivate a customer to go through the hassle of unwinding their checking accounts and automated transfers, and setting everything up at a new financial institution. This customer "loyalty" is behind many pricing decisions, from interest rates offered on savings accounts to NSF/OD fees.

However, there is one time when customers literally beat a path to your door, looking to open multiple accounts. That's when they move away from the geographic footprint of their existing financial institution.

So, it's long been the holy grail of banking to find a way of identifying these movers and get them signed up before they go bank shopping in their new place of residence. Over the years, banks have worked with moving companies, large employers, and other sources of data on incoming residents. Millions of expensive, direct-mail packages have been dropped, but the returns are often marginal at best. The problem: households on the move don't read their junk mail, if they even receive it.

Enter the Internet age. What do most households do now once they know they are moving to a new city? They Google it.

Action Items
So, if you know potential customers are Googling your city, you better put your name into areas they are visiting, such as rental listings, real estate listings, school info, and so on. And once you get their interest, your website better speak directly to their situation, because, in the midst of a major move, they don't have a whole lot of time to think about checking accounts.

You should have a place on your website devoted to new residents. It doesn't have to be as sophisticated as Bank of America's (click on inset for closeup), but it should tell potential customers:

1. What a great presence you have in the community
2. How your prices are competitive
3. How convenient it is to move accounts to your bank
4. How easy it is to get ahold of someone who cares (e.g., "chat now with our moving specialist")

We'll cover this subject, including a detailed look at online efforts to attract movers, in the next issue of Online Banking Report (to be published in late-April). 

--JB

Before looking at product and marketing strategies, do a reality check on what users expect from online banking. 




Source: Online Banking Report, 10/03  Notes: ¹We call it the illusion of real-time processing, because users don’t so much care whether a transaction is processed in real-time, what they care about is that they can SEE that you have accepted their transaction and have adjusted balances accordingly; the actual debits and credits can be handled behind the scenes in batch mode. ²It’s extremely difficult to describe what’s “right” in words, but we know it when we see it.                  

Last month we began a two-part look at the role non-financial content can play in your online strategies. Our thinking on this subject has evolved during our three years of analyzing financial institution Web sites. When we made our first recommendations for the optimal feature-set for a financial institution Web in June 1995 (table below), we didn’t see the need for non-financial content beyond simple things such as community links and personal finance information.

Three years later, we still believe these twelve modules are the core of a good banking Web. But with more than 2,700 Webs in the U.S. alone if your strategic plans include increasing market share among online consumers, you must look beyond the basics. That’s why non-financial features deserve a second look. If nothing else, think of them as easier-to-implement placeholders while you wait for your I/S dept. or technology vendors to deliver more advanced financial analysis and personalization features to your Web.

1. Enhance/Differentiate your Online Banking Program: There are two problems facing online banking programs as they attempt to expand beyond the early adopter segment:

• Lack of REAL-WORLD benefits: The first 5% of your customer base, the so-called early adopters, don’t need to be sold on the advantages of banking online; they are adept at visualizing the benefits themselves. The other 95% are more of a challenge. They are pragmatic and not about to buy something new until they see real benefits in cost savings, time savings, or quality improvements. Simple to understand non-financial content, such as free email , can help you appeal to the pragmatists.
• Lack of differentiation: The problem with attracting new customers to your bank is that most online banking programs are very similar on the surface. Non-financial content can be used to develop a lengthy list of unique features to aid your online account acquisition efforts.

2. Improve your Position in Search Engine Results: The more diversity there is to your online content, the better your chances of being displayed prominently in search engine results. For example, business owners searching on “small business advice” could be drawn to your Web site’s Small Business Advisor online newsletter.

3. Improve Brand Positioning with Online Users: Everyone wants to do business with winners. The more robust your online offerings appear, the more likely you are to attract new customers. Note of caution here: You must be careful not to bury core functions behind less useful content. First Technology Credit Union (screenshot below) puts the four most important features right on their first page:

•  account access
•  customer service
•  rates
•  loan application

First Tech CU puts the four most important Web features right on its first page at www.1sttech.com .

4. Improve Customer Retention: There are three ways your Web can help keep customers locked-in to your financial institution.

•  Help users build a highly personalized online portal to their financial situation. Allow users to enter a wide variety of preferences on how they want to view their account data and how it’s delivered (e.g. email, Web, fax, snail mail, etc.).
•  Offer non-financial functions that require user involvement such as reminder services, free email or virtual safe. Once the user has gone to the trouble of setting up these services, they will be less likely to move their accounts.
•  Allow users to build a large file of account history on your server and/or in a proprietary data format, which would be time-consuming to transfer to another financial institution.

5. Increase Loan Originations: Double-digit growth in Web site traffic makes for great bar charts in PowerPoint presentations; but what attracts funding to you and your Web projects is revenue generation. Every time you add a new feature to your Web, consider the impact on the primary online revenue generator for the next few years, lending.

That’s why we like mundane, yet addictive Web features such as weather forecasts, online datebook/reminders and email services. These are Trojan horses that provide an opportunity to pitch preapproved credit to users each and every week. Advice: Avoid ad banners, especially for repeat visitors. They are obtrusive and increase download times; instead develop a series of eye-catching buttons with loan teasers such as “press here for $5,000” or “press here for an instant tax refund.”