These days, most major banks and credit unions do a pretty good job of exposing their various products and services to website visitors. But when it comes to actually moving visitors through the sales process, it's a mixed bag. The best have account selection tools, online applications (see note 1), readily available help, good benefits-oriented copy, and so on.

But you still won't mistake banking sites for a retailer. Most banks still assume that visitors are already familiar with their brand and are predisposed to buy. While that thinking works fine with walk-in traffic to bank branches, on the Web it's a different environment, with near-infinite choice.

You need to quickly impress visitors, then provide incentives to get them to take action. I always go back to the AIDA framework from Marketing 101: Attention, Interest, Desire, Action. Many financial sites are effective only for consumers already ready to take action. They are missing crucial financial AID (sorry for the weak effort at banking humor).

HSBC diverts customers to a lower-cost checking account
However, there are many exceptions. For example, HSBC's U.S. website. The site really sells. There are dozens of little things they do right, and a few that could be improved, but here's something I've not seen before.

When looking at checking account options, I clicked on the Basic Banking package. Instead of telling me about the account, I was greeted with a popup, on top of the grayed-out screen, explaining how I could save the $3 per month charge by choosing Choice Checking (see screenshots below).

I never thought I'd see a major bank, or large retailer for that matter, trying to push me into a lower-cost option (see caveat below). But it makes a ton of sense. HSBC knows that most website visitors are expecting a no-monthly-fee checking account. So why not direct them that way instead of just hoping they find it before heading off to ING Direct or other online options?

But I wonder how many visitors are happy with this recommendation? Choice Checking is only conditionally free (which is disclosed in the popup). The account has a direct-deposit or minimum balance requirement to avoid the $8 monthly fee. Customers unable to muster those hurdles would be better off with the account they were originally looking at, Basic Checking. And, many visitors, especially outside the branch footprint (note 2), might prefer the Online Payments Account from HSBC Direct.  

Only HSBC knows whether the end results are positive, but it's a great marketing technique regardless. 

HSBC Basic Banking landing page (8 Dec. 2009)

Landing page for "lower cost" option
Note: It's only free if you have direct deposit or maintain a $1500 combined balance (highlights below are mine).

Notes:
1. For more information on the online sales process, see Online Banking Report: Online Account Opening.
2. We have several HSBC branches in the Seattle area, so the results of this cross-sales experience could have been different if I'd been searching from a different IP address. It's possible they had a cookie on me from present visits as well.

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.

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

Assuming typical high-yield balance levels of $8000 to $10,000 per account (our estimate), the bank has attracted more than $3 billion in deposits. The bank has marketed its 5%+ APR account heavily, so it's not likely that the new business is making much of a profit contribution yet. 

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

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

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

Notes:

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

HSBC <us.hsbc.com> is offering new Smart Idea checking customers a free night at participating Marriott hotels, and are even tossing in breakfast for two. The only major requirement, as outlined in the relatively scant fine print (click on continuation link at the bottom of this article), is a direct-deposit relationship or $3,000 deposited by the end of September. The screenshot right shows the offer on the bank's homepage (click to enlarge).

Here's the landing page for the offer (first click off the homepage):

Analysis
This is a good offer because the perceived value of $200+ is likely far less than what HSBC is paying for it, which we estimate is considerably less than $100 due to the exposure Marriott receives. While it may not appeal to the stay-at-home crowd, they are not the target market for HSBC's premium checking account.

We also like the alternative to dropping $3 grand in the account in lieu of direct deposit. That appeals to small business owners and the self-employed who often are ineligible to participate in many bank premium offers  that require direct deposit. However, the bank should work with the single-deposit customers to get some electronic hooks into the account as soon as possible, either electronic bill payments, pre-authorized debits, or an integrated credit line with automatic payments from checking.

--JB

Notes:

Fine print for HSBC's offer:
* Minimum balance to avoid monthly maintenance fee applies if direct deposit ceases. To receive the Marriott award, customers must open an Interest Checking account by 9/30/06 and either set up direct deposit or deposit at least $3,000 by 10/31/06. Interest Checking Account has 0.15% Annual Percentage Yield (APY), which is accurate as of 8/1/06 on balances of $5 or more. APY is variable and subject to change after opening. Charges and fees may reduce earnings. HSBC reserves the right to charge your Interest Checking account an amount equal to the bonus if your account does not remain active for at least 180 days. Hotel redemption forms will be sent to qualifying customers by 12/31/06. Hotel award includes accommodations for a one (1) night stay, including breakfast for two and room tax, at participating Marriott properties in North, South and Central America, Hawaii and the Caribbean, subject to availability. Breakfast not included at SpringHill Suites and TownePlace Suites properties. Hotel reservations must be booked and used by 1/1/08. Limit of one hotel award per customer. Cost of gift will be reported on IRS Form 1099.

** The Introductory APR does not apply to cash advances. After the Introductory Period or if during the first 12 billing cycles of your Account, whichever is earlier, your Minimum Payment (or any greater amount) is late or you exceed your credit limit twice, the Introductory APR will increase to the Customary APR. The variable Customary APR is 11.99%, 15.99% or 18.99% (as of 8/1/06), depending upon your creditworthiness. There is no balance transfer fee for balance transfers that post to your Account within 90 days of your Account opening; otherwise a 3% ($5 minimum, $50 maximum) balance transfer fee will apply, unless otherwise disclosed. We apply payments to lower APR balances before higher APR balances. We have the right to change your APRs, fees, and other terms at any time, for any reason including, but not limited to, any change in your credit history, credit obligations, Account performance, use of your credit lines with us or any creditor, or our financial return. Any changes will be in accordance with your Cardmember Agreement and applicable law.

In an effort to boost awareness of its 4.5% e-savings account (see NetBanker March 29), Citibank made the unusual decision to reveal its 5-year forecast for industry-wide sales of online savings accounts. In today's New York Times, Citibank.com director Catherine Palmieri made the following market size estimates:

$250 billion in 2006
$600 billion in 2010

To put the numbers in perspective, the 2006 estimate is approximately four times the total deposits of the two biggest direct banks, ING Direct and E*Trade. And it's about 4% of the total U.S. deposit market of $6 trillion.

Assuming Citibank is right and the online savings market grows at a compounded rate of 25% per year, it will represent 10% of today's total deposits or 8.5% of the total $7 trillion in total deposits 2010, assuming a 3% annual growth rate.

The article also said that HSBC Direct is on track to have 250,000 accounts by the end of this year.

Googling "online savings accounts" from a Seattle IP address today found Citibank in the number seven position. Here were the top advertisers (see inset above for closeup):

1. HSBC Direct
2. Emigrant Direct
3. Capital One
4. American Express
5. E*Trade
6. Alaska USA Credit Union (Seattle local ad)
7. Citibank Direct

--JB