Would you like your bank statement to be more interactive? Cardlytics is betting you would. The company's patent-pending technology allows merchants to present their customers with rewards and incentives for shopping with existing bankcards, without needing extra coupons or promotional codes.

But the clever part is that the incentives are placed directly in the customer's online bank statement. The consumer can activate an offer by clicking on it and then using their card at the merchant. No coupons necessary.

Here's how it works:

(1) Bank clients log into online banking. The bank statement includes special offers based on the client's previous spending. As shown below, offers are presented next to the transaction record:

(2) To get more information, users click the expand link.

(3) After seeing the full offer, users can choose to accept it or get more information. Accepting the offer activates the promotional deal.

(4) Once the promotion has been activated, the cardholder simply uses the associated debit or credit card at the merchant. The reward dollars are then automatically credited to the account. Nothing needs to be printed or carried to the store.

(5) Qualifying transactions are instantly confirmed in the consumers' online banking statement.

Analysis:The Cardlytics system is a useful tool for banks seeking to develop incentive programs. According to Cardlytics CEO Scott Grimes, consumers in the current economy are no longer buying into the "pay for it later" mentality fostered by credit cards, making this the perfect time for banks to provide debit card incentives. Merchants fund the rewards in exchange for the highly targeted advertising.

The appeal for the merchants is obvious. They are able to make highly targeted offers directly to customers of their competitors. In the example above, McDonald's places its famous Golden Arches in front of a Burger King customer. That's a definite score.

As a result, more than 50 national retailers have signed up for the platform.

One cautionary note: Will Burger King customers feel they've been sold off to McDonalds by their banks? It's a real concern. Customer education will be important so that consumers understand that no personally identifiable information is being released to advertisers.

The ultimate test for Cardlytics will come from the consumer. Will the Cardlytics program increase bankcard use? It might if the deals are attractive enough to change behavior. So far, the company reports positive results, with an average response rate of 15% and some going as high as 40%.

I'll be watching my bank statement.

Most major financial institutions have been pushing estatements for several years (see previous coverage). The appeal of shaving $10 to $20 off the annual servicing cost for every account is an attractive payoff.

Yet, you rarely see estatement appeals elevated to the homepage. BB&T bucks convention with this attractive graphic with the big-three benefits: security, convenience, accessibility (see first screenshot). The green button leads to a landing page reiterating these three benefits plus adding the environmental message.

Bottom line: It's a good, educational effort. But with most consumers already aware of online statements, there's little motivation to change something that's worked fine for the past 10, 20, 30 or more years. 

If you are serious about reducing paper and postage expense, give your customers a reason to change their behavior:

• Low-cost gifts, such as a pair of movie tickets, 2-for-1 meal, $10 Starbucks card, etc.
• Sweepstakes (one-time or ongoing; see Wells Fargo example below)
• Extra online services such as increased archives or an electronic vault
• Enhanced security guarantee
• Discounts on other services

But whatever you do, don't introduce a fee for paper statements unless you want to get T-Mobiled.

BB&T homepage promotes online statements (7 Oct 2009)
Access via Seattle IP address; we do not have any accounts at the bank

Landing page (link)

Wells Fargo $60,000 estatement sweepstakes landing page (link)

Note:
For more information, see our Online Banking Report: Lifetime Statement Archives (June 2005)

According to today's Wall Street Journal, T-Mobile has backed down from its plan to start charging its customers $1.50 per month for paper statements (see my 22 Aug Tweet, inset, and T-Mobile landing page, below).

Apparently, a customer backlash prompted the reversal, coupled with the threat of government intervention over the proposed change that was to go into effect this week (note 1) . 

Lesson: Banks and card issuers are working hard to eliminate paper statements from their cost structure. But, be warned that consumers are not ready for an estatement mandate. It's better to offer various enticements to go electronic rather than forcing a new fee or paperless policy on customers. See our previous coverage for ideas to incent estatement usage.  

T-Mobile landing page for estatement signup (link, 22 Aug 2009)

T-Mobile account management Billing & Payments page (16 Sep 2009)
Surprisingly, T-Mobile doesn't currently even have an option on its billing page to turn the paper statement off. 

Note:
1. New York's attorney general warned T-Mobile that it could not impose new charges without giving customers the option of ending service contracts early. 

One of my least favorite tasks as a business owner is filling out forms, and tax forms are the worst of the lot. Thankfully, Washington state has a relatively simple online form that I can complete at literally the last minute of the quarterly filing period.

So last week, with the midnight deadline looming, I went to download the previous quarter's transactions into our accounting software. After doing so, I noticed a six-week gap in the data. Because of timing issues, it had been 130 days since I'd last downloaded. Guess what? My bank archives only 90 days of data for Microsoft Money users (note 1).

So, I went online and figured I'd retrieve the older transaction there. No luck. Again, only 90 days of past data are visible in online banking. Next, I tried the data-download function. Nope, same 90-day limit. Now realizing that I'd have to hand-key the data, I was getting frustrated, but I figured I could at least view my April and May statements online. Strike 4. My bank doesn't post any estatements online UNLESS you've previously given up your paper statement.

So I had to paw through my paper piles to find the missing statements, then spend a half-hour hand-entering business transactions. Boy, did I feel like a fool. Luckily, I'd started the process earlier than usual and made the midnight deadline; otherwise, the lack of data archives would have cost me more than $300 in city and state penalties.

Fee opportunity for banks
Had I been a perfect customer and remembered to download my data within the 90-day window, this wouldn't have happened. But really, now that you can buy a 1TB (1000MB) hard drive for $79, how can a bank justify a measly 3-month archive, especially for business clients? Even factoring in security costs, backup sites and other expenses, what is the marginal cost to store 18 months of transaction data? A buck per year? Probably more like a dime or less (note 2).

It no longer makes sense to arbitrarily limit online data archives. Put a price on it and let your customers decide how long they want to store their data. Many small business customers would pay $1 to $2 per month per year of back archives. Interested consumers might pay half that, e.g., $3 to $5 per month for a 7-year archive.

It can also be used a perk for going paperless. For example, Chase Bank offers seven years of online statements for its customers (see screenshot below); otherwise, users can access only the last 18 months online.

Finally, it's one of the most cost-effective retention tools imaginable (note 3).

Chase Bank promotes the benefits of going paperless to its online banking users (1 Sep 2009)

Notes:
1. The lack of past data is especially annoying since I pay $5.95/mo for the data download service.
2. I do understand that increasing online archives is not a simple project. And even though storage costs are relatively minimal, the PROJECT costs, are certainly not. I'm sure it's a multi-million effort that's difficult to justify in an era where regulatory mandates eat up IT budgets like a power surge gobbling data. 
3. For more info on estatements, refer to our Online Banking Report on Lifetime Statement Archives (June 2005) and Electronic Messaging & Statements (Feb 2003).

As we've mentioned before, there are surprisingly few fee-based online financial services in the United States (see note 1). But things may be changing. In the past month we've looked at three innovative services charging fees:  

• Mercantile Bank of Michigan's Funds Manager, a $4.95/mo service that gives users a sneak peek at pending transactions, before they can cause an overdraft (previous post).
• LowerMyAssessment.com offers a $125 service to help consumers challenge their property tax assessment for their home (previous post).
• Home-Account charges $9.95/mo for its home-management service (based on a one-year commitment).

Today, we highlight a fourth new fee-based service, also charging $4.95/month (or more), vSafe from Wells Fargo. vSafe is a secure online storage solution that sells for $15 to $15 per months as follows:

• $4.95/mo for 1GB of storage
• $9.95/mo for 3GB of storage
• $14.95/mo for 6GB of storage

The service was introduced several months ago, and I've been using it for a couple months. The service automatically stores Wells Fargo statements, and allows users to upload any other file up to the storage limit. It would be even more useful if it offered automated retrieval and storage of other bank and biller statements.

Wells Fargo homepage (1 June 2009, 1:15 PM PDT)

Landing page (link, 1 June 2009)

Take a test drive in the Wells Fargo lab (link, 1 June 2009)

Interactive video highlighting benefits

Signup explanation

Notes:
1. The golden rule of consumerism: "You get what you pay for." Because online banking services are typically offered free of charge, U.S. consumers have had to contend with clunkier, slower, less secure and less feature-rich online services than consumers in other countries that pay for online access. Fees for online services can be a win-win, allowing financial institutions to offer premium online services for those willing and able to pay for them, while at the same time offering basic services free of charge so that everyone can benefit from online banking. 
2. Article updated 9 July 2009 to remove incorrect reference to Expensify's $4.95/mo fee (see comments).

Today's American Banker tells of AmEx's plans to force electronic statements on an undisclosed portion of its corporate cardholder base, said to number more than 7 million accounts worldwide (note 1). This is probably a bit of an exaggeration, as it's more likely that paper statements are being eliminated as a standard account benefit and must be negotiated separately for an additional fee. The company admitted there would be exceptions for those without Internet access or those that still required paper for customer billings.

But it's still a watershed moment. Today, paper statements are a standard feature of most banking and credit card relationships. In a study last year (note 2), Javelin Research found that only 15% of customers had given up paper statements entirely on their primary credit card.

Currently, the burden falls on the financial institutions to beg, trick, incent, or "green" their customers into giving up paper (see inset above from Texans Credit Union). For example, Citibank frequently uses an interstitial (splash screen) after login that encourages estatements (screenshot below). See our previous posts on those efforts.

The tables are about to turn. With severe profit pressure on most big banks and card issuers, most (all?) will soon adopt the American Express approach and offer electronic statements free of charge, with paper available for an extra charge. This is how checking-account pricing has evolved over the past two decades as banks migrated customers to check truncation as the standard, with paper checks returned for an extra fee (note 3).

Interstitial displayed after logging in to Citibank's online banking
(9 April 2009, note 4)

Notes:
1. This decision will impact less than 10% of American Express cardholders, which number 92 million worldwide as of 31 March 2009, up 4% from 88 million cards a year ago.
2. Javelin survey of 2,500 consumer head of households in 2008.
3. For no valid reason any more, checks are still returned on my U.S. Bank "free" small business checking account for a $10 monthly fee.
4. Example from our latest Online Banking Report: Selling Behind the Password.

Given the financial benefits of driving paper out of the banking system, I was surprised to see little evidence of banks or credit unions using Earth Day to promote paper-saving options (eStatements, electronic bill pay, ebills) or fuel-saving approaches (online banking, remote deposit capture, bank by mail).

I looked at the 30 largest retail banks and the 10 largest credit unions and found just three green banking promos running on the homepage: Sovereign Bank (Santander), Zions Bank, and Citizens Bank (Royal Bank of Scotland).

And none of those were Earth Day specific. A Google search turned up a few credit unions sponsoring shredding days, which are nice, but not really doing much for the environment.

Sovereign Bank (Santander)
Santander's Sovereign Bank encourages users to go green by signing up for bill pay and ebills. A savings calculator on the landing page allows users to determine the environmental impact of converting bill pay activity from paper to electronic. In addition to the environmental benefits of eliminating paper, the bank promises to plant a tree for every ebill initiated.

The incentive program is conducted in partnership with the bank's bill payment provider Fiserv/CheckFree (press release).  Similar programs are also in place at BankAtlantic, Fifth Third Bank, PSCU Financial Services, SunTrust and USAA

Sovereign landing page (22 April 2009)

Zions Bank
Zions promotes eStatements in a small mid-page graphic. No monetary incentives are provided.

Citizens Bank
RBS's Citizens Bank is pushing its Green$ense checking rewards program that pays users $0.20 per electronic transaction for the next 12 months. Ultra-heavy users (3x per day), could bag up to $20/month in savings.  

On Friday, I received a marketing message from U.S. Bank attempting to convince me to turn off my paper statements and adopt online statements. In 2007 (here), I wrote about its similar effort at login. 

The graphic design and layout are wonderful with splashes of green throughout and a peaceful, sunny forest scene. It's a nice bit of branding for the bank. So far, so good.

However, in terms of direct-marketing effectiveness, where the goal is to get the reader to take action, the message leaves a lot to be desired.

Turning off your paper statement is a relatively major change in behavior (previous post), so readers need clear information and/or incentives to move to less-costly paperless delivery. This message is lacking in both.

Online statements help you:

- Deter fraud
- Reduce clutter
- Manage accounts
- Get real-time updates

Let's look at the benefits from the standpoint of the end-user:

• Deter fraud: Can the average reader make the leap to how online statements will cut down on fraud? I doubt it. This bullet point needs more detail.
• Reduce clutter: This is pretty self explanatory. But do people really think of their monthly bank statement as "clutter." Some do, but it's not a particularly compelling argument.
• Manage accounts: This wording leaves a lot to be desired. How does turning off your paper statements help you manage your accounts better? Presumably, those who sign up for online statements have more info available online. If that's the case, the bank needs to say so.
• Get real-time updates: What do online statements have to do with real-time updates?  This is probably meant as a generic benefit for banking online, but it's out of place here.

On the other hand the environmental benefits are much more tangible. However, for the cynical reader (and there are a LOT of cynical bank customers these days), there should be footnotes explaining the derivation or source of the green benefits. For example, at the bottom of the message there's prominent claim:

Save nearly 7 pounds of paper yearly by Going Green.

That sounds impressive, but if you think about, it doesn't jive with experience. Unless you get your checks back, most statements come in at under an ounce. And that includes a significant amount of bank advertising flyers. So how do we get from 12 ounces saved annually to the 7 lbs cited in the email? Readers will never know because there is no additional info available to substantiate the claim. You would think the bank would explain the claims on the landing page, but it has even less info (see below).

Call to action/incentives
The message includes tangible, albeit unsubstantiated, environmental benefits which are compelling. However, customers know that all these benefits spell significant cost savings for the financial institution. For some customers, especially of  member-owned credit unions, that may be enough to get them to take action.

However, many customers are going to feel this is a pretty one-sided deal. If they are going to give up the comfort of their paper statements, there should be something in it for them.

That's why we recommend an incentive of some sort. It could be a periodic giveaway, a one-time thank-you gift ($5 at Amazon), or an extra online benefit they wouldn't otherwise get, such as long-term archives, premium customer service or a free-overdraft card. For example, Key Bank offered a low-cost and effective incentive in the fall (post here). Chase had an even better promotion in 2007 (post here).

Landing page
Granted, there isn't much room in a one-page HTML message. So it's understandable that the benefits are abbreviated. Usually, a marketer will use the landing page to expand on the key features and benefits. However, U.S. Bank's landing page offers little additional help (see screenshot below).

The page doesn't connect back to the email in any meaningful way. Benefits are neither reiterated, nor explained. Within the page, a brief explanation tells how to enroll, but surprisingly the Enroll Today link on the right has nothing to do with estatements and leads to a page explaining online access options.

Grades

• Design: A
• Copywriting: B+
• Content: C+ (could be A- if benefits were explained on the landing page or FAQ)
• Landing page: D
• Overall effectiveness: A- for brand building; C- for driving estatement enrollment
  

U.S. Bank email marketing message, "Go Green with Online Statements" (23 Jan. 2009)

U.S. Bank landing page for online statements (link, 27 Jan. 2009)

Note: See our Online Banking Report on Email Marketing and Online Banking Report on Emessaging & Statements for more information.

Overall, most major financial institutions do a good job with website design. But one thing usually lacking is timely tie-ins with events and holidays. Google is famous for doctoring its logo dozens of times each year to coincide with the national holidays and other big events. For example, for today's big presidential election, the logo has been changed into a voting booth.

Those efforts, while not always directly driving new business, keep the website fresh and show that the bank is paying attention to the events that impact users day to day. And the best ones can increase sales. By leveraging well-hyped events such as the Olympics or Super Bowl, financial institutions can gain valuable PR and attention from customers.

I looked at 3 or 4 dozen large U.S. bank and credit union sites today and found just one riding the election hysteria to make a point. Key Bank's Pick Your President promotion (here) has nothing to do with McCain vs. Obama but is actually a clever way to convince customers to switch to electronic statements. Customers get $1 (George Washington) for every account switched to estatements and $5 (Abe Lincoln) if they take bill pay with that. The bank is also throwing in a pair of $1,000 sweeps prizes to add a few Benjamins to the mix.

Nice job, Key; our vote is with you.

Key Bank homepage with small banner for the Pick Your President promo
(4 Nov 2008)

Key Bank Pick Your President landing page (4 Nov 2008)

Is there anyone left in America that doesn't have an account at Bank of America? Probably a few, maybe even some of our readers. But if you haven't logged into your account lately, you might have missed the subtle "green marketing" the bank is using to encourage customers to go paperless.

In the screenshot below and closeup above, you can see the little green leaf next to the words "Go Paperless." It's subtle, as good green marketing should be. The leaf not only makes the link stand out, it provides a small reminder that customers can do a little something for the environment, and the bank's bottom line, while they are online.  

Also of interest (by the second arrow), since I only have a credit card, is link cross selling a free "MyAccess Checking Account." 

BofA "account overview" page (23 Aug 2007, Washington state credit-card-only customer)

Finally, the bank doesn't ignore the important logout page, a often-forgotten piece of real estate that can be far more effective than a homepage banner ad. This month, the bank is promoting it's No Fee Mortgage Plus.

BofA logout page (23 Aug 2007, Washington state credit-card-only customer)

Using a splash screen after logging in to online banking (see screenshot below), U.S. Bank is asking customers to move to electronic statements, specifically for credit card and loan accounts, although the online-only option is also available for checking accounts. I saw the message, dated Aug. 20, for the first time today. I've been a customer of U.S. Bank through the entire online era (note 1) and this is the first time I recall being asked at login to go paperless. Unlike PayPal, BofA, and others, U.S. Bank rarely uses the login splash screen technique. 

Let's look closer at the bank's pitch:

Title: Internet Banking Updates
NetBanker comments: OK...but would be more effective if it directly mentioned the purpose of the message

Opening line: U.S. Bank Internet Banking just keeps getting better! 
NB comment: That's a bad opening line. This is not a new feature. Some U.S. Bank customers have had electronic statements available for 13 years now. Everyone customer has had them for at least 9 or 10 years. The only new thing is that you stop receiving paper statement, hardly the "bank getting better." Most customers know this is a cost savings move for the bank.

Benefit statement (bullets): Online Statements Only help you: Deter fraud, Reduce clutter, Manage your account online....
NB comments: Beside the grammatically challenged opening, the bank did a good job getting the anti-fraud message into the first bullet. The second bullet, "reduce clutter," is OK, but the third is pretty weak. Why are you telling online banking customers they will benefit from "managing your account online?" And only 18 months of archives is hardly going to give customers a good feeling about doing away with their paper statement.

Call to action: The bank provides specific instructions on how to turn off the paper statement.
NB comments: The specific instructions are good, but a small graphic of where to click would be more powerful (see the example at right). Also, the choice to view the message later is a user-friendly option.

Overall graphic design: The splash screen is laid out like a letter.
NB comments: That's OK, but a graphic image or two would give it a more modern and professional image.

Overall grade: C
NB comments: The bank does a good job getting right to the point. But the overall look and feel along with some of the specific copy points lower the score. This would have been an A- in 1997, but a decade later, Internet users expect and deserve a more sophisticated message.  

Note:

1. Full disclosure: I was the lead product developer on U.S. Bank's online banking system launched in 1994.

In response to my post last week about online archives (here and here), I heard from Citibank and WaMu, who both support online requests for statements going back seven years (see note 1). The statements are delivered online, free of charge, and in WaMu's case, generally within five minutes. The customer receives an email notification when the statement is available. That's slightly less convenient than real-time access, but it still provides 98% of the value (see note 2), which is quite acceptable.

But the new winner, with the longest online archives, is San Jose-based Technology CU which provides free online access to statements going back to 1993. That's 14 years and counting. Tech CU also requires an online request for the back statements, but with the archives hosted in-house, they are readable within seconds. In response to my question, SVP Michael Luckin timed the query for me, and was able to login, request and receive an older statement, and logout in 20 seconds. That ought to satisfy most members.    

Notes:

1. The Citibank archives were included in our previous summer 2005 report, but at that time we did not know of WaMu's expanded archives which became available in March 2005, but were evidently not discussed on its website when we did our research.

2. None of the statement archive systems mentioned here allow the customer to search for specific transactions or to manipulate/download the actual data. Only Whitney Bank offers seven years of searchable online data.  

The folks at Chase Bank were on the ball today. Less than an hour after I wrote about Whitney Bank joining the long-term statement archive club (here), I received an email from a subscriber* at Chase letting me know they offer six years of online statements for credit cards. 

Below is the bank's announcement to cardholders. It's nicely designed with a green touch. And it reminds cardholders they will receive an email both when the statement is ready and when payment is due. And note the call to action: "TRY" paperless. That lets customers know they can always go back. Now that's the way to get fired up about saving trees, and the bank's cash. The only thing missing: a simple guarantee.

Grade: We score it an "A" 

Chase has been working hard to move customers out of paper. So far this year, the bank has run a $35,000 sweeps to go paperless (see post here) and they currently have a popup on the credit card homepage pitching estatements (see screenshot below).

January 2007 email to Chase credit card customers

Popup at credit card site

*He earns a Starbucks card for his responsiveness. Anyone else have five or more years of statements online? Add your comments or email me.

I was glad to see Eleanor Laise explore both the pros AND cons of turning the paper off  in Tuesday's Wall Street Journal (here). Sometimes, we in the industry get so excited about the supposed win-win of estatements (save trees, save money, save clutter, thwart dumpster divers, and so on), that we forget about the very real consumer behavior issues that work against going completely paperless.

For example, here are some of the potential pitfalls of paperless finance: 

• Statements and notices lost in overflowing email in-boxes
• Email address changes that are not communicated to the financial institution
• Spam filters trapping financial notifications and alerts
• Hard drives crashing and erasing records
• New computers being installed and records lost in the process
• Laptops being stolen along with the digital papertrail
• Computers infected with viruses rendering them inoperable or worse, sending financial data to the thieves 
• Stress at tax-time trying to remember web addresses and login credentials to access last year's financial info
• Finding out on April 14 that your credit card issuer only stores 12 months of records online, so Jan/Feb/Mar of the last tax year are no longer available online, and will take days to retrieve through customer service
• Forgetting to rebalance your investments because you never take the time to login and look at your online statement
• Forgetting to report investment income/losses on your taxes because you had no paper trail and forgot about the account
• Trying to explain to the tax auditor that you don't have paper copies because you "are saving trees" 
• Backup files being lost, forgotten, or corrupted

At one time or another, everything on this last has happened to me. That's why, even though I prefer trees to be alive, I've resisted going paperless for most bank and credit card statements (note 1). Also, as an industry observer, I like to see the statement stuffers for research purposes. 

Action Item
However, most of these problems can be solved over time by a single online banking improvement:

Guaranteed, long-term storage of financial transaction records, statements, check images, and other financial documents. 

By long-term we mean at least five years to cover tax audits. But much better would be life-of-the-account storage, which we believe is a tremendous retention tool and much less costly than free bill payment. See our Online Banking Report, "Lifetime Statement Archives," for the full business case.

Update: Gonzobanker published a how-to on going paperless today (here).

Note:

1. Of course, I'd save many more trees by turning my newspaper subscriptions off. A few days worth of newspapers at our house weighs more than a year's worth of financial statements. But I still like the scanability and serendipity of browsing a printed publication.   

Example 1

American Airlines

Email: Monthly Rewards Statement

Date Sent: Wed 1/8/03 1:03 AM

From: AADVANTAGE [summaries@esummary.info.aa.com]

Subject: AAdvantage eSummary At Your Request

Example 2

GetSmart (Providian)

Email: Mortgage Solicitation to Registered Users

Date Sent: Tue 1/14/03 8:43 AM

From: GetSmart [getsmart_4655+708436.618493713.3@ getsmart.reply.tm0.com]

Subject: Take Advantage of low mortgage rates - find a loan now.

Pros

• Well-designed, short and to-the-point

Cons

• Vendor gobblygook in the Sent-From address
• No contact info

Example 3

TrueLink (TransUnion)

Email: Credit Monitoring All-Clear

Date Sent: Tue 1/14/03 12:12 AM

From: TrueCredit [support@truecredit.com]

Subject: No new Credit Alerts: Monthly Summary

Dear James,

During the last 30 days, no credit alerts have been triggered by changes to your credit report.

To view a complete history of your credit alerts, please visit--https://www.truecredit.com/user/returnUser.jsp?mn=77

*********CHOOSING YOUR ALERT PREFERENCES**********

During your subscription, there may be weeks in which no alerts occur.  When this happens, TrueCredit.com feels it is important to email you and let you know that all is well. You can choose to receive these "all clear" notifications on a weekly or monthly basis.

To change your alert preferences, simply login to your account at http://www.truecredit.com/user/productPreferences.jsp?mn=72

**************************************************

If you need help remembering your login or password, please contact the Customer Service Team toll-free at (800) 493-2392. Representatives are available weekdays from 9 a.m. to 10 p.m. and Saturdays from 11 a.m. to 7 p.m., Eastern Time.

To receive a list of frequently asked questions and answers, simply reply to this email.

TrueCredit.com
Manage your credit. Manage your life. (sm)

Toll-free: (800) 493-2392
Weekdays 9 a.m. to 10 p.m.
Saturdays 11 a.m. to 7 p.m.
Eastern Time

Pros

• Given the limitations of text-based messaging, it’s well-laid-out and concisely written
• Customer service phone number and hours
• Sent from TrueCredit domain
• Can reply to the email for a FAQ
• Explanation and link to account preferences

Cons

• No customer service email address
• Subject line a little confusing
• Copy could be improved with clearer explanations

Example 4

DeepGreen Bank

Email: Refer-a-Friend Solicitation to Current Customers

Date Sent: Wed 2/12/03 6:07 AM

From: DeepGreen Bank [Precision@Dialogue.rsc03.com]

Subject: Share the Value of DeepGreen Bank

Pros

• Simple and attractive message with two
  action buttons

Cons

• Sent-from email address is vendor gobblygook
• No compelling user benefits
• Dull landing page
• No ability to customize the sales message sent to your friends

Example 5

Wells Fargo

Email: Monthly Marketing Letter

Date Sent: Tue 2/11/03 4:33 PM

From: Wells Fargo Online [online@wellsfargo.rsc03.com]

Subject: Your February WellsWire

Pros

• Good tax-time message with timely offer
• Great interactivity with quick poll, five opportunities to provide feedback, and 12 other clickable links
• Divided into three articles with headline at top and full text “below the fold” (not shown)

Cons

• Sent-From the vendor’s domain
• Too much of a good thing: 1400 words+275 fine print

Example 6

American Express Opt-in Solicitation

Email: Credit card offer to opt-in customers of third party (Institutional Investor)

Date Sent: Tue 2/11/03 12:16 PM

From InstitutionalInvestor.com [4962.22411372@ems.iinvestor.net]

Subject: Get Up To 5% Cash Back from American Express (r)

Pros

• Attractive message with clear user benefits
• Email clearly from trusted third party (see top)
• Good landing page further spelling out benefits

Example 7

NetStock Sharebuilder (via Wells Fargo)

Email: E-statement notification to customers

Date Sent: Thu 2/6/03 10:45 AM

From: owner-events@customer.sharebuilder.com

Subject: January Statement and Tax Notification

Pros

• Very short, just 78 words in the body and 40 in the fine print, plus a few more in the right-hand column
• Good interactivity with login button, stock search, stock browse, and top requested index funds
• Timely and low-key IRA cross-sell with action button

Cons

• Copy and design could use a little more warmth
• No mention of co-brand partner, and primary trusted party, Wells Fargo in the email title, sender, or sent-from address

Example 8

US Bank

Email: General marketing message to customers

Date Sent: Tue 1/28/03 6:04 AM

From: U.S. Bank [1800USBanks@usbank.com]

Subject: U.S. Bank Helps Improve Your 2003 Financial Outlook

Pros

• Excellent layout and graphic design
• Concise, well-written copy arranged on as single screen covering 3 subjects; only 200 words not including 75 of fine print
• Obvious where its from, U.S. Bank in the Subject, Sender, and Sent-From email address
• The bank’s toll-free number is embedded in the Sent-From email address
• Timely tax-time copy and special offer
• Great subject line
• Links at top to: (a) view message on Web page, and (b) forward to a friend

Cons

• Customer service phone number should be in the body

Email Example 9

PayPal (issuer = Providian)

Email: Credit card solicitation to customers

Date Sent: Thursday, January 30, 2003 1:46 PM

From: PayPal Visa [announcements-paypalvisa@paypal.com] Subject: Introducing the PayPal Visa

Pros

• Less than 50 words, not counting 180 in grayed-out mousetype, below the fold (not shown)
• Great layout with five clear user benefits
• Easy-to-find Apply button with 30-second approval time noted

Cons

• Could use a little more graphic design such as a second color (it’s blue on white with black type)
• Subject line doesn’t have a user benefit           

Example 10

Comerica

Email: Small business marketing to any registered user

Date Sent: Wednesday, February 05, 2003 6:41 PM

From: Comerica Small Business Services [Comerica_Small_Business-e2-15699@processrequest.com]

Subject Comerica Business Insights Volume 1

Pros

• No-nonsense look and feel; tabs are a good touch
• Good links to outside experts

Cons

• Vendor domain in sent-from address
• Needs to be pared down; total of 500+ words with some especially long-winded areas, for example, 66 words in the middle-right box to say “click here for customer service”

Example 11

E-Loan

Email: Mortgage Refi Rate Alert

Date Sent: Wed 1/29/03 6:44 AM

From: E-LOAN [mortgagemonitor@eloan.com]

Subject: E-LOAN Alert: We can save you $68398 on your mortgage.

We’ve been getting this message every couple months for the past two years, when we established a Rate Watch at E-Loan. The text-only format is ugly, but the headline is highly effective:

Pros

• Extremely clear user benefits in headline
  and copy
• Copy explains the loan process
• Sent from E-Loan domain

Cons

• Too long and needs a better layout with more white space and sub-heads
• Vendor domain in sent-from address
• Should be sending it to me in HTML format (apparently not yet an option)
• The top link in the message just dumps you back on the home page; it should take you to the Rate Watch area where you can alter the parameters or unsubscribe, or the application page

Example 12

Chase Credit Cards

Email: Balance Transfer Solicitation to Cardholders

Date Sent: Fri 1/10/03 1:40 PM

From: Chase Credit Cards [chasecreditcards@chase.bfi0.com]

Subject: Important Account Information about Your Chase credit card

Pros

• Short and to-the-point, just 70 words not including the fine print
• Clever banner and clear lay-out

Cons

• Sent from the vendor’s domain; helped by having “Chase” included in the address
• User benefits are a weak, “could be eligible for a money-savings low APR;” if you have a good offer (which they did), spell it out quickly before I lose interest
• Generic message Subject (title); although it will help get by the spam filters
• Needs more graphic design, for example an action button
• No customer service email or phone number, although in the fine print there is a link to the Website to contact Chase via email

Example 13

Free Debt Consolidation (spam)

Spam: Debt consolidation

Date Sent: Thu 2/6/03 6:55 AM

From: TurboRocketOffers [TurboRocketOffers-replyto-368-131772932@lists.zoanmail.com]

Subject: Want More Ben Franklins In Your Pocket?

Pros

• Even though it’s spam, the layout/graphics/copy are much better than most legit messages

Cons

• Sounds too good to be true; questionable value proposition

Example 14

Citibank Credit Card

Alert: Signup form and sample

Date Captured: 2/11/03

Example 15

NetStock Sharebuilder (Wells Fargo co-brand)

E-statement Navigation

Date captured: Feb. 12, 2003

Example 16

TIB Bank of the Keys

E-statement

Date captured: 1/30/03

Example 17

American Bank

Email: Routine Security Education to Customers

Date Sent: Wed 1/22/03 12:48 PM

From: American Bank [marketing@pcbanker.com]

Subject: Helpful Hints for Internet Security from American Bank

We’d only had an account a short time at American Bank www.pcbanker.com ,  when we received this email outlining ways to avoid logging in to a fake
Web site.

Pros

• Good concept; makes you feel like the bank knows what they are doing, helping themselves by helping users avoid fraud.
• Sent from the bank’s domain, although an address other than “marketing@” would probably have more credibility given the subject matter.
• Thorough and well laid out, with numbered lists and third-party references.
• Contact info for customer service, both phone and email.
• Signed by the CEO

Cons:

• A little tedious at 400+ words (not including the fine print), and probably overkill for most; could have been written more from a lay user’s perspective.
• The most important info, not to respond to fraudulent emails claiming to be from PC Banker, is buried in the second-to-last paragraph; it should be at the top.

Key

Type: Service = service-oriented messages; Sales = sales-oriented messages; Both = dual sales and service purpose

Scheduled: AT = account triggered; BS = bank scheduled; CS = customer scheduled; ET = event triggered; Var = varies;

Frequency: OTO = one time only; 365x = daily; 52x = weekly; 24 x = semi-monthly; 12 x = monthly; 2x = semi-annual;
1x = annual

Priority: “++” = considered important by most users, a highly effective sales/service tactic; “+” = considered important by many users, should be an effective tactic; “0” = important for certain niches, optional service that depends on bank strategy

Source: Online Banking Report, 2/03       

Table 1

E-messaging and statement use at 47 North American financial institutions with 100,000+ registered users

Source: Companies, American Banker, Online Banking Report, 11/02        a = active users only e= OBR estimate, +/- 33%

Notes:

(1) Definitions of registered users vary by bank, but in general the figure listed is the most generous estimate of all customers signed up for online banking, not necessarily using the service; company reports may reflect totals as far back as Q1 2002; see notes column

(2) Monthly transaction statement that can be viewed online, includes checking accounts for banks/credit unions, credit card account for card issuers

(3) Emailed statement OR notification of new statement availability

(4) For non-customers

(5) Worldwide total; there are no recent figures available on the geographic breakdown of its user base, but on 9/30/01 the company reported more than 700,000 users reside outside of North America

(6) Worldwide total, includes an estimated 15% to 20% who reside outside North America

(7) Includes brokerage accounts which numbered 1.7 million in April 2000

(8) Includes brokerage accounts which numbered 230,000 in April 2000

(9) Nov. estimate based on company report of 533,000 registered users at year-end, 40% of the total are active

(10) Nov. estimate based on company report of 141,000 at year-end

(11) Paper statements cost $3/mo

Courtesy of Digital Mailer

Have a Strategy: It’s an ongoing process
to educate and enroll your customers in
e-statements. You should have a strategy that:

• Communicates that e-statements are FREE, convenient, FREE, secure, and FREE
• Explains the overlap in paper and
  e-statements (customers must be weaned)
• Outlines e-statement archive plans:
  • How long will they remain online?
  • How can a customer get a copy of an old statement after that time period?
• Offers special promotions exclusively for e-statement users
• Has the ability to convert back to paper if not 100% satisfied
• Addresses security and privacy concern

Share the Benefits: Tell your customers what’s in it for them! Too many institutions seem to believe that customers will opt-in because of the benefits to society (save trees) or the benefits to the institution (save costs). The fact is that people make decisions from a selfish perspective – What’s in it for me? If you don’t communicate a good answer to this question, adoption will suffer.

Multi-Media Approach: How many different ways do you disseminate information to customers? Each and every vehicle should be used to promote your e-statement campaign including, envelope teaser copy, statement stuffers, Website, email, online banking banners/links, postcards, deposit slips, ATM receipts, and so on. Keep in mind that each customer who signs up saves your institution $0.50 or more per month.

Utilize Every Point of Contact for Email Capture: Every piece of correspondence and every contact point, from teller to mortgage loan officer, should ask for email addresses. Build your database now to ensure maximum adoption later.

Free Gift Offers: One of DigitalMailer’s clients averages 300 new e-statement sign-ups each month. But when they raffle a gift with a high-perceived value, they triple their sign-up rate.

Make it Easy: It behooves you to make it ridiculously simple to sign up for e-statements. One of the easiest ways is to send customers an email with a big clickable YES link.

Aggressively Court Online Banking Users: You should be able to convert at least half of your online banking users to
e-statements. And you should also be to get an equal number of non-online banking customers to sign up.

Referral Raffles: Using viral marketing, you can incite your customers to refer others (co-workers, friends and family) by offering a nice raffle prize and indicating that each referral bearing the referrer’s name will count as one entry. Therefore the more a customer refers, the greater his or her chances are of winning the prize.

Survey Customers: Use your Website and the email addresses you have captured to survey your customers about e-statements and other products. You’ll be surprised at what you can learn from a short four-question survey.

Ask: Don’t be timid. After you build a solid case for e-statements, clearly ask the customer to sign up. And continue to ask, at reasonable intervals, until they sign on.

by Greg Crandell and Ron Daly

When the financial institutions’ e-statement industry was born three years ago, issues of Push vs. Pull, HTML vs. PDF and costs of electronic versus paper delivery drove the debate. Now these issues have given way to a new discussion of whether e-statements are a tactical option to save costs or a strategic opportunity to sell more products and provide richer customer service. One thing we have learned since 1999:  savings on statement printing and delivery are just the tip of the iceberg.

Financial institutions using e-statements as part of a Web strategy have found that they can be used as a strategic contact point to inform and interact with customers. By using e-statements with email notification, institutions have been able to increase business and generate additional revenue by pulling customers to their Website for information and targeted offers.

Many e-statements link to other Web-based services and information reducing transaction costs, enhancing interactivity, and enabling self-service. The most common links are to loan applications, online banking, newsletters, customer service, and even live chat.

Forecasting Adoption:  In estimating your institution’s adoption rate expect approximately 50% of online banking users to opt for e-statement;, and an equal number of non-online banking users to sign up, if
e-statements are offered without online banking registration required.

Using traditional snail mail, financial institutions spend $0.75 to $1.25 or more to generate and deliver a single statement. Included in this figure are the materials expenses (such as paper and postage) and the labor associated with generating and mailing statements. The ability to reduce, even eliminate, these recurring expenses results in significant savings, even at conservative adoption rate. 

We estimate that for every 10,000 retail customers, an institution can save at least $7,000 per year, assuming 12% adoption, or $12,000 per year with a 20% adoption rate. And these savings could be as much as three times higher depending on an institution’s current costs. These adoption rates are definitely realistic based on our experience. One of our longest tenured clients (two years) has reached nearly 20% adoption for account statements and 25% for mortgage statements (see below). And the savings grow as more users sign up and postage rates increase.

Table 1

Potential Savings from E-statements

annualized

Source: DigitalMailer, 1/03        Assumes monthly statements

For example, 10,000 x 12% x $0.50/mo x 12 months = $7,200

Beyond cost savings, e-statements can greatly aid financial institutions in improving customer relationships and thwarting competition. With an
e-statement service in place, the financial institution can leverage it to deliver more timely service. E-statement delivery eliminates monthly mailings of cumbersome paper statements that must be manually reviewed and stored by the customer. With e-statements, the customer can view their statements online, store them electronically, and print them if they wish; and they can expect their statement will be available to them days before the paper statement would have arrived.

But that’s just the beginning, the e-statement can become the entrée point for a host of self-service options such as: check images, balance/activity triggered alerts, deposit confirmations, check reordering, funds transfers, and all types of dispute resolution.

Along with cost savings and service enhancements, e-statement services are providing sales and promotional opportunities. Financial institutions are starting to use the e-statement and email vehicles to deliver newsletters and targeted promotional materials through links to Website content.

While most institutions are struggling with ways to generate new loans, one Mid-Atlantic credit union has found that targeted e-statements are proving to be one of their best loan-generation tools. The credit union began a strategic initiative to increase loan volume by targeting their members through e-statement and Website campaigns. Using database information and their e-statement engine, the credit union used the 44,000 monthly marketing opportunities to generate new loans. The credit union’s MCIF system identified members that most likely had car loans and credit cards elsewhere. Once identified, their e-statement program delivered tailored offers with the following results:

• The CU presented 2,945 targeted offers to non-credit cardholders for a new credit card via banners in their e-statements; 57 new credit card accounts were opened for a 2% response rate, with a total credit limit of $500,000 and $275,000 in outstanding balances within two months.
• During a three-month period, 8,713 members received targeted offers on their e-statements for new car loans; 117 accepted for a 1.5% response rate and $2.3 million in loans.

While all e-statement products should provide a financial institution with cost saving opportunities, only targeted marketing can put the right offer in front of the right member at the right time. The credit union’s marketing manager explained it this way: 

Each month our e-statement program saves the credit union $8,900 in statement costs and puts 44,130 marketing offers in front of my e-statement members. Last year the CU saved over $80,000; however, the cost-savings pale in comparison to the substantial opportunity for increasing revenue by cross-selling our products and services.

When considering e-statements, a financial institution needs to address a number of issues that mix technology, customer service, and marketing. The first of these is the decision whether to push
e-statements via email, or to notify customers via email and pull them back to the institution’s Website for statement viewing.

The push approach emails or pushes an image of a statement to the customer as an email attachment. Customers view their e-statements by opening the attached file. This approach is convenient for the member since the image is delivered to their email box and no additional steps need to be taken. A receipt notification back to the bank can provide confirmation that the email was received at the intended address. Most push providers use PDF-formatted attachments to closely emulate the printed statement and save costs.

The pull approach pulls the customer back to the institution’s Website each month to access their e-statements. This approach provides an added level of: security for the customer's financial data and provides more flexibility in crafting a personalized message.  Each month, an email notification is when the user’s statement is available for viewing. The notification contains a link to a secure login page that prompts the customer for their account number and a password. Once the security verification takes place, the customer can view their statement via a secure socket layer (SSL) connection.

But the problems with the push approach became clear once institutions started to deploy e-statements. First, while the PDF format closely resembles the paper format, it carries a number of liabilities: 1) customers may have to download and install the PDF reader;
2) PDF pages have somewhat different navigation than typical Websites; and 3) PDF files are sometimes restricted by workplace networks. The last point is the biggest problem; many people check their email, shop online, pay bills, and more while at work.                 

While the push approach proved less viable because of technical considerations, it also proved less attractive for another reason. Statistics show that customers drawn to an institution’s Website to pick-up
e-statements are spending significantly more time on the site and are increasing services. NSFCU’s Web traffic tripled during the first year after launching e-statements (see chart on previous page).

Gaining a customer’s permission to use their email address has always been a challenge facing retail institutions. E-statements have become a successful vehicle for gaining this permission and have become a formidable digital communications tool. They have helped customers establish an “e” comfort level and allowed the institution to become an invited guest in the customer’s email box, while building an online relationship with that customer.

Studies indicate that about 75% of e-statement customers are willing to give their financial institution permission to use their email address to communicate electronically with them on other topics – as long as this permission is not abused. An example of this can be found in the alert sign-ups experienced by a Northern Virginia credit union:

Table 2

N. Virginia CU Opt-in Statistics

• 82% request special offer or new product alerts
• 67% request loan rate change alerts
• 63% request share rate change alerts
• 63% request CD rate change alerts

Source: Digital Mailer, 1/03

With the level of permission granted by customers opting for e-statements and email alerts, financial institutions can target both product and service messages to their customers.

Case in point: Since implementing e-statements in September of 2000, the Mid-Atlantic credit union mentioned earlier has achieved an 18% adoption rate for checking accounts and a 25% rate for first mortgage statements. The credit union’s 2002 member survey revealed that 9% of its membership used e-statements (and the custom email notification) as a source of credit union information.

 The Next Generation

The Internet and Web-based technology have significantly reduced the cost of check image storage and retrieval. In 2002, vendors began rolling out the next generation, e-statements with integrated check image access. This new product allows an institution to use its Website to promote self-service technology and provide instant access to information. More importantly, it can free up personnel while taking the institution to the next level of customer service in the eyes of their customer.

Institutions across the country are seeing significant adoption rates when an e-statement/check image product is rolled out. One Midwest credit union’s program attracted hundreds of e-statement sign-ups each week. Why? Customers already accustomed to check truncation appear quite willing trade a paper statement for an electronic version with 24-hour access to check images.

E-statements with check images create customer value and another opportunity for institutions to save printing and postage costs, generate new business, and retain existing customers. Best of all, for many institutions, the technology is already in place at their check processor (e.g., Federal Reserve Bank or corporate credit union). It’s just a matter of hooking it all together.

Early adopting financial institutions are looking to take fuller advantage of the marketing and service opportunities afforded by next generation e-statement solutions. With this in mind, e-statement providers are developing more interactivity and improving digital communication with every product release.

E-statements are one of the best new technologies to come along in a long time. Not only are you able to enhance customer relationships and increase sales, you can build the business case on a quick payback with hard dollar cost savings. What a nice change!         

Ron Daly is President/CEO of DigitalMailer with prior experience as CFO at a large credit union.

Greg Crandell is VP Business Development at DigitalMailer with prior experience in financial services and high tech product management and marketing.

DigitalMailer  www.DigitalMailer.com   provides digital communication products such as, E-statements, alerts, and e-checks, (866) 994-4900, info@digitalmailer.com.

Definition

E-statement: noun; a periodic account summary delivered via email, includes email notifications as long as they link directly to the account statement (graphic source: Citibank Singapore)

Although relatively few banks have implemented e-statements, they have become quite common at credit card issuers and credit unions. In a recent survey by Callahan & Associates, 45% of 159 credit unions responding currently offer e-statements, and 33% more planned to roll it out in 2003. Although these numbers cannot be projected to the entire credit union population, it’s still amazing growth given that just 19% of the respondents to a similar survey a year ago offered e-statements.

There are four primary methods for delivering statements electronically:

(1)     Notification with link: The simplest approach, and one devoid of tech support and security issues, is to email a link when a new statement is available for viewing online. This is the most common technique, used by DeepGreen Bank (see below), and hundreds of other financial institutions.

DeepGreen’s e-statement notification, not much to look at but it gets the job done. We wish they would change the subject line; “important notice from DeepGreen Bank” should be reserved for non-routine communications.

(2)     Statement imbedded within the email or in an unsecured attachment: This technique is not widely used due to perceived privacy and security issues. However, we believe it’s a viable option as long as account numbers are not transmitted with the statement. Several banks, including Charter One (below) and TIB Bank of the Keys, send unsecured statements or mini-statements.

Charter One’s emailed mini-statement in HTML format. Note: Only the last four digits of the account number are provided.

(3)     Email with password-protected attachment: The second-most popular approach is to email the entire statement as a password-protected attachment. Users have the comfort of knowing their account statement is safely stored on their hard drive: even if their machine is stolen or compromised, their data remains encrypted and safe from prying eyes. Password resets, tech support, and outsourcing costs are the downsides of this approach.

(4)     Email into a password-protected vault: This hybrid approach has considerable appeal if you can overcome cost issues and/or convince users to pay for it. Statements are placed into the user’s personal online vault stored on a co-branded server. Users control vault access, so they have the peace of mind knowing that the data will be available for years to come. The vaults can typically be used to store other valuable papers.

Zions Bank’s Z-Vault for instance can be used as a secure online storage facility for any document or file. Users have four ways to transfer items into their personal vault:

• via email to username@vaultinbox.com;
  note the vault’s address could be used to receive e-statements directly from any financial provider
• by logging into the vault, browsing their own hard drive and selecting files to upload
• using a personal scanner
• using a scanner at certain Zions branches 

Zions’ Z-Vault, from affiliate company Entervault cost users $3/mo for 10MB, $5/mo for 100MB, and $5/mo per 100MB thereafter.

Ref: www.zionsbank.com/zvault.jsp?leftNav=ob_zvault&topNav

• Market research: What kinds of information and alerts do users want? For e-statements, what will be the reaction to forced or voluntary paper turnoff? Using Web-based surveys, find the hot buttons of your market. Certain account-related functions, such as deposit confirmations are universal, but the desire for non-financial messages, such as community events, may vary widely by institution.
• Make vs. buy: At first blush, electronic messaging may look like a good candidate to handle inhouse. But realize the battle to get into your customers in-boxes is escalating and you’ll need state-of-the-art tools and knowledge. Even smaller companies may need to dedicate one-half FTE or more to stay abreast of the industry and handle spam complaints and blacklist problems. If that sounds too expensive, consider outsourcing your email distribution .
• Vendor selection: There are hundreds of companies that can handle email distribution for you, but given the stakes, you’ll want someone with experience and ironclad security. The well-respected online marketing publisher, MarketingSherpa completed a study in November identifying 59 companies that met their minimum qualifications of experience and size .
• Cost: As a rule-of-thumb, whether you do it yourself with soft dollars or outsource with hard dollars, emailing will cost 1 to 2 cents per message (less when you get into the multi-million category). If you send 300,000 messages a month, that’s $3,000 to $6,000 per month, a good investment if you follow the basic tenets of good email marketing.
• Pricing: While you wouldn’t dream of charging for your monthly member news, what about more specialized alert services, especially for small businesses? Bank One is the first major financial institution to test the waters by charging a $14.99 annual fee for its Premium Alerts (see next page). We believe there are good opportunities to charge for certain information feeds delivered by electronic messaging.

Premium Alerts from Bank One cost $14.99/year for banking customers but are free for card-only accounts.

• Mandatory vs. optional paper statement turnoff: Everyone knows the paper goes away eventually, but the key question is whether you can now begin to gently nudge, or even force, paperless options on your customers. Many early adopter credit unions require e-statement users to forego the paper, and several Net-only banks, including NetBank ($3/mo) and American Bank ($3/mo) charge fees for paper statements.
• We say go slowly. Don’t alienate your e-customers before they trust the electronic alternative. The best approach, if you can afford it, is to offer paper as a no-cost option on your core transaction accounts.* Then a year or two from now, you can begin to charge a fee for those who really want the paper.
• Print stream conversion vs. custom designs: Some financial institutions are simply converting their print-streams into PDF files and making them available to end-users. There is nothing wrong with this approach; in some ways, it’s a comfortable transitional method for users. However, long-term, you’ll want more flexibility to build cross-sales and relationship functions into the e-statement.

*Free or low-cost ATM-checking accounts can be forced into e-statements more rapidly.

• Online banking registration requirement:
  To maximize adoption, some financial institutions are not requiring online banking registration in order to receive e-statements. We think this is a good idea. With this approach, call center reps and branch staff can sign up customers for e-statements without requiring a visit to the Web. DigitalMailer has found that its credit union clients are able to double their signups by offering e-statements to all members.
• PDF vs. HTML: While the majority of users can open PDF files, it’s still more time-consuming, and in our experience PDF files are more likely to crash the PC. If you can afford it, HTML is desirable.
• Attached statement vs. notification with link: This is a difficult decision. You want to avoid sending attachments whenever possible. Attachments increase tech support and other costs. On the other hand, email notifications require action on the part of the user and may not be perceived as a valid paper statement substitute, thus reducing your ability to eliminate paper. You can mitigate this problem by offering a lengthy statement archive and reminders before you pull statements off the archives.
• Frequency: Will you send e-statements daily, weekly, monthly, quarterly, or annually? Will each statement contain only the transactions since the last statement, or will it be cumulative? Or will you offer both types, for example, daily statement of new transactions with a weekly/monthly summary? When possible, let the user decide. You might consider charging a modest fee for more frequent statements combined with alerts.
• Password protection: If you send statements as attachments, you must deal with this issue. It’s possible to password-protect the attachments, but it will increase your costs and make it harder for the user. If you decide against password protection, you must ensure that account numbers are masked or truncated in the e-statement. You must also educate users on safeguards to ensure the privacy of their in-box.
• Marketing messages/targeted banners: Once you turn off the paper, or make it redundant with e-statements, you will need electronic marketing tactics to maintain a positive business case. There are no common industry practices at this point, but we recommend beginning with a low-key approach. Again, you don’t want to scare away your early adopters with banner ads for cheap watches and ginzu knife sets.
• Check image integration: E-statements and online check images are great complements to each other. Five years from now, every major financial institution will offer both.
• E-statement forwarding: If you send attached statements without password protection, they will be easy to forward to others. This can be a benefit, but it also increases the risk that crooks or vandals will post customer statements on the Web for all to see. Assuming you don’t show full account numbers, names, or addresses, the security risk is minimal. Southwest Bank of Texas www.swbanktx.com  is even making statement forwarding into a profit center, charging $1.50 per forward. Ref: https://www.swbanktx.com/
  Personal_Banking/_e-statements.html
• Multiple email addresses: Will you allow
  e-statements to be sent to multiple email addresses?  Many banks allow up to three email addresses. That’s a nice customer service, but make sure you authenticate all the email addresses (and subsequent changes) by requiring confirmation of the change via a message to the original email address.
• Statement archive size: In researching this report, we saw archives ranging from 3 months to 2 years.* If you are serious about eliminating paper statements, you’ll need to measure archive length in years not months. We consider 12 months the minimum today, but that will increase in the future. We expect financial institutions to eventually offer lifetime archive options, possibly with annual fees for the older records. For instance, Zion’s Z-Vault costs $3+/month for indefinite storage of statements and other documents. A side benefit: massive statement archives provide yet another reason for your customers to stay with you.

*NetStock’s Sharebuilder offers lifetime archives, but most of their customers were added in 2001 or later.

• Bounced emails: You will need to keep on top of bounced emails with procedures to resend after a certain amount of time and to contact your customer if messages continue to bounce. Much of this work can be programmed into the system, but you’ll need human involvement for extreme cases.
• Change of email address: Email address changes need to be handled with the same level of security as postal mail address changes. And since they are far more frequent, you’ll want to automate the process as much as possible.
• Password changes: If e-statements are sent as password-protected attachments, you’ll need support staff to handle password-change requests.
• Electronic statement turnoff/vacation mode: You will want to make it easy for users to turn off electronic statements when they are away for extended periods. Citibank provides this option with its alert program (screenshot below).

Citibank allows users to turn alerts off and on with a radio button on the top of the screen.

• Tech support: All electronic messaging programs will require some level of additional tech support, more if you send attachments.

The inbox is a key to serving online customers profitably. It’s where your customers will be reminded to pay bills or bump up credit lines. Urgent emails to home and work will notify them when balances have dropped perilously low or if someone in Timbuktu has tried to use their debit card number.

However, the inbox is also the epicenter of a fierce war between legitimate marketers, those with permission to communicate, and hucksters of all shapes and sizes. We believe that tools to control inbox clutter and spam will eventually win out, but it’s going to get worse before it gets better.

Even though more than 500 billion marketing messages will clutter U.S. inboxes in 2003 , financial institutions shouldn’t be discouraged about expanding their own electronic messaging programs.  While users are increasingly skeptical about email pitches, by a 3-to-1 margin they prefer it over postal mail for receiving marketing messages.* Despite spotty service standards by merchants, email is now the preferred way to communicate with customer service, favored by 57% of users, up 7 points from 50% last year.

In researching this report we looked at the messaging programs of the 47 largest North American financial institutions as measured by registered online users. While several banks, including Bank One, Citibank, Charter One, and Zions, have embarked on aggressive outbound messaging programs, most are still on the sidelines with programs on the planning board for 2003 or 2004. On the
e-statement front, credit unions are more active with hundreds already in production and more coming online every month. 

This report covers four major types of financial e-messaging:

• Alerts/confirmations: Account-specific activity or balances
• E-statements: Statements or statement notifications
• Service messages/alerts: Primary goal is to inform (non-sales)
• Marketing messages/email lists: Primary goal is to sell

Table 1

U.S. Email Marketing Forecast

billions of messages, billions of dollars

Source: Forrester, 8/01 as cited in eMarketer’s Email Marketing Report, 8/02              CAGR = compounded annual growth rate

Table 2

U.S. Financial E-statement¹ Forecast

millions of messages

Source: Online Banking Report, 1/03        HH = household       CAGR = compounded annual growth rate

(1)       E-statement defined as any periodic statement of a bank, loan, or credit card account delivered to cardholders; the statement can be delivered in the message, attached to the message, or through a unique link to a stored copy of the statement (excludes simple notification message, e.g., you have a new statement, log in to your account at www.yourbank.com/login to view)

(2)       Number of statements received per household that subscribes to any financial e-statement

(3)       Col 1 x Col 2

(4)     Col 1 x Col 2 x 12

Table 3

U.S. Financial E-messaging¹ Forecast

millions of messages

Source: Online Banking Report, 1/03        HH = household

Notes: (1) E-statement defined as any periodic statement of a bank, loan, or credit card account delivered to cardholders; the statement can be delivered in the message, attached to the message, or through a unique link to a stored copy of the statement (excludes simple notification message, e.g., you have a new statement, log in to your account at www.yourbank.com/login to view)

(2) Number of statements received per household that subscribes to any financial e-statement; (3) Col 1 x Col 2; (4) Col 1 x Col 2 x 12

Table 4

U.S. Financial E-statement/E-message Combined¹ Forecast

millions of messages

Source: Online Banking Report, 1/03        HH = household

Note: (1) Number of e-statements and e-message received per household; (2) Col 1 x Col 2; (3) Col 1 x Col 2 x 12