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The Billion-Dollar Fintech Club (private companies)

By Jim Bruene on January 23, 2014 6:09 PM | Comments

image

With Stripe raising $80 million at a $1.75 billion valuation yesterday, I was wondering how many other private fintech companies have reached that milestone recently. It's not as many as I had hoped, but perhaps I'm missing a few. If so, please tweet @netbanker or email me since blog comments are broken (new system coming in Q1, really). 

Pretty sure:

  • Square valued at $5 billion this month (Techcrunch)
  • Lending Club valued at $2.3 bil in late 2013 (Bloomberg)
  • Wonga has been discussed as a billion-plus company for several years and has annual profit in excess of $100 million (in Sep 2013 Wonga reportedly turned down a $1.6+ billion bid  Sky.com post)
  • Stripe valued at $1.75 billion as of yesterday (Reuters)

Likely:

  • Klarna the Swedish ecommerce giant has raised $250 mil and has a $200 million annual revenue run rate; it recently made a 9-figure acquisition of Sofort (Techcrunch, 18 Dec 2013)

On their way (based on recent fundings):

  • Cardlytics has raised more $100 million and reported a $200 million annual run rate in Q4 2013
  • Credit Karma raised a $30-million series B in April to further its ad-driven free credit report business, which is one of the busiest financial websites and most popular iPhone app (other than the big retail banks) (Finovate post)
  • On Deck Capital raised $42 million in early 2013, bringing the total to $102 million, and projected $80 to $100 million in revenues for 2013 (Venturewire)
  • Paydiant has raised more than $30 million and is powering payments via Subway's mobile app; looking at Stripe's $1.7 bil valuation, it seems plausible that Paydiant is closing in on the billion mark
  • Ping Identity -- it can be hard to evaluate security plays because there often isn't much transparency into their traction, but based on Ping's $78 mil raised, including $44 mil in July ($15 mil of that was debt), they must be doing something very right (Finovate post)
  • Prosper had one-quarter of Lending Club's loan-origination volume in December, making them potentially worth more than $500 million based on the Lending Club $2+ bil valuation
  • Sofi, with $300 million lent to prestige college grads, it could be the Lending Club of high-income 20- and 30-somethings

Made it (recently went public/acquired):

  • Xero, the New Zealand-based cloud accounting company, is valued at US$4 bil on NZ market
  • Qiwi PLC, the Russian payment giant, went public in May 2013 and is currently valued at $2 bil (Nasdaq)
  • Lifelock went public in Oct 2012 and is currently worth $1.8 billion, it recently acquired Lemon to bolster its mobile identity-protection services
  • Trusteer, the online security company, sold to IBM for $1 billion in 2013
  • Climate Corp (formerly Weatherbill), a weather insurance play, sold to Monsanto for $930 mil in Oct 2013 after raising $107 mil (Forbes)
  • Braintree sold to PayPal for $800 million, $200 mil shy of the "club," but not too shabby

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Picture credit: Fakemillion.com

Comments

New OBR Published: Digital Banking Forecast Through 2023

By Jim Bruene on January 15, 2014 5:29 PM | Comments

image Alright digital banking fans (note 1), it's that time of year again for our annual look-back at the previous year, along with a fearless forecast for the rest of the decade and beyond.  

The report, Digital Banking Forecast: 2014 to 2023, includes our take on future U.S. household penetration levels of online banking, mobile banking and billpay. While online banking has been relatively flat, with low-single-digit growth, mobile has exploded, expanding ten-fold in the past 5 years and now reaching about one-third of U.S. households. We are four or five years away from the tipping point where more households bank via smartphone than by desktop.

It also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing almost eight-fold in the past two years, we expect continued strong growth of 30% compounded annual through 2023. And with the expected blockbuster IPO of Lending Club (note 2), the area will receive a LOT of attention in the press this year.

Finally, we update our list of top-10 project priorities for 2014.

__________________________________________________________________

Top developments of 2013
__________________________________________________________

The report includes a summary of the top-10 developments during the year (in alphabetic order):

  • Bitcoin proves there is demand for a global virtual liquid asset
  • Coin's programmable credit card is a viral hit
  • Crowdfund investing, both debt and equity, gains serious traction globally
  • Mobile-first banks such as GoBank, Moven and Numbrs arrive on the scene
  • Mobile login gets simplified at Bank of the West, Capital One, GoBank and others
  • P2P lending moves beyond a niche as Lending Club originates $2 billion
  • Photo billpay launches at US Bank and First Financial
  • Regions Bank adds time-based fees to remote mobile deposit
  • Square and Google enable true email-based peer-to-peer payments
  • Yodlee shows the power of mobile in financial collaboration with Tandem

__________________________________________________________________

New entrants into the OBR Hall of Fame
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). A total of 50 achievements are listed from 51 companies:

  • 18 banks
  • 5 credit unions
  • 11 non-bank financial services companies
  • 17 fintech companies

Two new entrants were added this year:

  • Capital One's non-alphanumeric mobile login, SureSwipe
  • Yodlee's mobile financial collaboration tool, Tandem 

__________________________________________________________________

About the report
__________________________________________________________________

Digital Banking (Online/Mobile) Forecast (link)
The next 10 years: 2014 through 2023

Author: Jim Bruene, Editor & Founder

Published: 9 Jan 2014

Length: 36 pages, 29 tables, 13,500 words

Cost: No extra charge to OBR subscribers, US$495 for others here

__________________________________________________________________

Report excerpts:

Left: GoBank and Moven set the mobile bar high
Right: 10-year P2P lending forecast

image        image

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

Notes:
1. Can we agree that "digital banking" equals online and/or mobile banking?
2. Lending Club could be the biggest fintech startup IPO of all time.

Comments

Metrics: Mobile Traffic at Six Large Prepaid Card Sites

By Jim Bruene on June 20, 2013 9:39 PM | Comments

image In March, we reported on the mobile traffic at the 10 larget U.S. banks. Across all ten banks, an average of 20% of users were mobile-only.

Today, comScore provided similar numbers (note 1) for major prepaid card issuers in Q1. And the mobile lift was even more dramatic. Across the six major issuers, the incremental traffic through mobile browsers (not including native apps) ranged from 23% at WalmartMoneyCard.com to 80% at Netspend. The weighted average lift across all six was 43%.

Bottom line: While we need conversion rates to gauge channel profitability, it's clear that mobile users are a large potential market for prepaid issuers.

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

Table: U.S. desktop and mobile browser traffic at six large U.S. prepaid card sites
millions of unique visitors, age 18+ (Feb 2013)

Q1 2013 Total Desktop Mobile* Mobile Only Mobile Incremental**
netSpend 1.4 mil 790,000 670,000 630,000 80%
WalmartMoneyCard 1.1 mil 930,000 230,000 210,000 23%
Rush Card 980,000 710,000 290,000 270,000 38%
Green Dot 820,000 560,000 270,000 260,000 46%
Account Now 600,000 450,000 150,000 140,000 31%
Amex Bluebird* 370,000 240,000 130,000 130,000 54%
  Total*** 5.3 mil 3.7 mil 1.7 mil 1.6 mil 43%

Source: comScore, monthly unique visitors in Q1 2013 (methodology)
*Includes traffic only from mobile browser, except American Express BlueBird, which also includes native app
**Mobile-only divided by desktop base
***Includes some overlap of users visiting multiple prepaid issuers

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

Note:
1. The banking numbers in March included native app traffic. The prepaid card traffic estimates exclude any native app traffic, except for American Express Bluebird which has both native and mobile browser traffic.

Comments

New Online Banking Report Published: Online & Mobile Forecast Through 2022

By Jim Bruene on January 8, 2013 4:15 PM | Comments

imageOur latest research is now available: Online Banking Report 2013 to 2022 Forecast. The report includes our latest 10-year online banking, mobile banking and bill-pay forecast for the U.S. market. Online banking remains relatively flat, growing less than 5%, while mobile expanded by 40% last year (see note 1).

Based on recent mobile growth, we now project that in 2019, mobile account access will equal online account access in the United States (based on household penetration of each service).

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing almost fifteen-fold in the past three years (2012 vs. 2009), we expect continued strong growth of nearly 30% compounded annually through 2022.

Finally, we took one last look at 2012 and documented the top-10 innovations or trends of the year (see below). We also updated our top-10 project priorities for 2013.

__________________________________________________________________

Top innovations & trends of 2012
__________________________________________________________

The report includes a summary of the top-10 innovations or trends during the past year (in alphabetic order):

  • Alt-biz lending disrupts commercial lending for the smaller business
  • Balance forecasting launched by Simple and Key Bank
  • Banking websites get “simple” makeovers
  • Digital (cloud) wallets find a value proposition, best-case routing
  • iPads appear at the POS and new accounts desk
  • Mobile deposit goes mainstream
  • P2P lending pops!
  • Pay As You Go auto insurance launched by MetroMile
  • Prepaid cards gain as “basic checking”
  • Virtual gift cards get a boost as Square launches 200,000 in a single day

__________________________________________________________________

New entrants to the OBR Hall of Fame
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). A total of 48 achievements are listed from 50 companies:

  • 17 banks
  • 5 credit unions
  • 11 non-bank financial services companies
  • 17 fintech companies

The class of 2012 included two new entrants:

  • City Bank of Texas's mobile on/off switch for debit cards (powered by Malauzai)
  • Simple and Key Bank both launched real-time balance forecast tools 

__________________________________________________________________

About the report
__________________________________________________________________

Online & Mobile Banking Forecast (link)
The next 10 years: 2013 through 2022

Author: Jim Bruene, Editor & Founder

Published: 7 Jan 2013

Length: 32 pages, 26 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

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

Report excerpt:

Lending Club is the biggest fintech startup success of 2012 
The company originated nearly three-quarter billion dollars in new loans in 2012 and surpassed $1 billion in cumulative originations in November.

 image

Comments

Numbers: Sunny Outlook for Mobile Banking (U.S.)

By Jim Bruene on August 27, 2012 10:54 AM | Comments

image ComScore's latest mobile usage numbers provide useful context as you head in to the 2013 business planning cycle. With 42 million monthly smartphone users, mobile banking penetration (38%) is similar to other specialized information services such as sports (39%), news (49%), and movie info (30%).

Granted, banking still trails the gold standard of info services, the weather button, but it's gaining ground.

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

Table: Information services accessed by U.S. mobile users
2012, Q2 monthly average

  Smartphone % Using All Mobile % Using
Total audience 110 mil 100% 230 mil 100%
Weather 75 mil 67% 90 mil 38%
Facebook, Twitter* 71 mil 64% 86 mil 37%
Search 67 mil 60% 80 mil 34%
Map 59 mil 53% 68 mil 29%
News 54 mil 49% 64 mil 27%
Sports 43 mil 39% 51 mil 22%
Bank account 42 mil 38% 49 mil 21%
Entertainment news 42 mil 38% 51 mil 22%
Movie info 34 mil 30% 40 mil 17%

Source: ComScore MobileLens as cited in Advertising Age, 20 Aug 2012; 3-month average ending in June 2012; usage counted is the user accessed info in the category at least once in past 30 days; *any social networking site; percentages may be off by 1% due to rounding of the numbers to two significant digits
Comments

The 43 Financial Sites With the Most Unique U.S. Visitors in January per Compete

By Jim Bruene on February 14, 2011 5:47 PM | Comments

image Every month, Compete publishes a list of the 1,000 websites with the most U.S. monthly unique visitors. In January 2011, 43 were financial sites (banking, payments, brokerages, cards, credit reports, lending, or personal finance). Of the 43, 14 were banks (see note 1).

For a little context, Google topped the list with 145 million. The largest banks were similar to Apple (34 mil), Twitter (28 mil), Flickr (21 mil), or Yelp (12 mil).

Company Traffic Type
1. paypal.com 30 mil    Payments
2. chase.com 25 Bank (#1)
3. bankofamerica.com 24 Bank (#2)
4. intuit.com 20 Personal finance
5. wellsfargo.com 16 Bank (#3)
6. capitalone.com 13 Bank (#4)
7. citibank.com 12 Bank (#5)
8. hrblock.com 12 Tax
9. lowermybills.com 8.5 Personal finance
10. americanexpress.com 8.4 Cards
11. taxactonline.com 7.7 Tax
12. discovercard.com 7.3 Cards
13. taxact.com 7.3 Tax
14. wachovia.com 6.2 Bank (#6)
15. fidelity.com 5.6 Investments
16. usbank.com 5.4 Bank (#7)
17. hsbccreditcard.com 4.9 Bank (#8))
18. netteller.com 4.5 Banking services (Jack Henry)
19. pnc.com 3.9 Bank (#9)
20. bankrate.com 3.9 Personal finance
21. usaa.com 3.8 Bank (#10)
22. progressive.com 3.8 Insurance
23. creditreport.com 3.4 Credit reports
24. allstate.com 3.4 Insurance
25. freescore360.com 3.2 Credit reports
26. freecreditscore.com 3.2 Credit reports
27. turbotax.com 3.2 Tax
28. orchardbank.com 2.8 Credit cards
29. ingdirect.com 2.7 Bank (#11)
30. hrsaccount.com 2.7 Credit cards (HSBC)
31. salliemae.com 2.7 Student loans
32. statefarm.com 2.6 Insurance
33. mycheckfree.com 2.6 Payments
34. suntrust.com 2.4 Bank (#12)
35. vanguard.com 2.3 Investments
36. speedpay.com 2.2 Payments (Western Union)
37. regions.com 2.2 Bank (#13)
38. tdbank.com 2.1 Bank (#14)
39. sharebuilder.com 2.0 Investments
40. bbt.com 2.0 Bank (#15)
41. gemoney.com 2.0 Lending
42. annualcreditreport.com 2.0 Credit reports
43. bbandt.com 1.9 Bank (#16)

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Note:
1. There are 16 bank URLs in the top 1,000, but wachovia.com is part of Wells Fargo. And bbt.com and bbandt.com are both BB&T Bank.

Comments

New Online Banking Report Available: Online & Mobile Banking Forecast through 2020

By Jim Bruene on January 24, 2011 7:46 PM | Comments

image The latest Online Banking Report: 2011 to 2020 Online & Mobile Banking Forecast is now available. It was mailed over the weekend to all OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online & mobile banking and bill-pay forecast. While our reading of the tea leaves is unlikely to be perfect, it seems clear that the demand for online banking in the United States has reached a plateau (note 1); in fact, we are likely within a year or two of online banking penetration peaking and slowly heading down.  

How could that be? Mobile of course. In fact, through the end of 2020, we project an increase of 40 to 45 million U.S. households using mobile banking, to a total of nearly 60 million. During the same period, online banking penetration is actually expected to drop by a few million households.

If we are right, sometime near the end of the decade mobile banking will surpass online (note 2), although by then, the two will look pretty similar. 

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After more than doubling in 2010, we expect continued strong growth of around 40% compounded annually through 2020.

__________________________________________________________________

Top innovations & trends of 2010
__________________________________________________________

The report includes a summary of the top ten innovations or trends during the past year (in alphabetic order):

  • In-statement merchant rewards goes from zero to 100 financial institutions
  • Loan preapproval wizards reduce uncertainty for applicants
  • Location-aware mobile services for banking debut
  • Mobile banking goes mainstream
  • Mobile capture removes the paper from commerce
  • Mobile payments gains real momentum
  • Online personal financial management (outside of the bank) struggles
  • P2P lending solidifies its niche
  • Social media proves it can have real impact in financial promotions
  • Transaction streaming and sharing gain a foothold

__________________________________________________________________

New entrants on the list of the top 43 innovations of all time
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). There are a total of 43 products listed from 42 unique companies:

  • 15 banks
  • 5 credit unions
  • 9 non-bank financial services companies
  • 13 technology companies

The class of 2010, which was unusual for being all technology companies rather than financial institutions (note 3):

  • Blippy for its automated transaction-sharing network
  • Cardlytics for its merchant-funded in-statement online rewards service
  • Finsphere for its location-aware fraud-targeting service, PinPoint
  • Mitek Systems for its mobile photo bill pay

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

Notes:
1. The penetration of online banking into U.S. households is relatively flat going forward. However, because each households accesses a larger number of financial accounts, growth at individual financial institutions is still growing on average.
2. Forecast is for the United States. Mobile has already surpassed all types of banking in some developing countries.
3. Perhaps this can be explained by the necessary focus of financial institutions on getting through the global banking crisis beginning in 2008.

Comments

Top 25 Financial Institutions Ranked by U.S. Web Traffic

By Jim Bruene on September 28, 2010 10:46 PM | Comments (1)

image Ever since Compete came along with its free Web traffic estimates, my work life has been much improved. Now, every time I review a startup or financial company, I check out their website traffic from Compete's free service to give me a sense of how big the company is and how fast they are growing.

But I'd also always coveted the Pro version, which unlocks a bunch more detail on each website, including two years of historical traffic data. So I took the plunge today and upgraded to Pro.

One of the first things I did with my newfound data trove was to highlight the financial institutions, insurance, and investment companies on the list of the 1,000 busiest websites (based on U.S. traffic). There were 29 FI websites, representing 26 unique companies.

PayPal was the top financial company with 30 million unique visitors, making it the 25th most visited site on the Internet. Chase was the largest commercial bank, just 2 million higher than Bank of America.

FI Rank All Rank Name Unique U.S. Visitors
(Aug. 2010)
 
1 25   PayPal 30 mil
2 35   Chase 25 mil
3 36   Bank of America 23 mil
4 57   Wells Fargo 14 mil
5 71   Citibank 13 mil
6 81   Capital One 12 mil
7 146   American Express 7.8 mil
8 154   Discover Card 7.6 mil
9 187   Wachovia (Wells) 6.7 mil
10 243   Citicards (Citi) 5.4 mil
11 252   Geico 5.3 mil
12 256   US Bank 5.2 mil
13 279   HSBC Credit Card 4.9 mil
15 298   Fidelity 4.7 mil
15 329   Netteller (Jack Henry) 4.3 mil
16 353   PNC Bank 4.0 mil
17 387   Progressive 3.8 mil
18 402   USAA  3.6 mil
19 601   ING Direct 2.7 mil
20 625   Orchard Bank 2.6 mil
21 640   HSRAccount (HSBC) 2.5 mil
22 693   State Farm 2.4 mil
23 737   SunTrust 2.2 mil
24 757   AllState  2.2 mil
25 791   BB&T  2.1 mil
26 816   TD Bank 2.0 mil
27 853   Vanguard 2.0 mil
28 854   Regions Bank 2.0 mil
29 925   Fifth Third Bank 1.8 mil
Source: Compete, 27 Sep. 2010
FI Rank = Rank among financial institutions (includes card issuers and investment companies)
All Rank = Rank among all websites
Comments (1)

The 49% Text Banking Gap

By Jim Bruene on September 7, 2010 2:23 PM | Comments (2)

image Quick. What comes to mind when you envision mobile banking? I'm guessing most of you pictured a mobile website or shiny new app running on a recent iPhone, Blackberry, Android or other smartphone.

And if mobile banking was used only by techies, that would be about right. But banking is used by just about everyone, and everyone still doesn't have a smartphone and Internet data plan.

According to the latest study out of Pew Internet (note 1), 82% of U.S. adults have a cell phone (and another 6% of the total live in a household where someone else owns one). And 72% of those cell phone owners use text messaging while only 38% access the Internet through their phone.

And only 60% of the mobile-Internet users, or 23% of all cell phone users, are frequent users, accessing the Internet 3 or more times per week (note 2). 

So the text-banking gap is 49% (72 less 23) or half of all cell phone users. Those are the people that use text messaging but do not regularly access the Internet through their phones. Another way to think of it, the non-Internet-using segment is more than twice the size of the mobile-Internet-using group. Or more simply, text users outnumber (frequent) mobile Internet users 3 to 1. 

Bottom line: Don't overlook the mainstream text-message group for both alerts and balance inquiries. And make sure your marketing and educational material speaks to the sizable segment that could care less about your new iPhone app and just wants to know how to txt for their bal. 

Notes
1. Adult data compiled via telephone interviews in May 2010. N = 2,252. Teen data is from a year ago in a telephone survey of 800 teens (age 12-17) fielded June through Sept. 2009.
image2. In comparison, text-message usage is crazy high (see eMarketer graph of the Pew Internet data inset). According to the Pew data, adult (18+) text-message users send/receive almost 40 text messages a day. Of course, that's nothing compared to the thumb-weary, under-18 crowd who send/receive an average of 110 messages per day. Side note: The wording on the question asks for the number of messages sent AND received, so one exchange, text out and reply back, should only count as one message. But I'm guessing respondents are thinking of this more as "sent OR received" so that each exchange counts as two messages. I also suspect the kids are over-estimating their usage quite a bit, wanting to wow the researchers with their uber-connectedness. But the bottom line is the same: Teens have embraced texting, and adults have caught the bug as well.   
3. For more info on mobile banking, see our mobile banking series in Online Banking Report.

Comments (2)

Mint.com Traffic Soars Under Intuit Ownership

By Jim Bruene on February 17, 2010 8:53 AM | Comments (4)

image I don't know if it has anything to do with the publicity Mint received in recent months following its acquisition by Intuit or the promotional links from Quicken's website, but the online PFM juggernaut just blew the roof off its monthly traffic. According to Compete, in January, Mint had 1.7 million unique visitors, 600,000 more than a year earlier.

To provide a little context, not counting the Dec. to April tax-time traffic spike at Intuit, Mint's traffic is now slightly HIGHER than that of its parent company (see chart #1 below). That gives you a little understanding of why Intuit coughed up $170 million for the startup.

Another way to look at it: Mint now has as much traffic as the tenth largest U.S. retail bank, BB&T (see chart #2).

The interesting question for 2010: Now that Mint is part of the establishment, what startup will rise up to challenge it? Or will the banks, back on a path to profitability, fill the need going forward? 

Chart 1: Mint's traffic is now similar to Intuit's non-tax-time traffic

image
Source: Compete (link)

Chart 2: Mint now has about the same number of visitors as the tenth largest U.S. retail bank, BB&T
Note: Mint is blue line below

image 
Source: Compete (link)

Note: For more information on the PFM space, see our Online Banking Report on Personal Finance Features.

Comments (4)

Numbers in the News: P2P Payments Usage at First General Credit Union

By Jim Bruene on February 11, 2010 7:40 AM | Comments (2)

image It's always difficult to gauge actual consumer demand for new services. Traditional market research, while providing some broad intent data (e.g., "yeah, that sounds like something I might buy"), doesn't really do a very good job in telling you whether real customers will use the service. The problem is that in the real world, customers have real concerns about new products and most are unwilling to spend very much time learning about them.

So it's always great to find financial institutions willing to share usage data on their online or mobile services. This week, First General Credit Union wins our undying gratitude (and a free subscription to Netbanker) by revealing its person-to-person payments numbers in the latest issue of Credit Union Journal

The CU uses iPay Technologies P2P payment service which is provided at no-cost to its deluxe bill-payment clients. Keep in mind, this is a small $44 million credit union serving 5,000 members, so the raw numbers aren't large but the percentages are interesting:

Number of online banking users: 500 (10% of members)
Number of bill-pay users: 200 (40% of online banking users)
Number of P2P payment users:    3 (1.5% of bill-pay users,
       0.6% of online banking users
)

Analysis: The credit union says it hasn't promoted the P2P feature, which is offered free of charge. It's not even mentioned on its website, except on slide 22 of its online demo. So this isn't a representative sample for a financial institution looking to drive usage to the product. However, a 2% penetration (of online/mobile customers) is along the lines of what we expect this year nationwide. Longer-term, we expect usage to grow at least 10-fold from that level (see note below).

Note: For more information on P2P payments including a 15-year usage forecast, see our recent Online Banking Report: Making the Case for P2P Payments (published Dec. 2009).

Comments (2)

New Online Banking Report Available: Ten-Year Online & Mobile Banking Forecast and 2009 Recap

By Jim Bruene on January 22, 2010 5:31 PM | Comments (1)

image The latest Online Banking Report: 2010 to 2019 Online & Mobile Banking Forecast is now available. It will mail next week to OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online banking and bill pay forecast. For the third year in a row, the forecast was bumped up a few percentage points to reflect a more robust outlook for adoption, thanks primarily to mobile banking. For example, we now project 73 million U.S. households banking and/or paying bills by online or via mobile in 2013 (note 1). 

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After experiencing a 30% decline in 2009, we expect healthy growth next year with a record amount of loan originations.   

Top ten innovations & trends of 2009 and of the decade
The report includes a summary of the top ten innovations of the past year, including the surge in mobile banking usage, the amazing tools coming out of the iTunes App Store, and of course, the surprising adoption of Twitter, with nearly 1000 financial institutions worldwide tapping the real-time info stream (note 4). 

We also listed the top 25 innovations of the decade topped by the invention of simple online payments by PayPal ten years ago (note 2) and the advent of modern mobile banking (note 3) which appeared in the United States just three years ago at Citibank (powered by mFoundry) and BancorpSouth (powered by Firethorn).

Notes:
1. Mobile banking access is included in the overall online banking numbers, but it's also shown as a separate line item. 
2. Technically, this launched in mid-Nov. 1999, but that seems close enough to 2000 to make the all-decade list.
3. There were a number of earlier mobile efforts, including from Citibank, in the 1999 to 2001 period, but they were ahead of their time and shuttered in 2001/2002 for lack of interest. The "modern era" began in 2007 in the United States.
4. Follow them all on Twitter via The Financial Brand's financial institution lists.

Comments (1)

Intuit's New Quicken Site Sprouts Some Mint

By Jim Bruene on December 10, 2009 10:30 AM | Comments

image If anyone still wondered how serious Intuit is about incorporating the Mint brand into its portfolio after its $170 million acquisition, take a look at the latest version of the Quicken sales site. Mint is prominently featured (see first screenshot below), especially if you scroll one "ad spot" over (second screenshot).

I also found Mint mentioned at PayTrust, Intuit's bill management site (third screenshot). There's even a small plug on the Quicken Online login page (fourth screenshot).

However, on Mint's site the co-branding is not reciprocated. Quicken is not mentioned at all and Intuit is relegated to 8-point type at the bottom of the page (fourth screenshot).

The latest traffic figures from Compete support the theory that Intuit is de-emphasizing Quicken Online in favor of Mint. Traffic to <quicken.intuit.com> fell 50% in November to about 400,000, while Mint held steady at about 3x that, 1.2 million unique visitors.

image
Source: Compete, 10 Dec 2009 (link)

Quicken homepage on default choice, Quicken 2010 (link; 9 Dec. 2009, 11 PM)

image

Quicken homepage with Mint.com selected from scrolling choices
Note: Yellow highlight is mine

image

Intuit PayTrust homepage (link)

image

Quicken Online login page (link)

image

Mint homepage
Intuit mentioned twice at bottom of page (yellow highlight is mine). 

image 

Note: For more information on the PFM space, see our Online Banking Report on Personal Finance Features.

Comments

2009 ABA Survey Shows Online Banking is Most Frequent Delivery Channel for First Time

By Jim Bruene on September 21, 2009 6:09 PM | Comments (5)

image Some interesting data was released today from the American Bankers Association (press release). According to its annual telephone survey of 1000 U.S. consumers, online/Internet banking is now the most common banking method among U.S. consumers (note 1). 

Here are the totals (see notes 2, 3):

Question: Which banking method do you use most often?

Channel 2009 2008 Net Difference Percent Change
Online/Internet 32% 25% Up 7.5 points + 30%
Branches 28% 34% Down 6.6 (24%)
ATM 22% 28% Down 5.6 (20%)
Mail (note 3) 11% 9.1% Up 1.9 +21%
Telephone (note 3) 5.8% 4.1% Up 1.7 +41%
Mobile (note 3) 0.6% 1.0% Down 0.4 (40%)
Total 100% 100% -- --

Source: American Bankers Association, telephone survey of 1000 U.S. consumers conducted by Ipsos-Reid, on August 14-16-2009

Notes:
1. Remember, this reflects households willing to take a telephone survey but who may or may not use the Internet. If you are surprised to see online usage trailing branch usage until this year, you may be thinking of research results from other surveys of online users, who have long preferred online banking over other delivery channels.
2. Unlike the ABA release, I've eliminated all the Don't know, Unsure, and Other responses from the totals. So, the figures above represent the delivery-channel penetration of customers who named a single one from the list read to them.
3. The changes in mail, telephone and mobile seem odd. It's possible that the way the question was constructed accounts for these counter-intuitive results in the lesser-cited categories. In 2009, respondents were given two new choices: "other" and "none of these." In 2008, without those two bail-out choices, more customers chose one of the six channels read to them over the phone.  In 2008, 110 respondents out of 1000 said don't know, unsure, etc. In 2009, that number doubled to 226 respondents out of 1002.
4. Image credit: Bank of Hawaii.

Comments (5)

Bank of America Implies that Branch Network Could Shrink 10% in Next Three Years

By Jim Bruene on July 29, 2009 10:41 AM | Comments (1)

imageIn what will surely be the first in a long string of similar headlines, the top of  yesterday's Wall Street Journal Money & Investing section declared:

BofA Plans to Cut 10% of Branches

The article, which has been picked up by nearly 100 news sites in the past 24 hours, reported that Bank of America was planning on reducing the size of its 6,000-branch network. There were no details on timing or whether the bank was retreating from certain markets or was simply pruning overlapping branches broadly.

But in later interviews with bank execs, it sounded like Bank of America was merely predicting a gradual shrinkage in its branch network over the next three years, and had no firm plans for specific closures. Here's a followup quote from president Liam McGee as reported by Charlotte NPR station WFAE:

"I think <CEO Lewis> was asked a question, 'Boy, could there be x-percentage less branches in the next few years?' And he was just saying, 'Yeah, could be, and if there was it would be in magnitude of this as opposed to a much higher number.'"

McGee says the bank is going through a 3-year evaluation process that could result in fewer branches, but that no particular number is targeted. He says customers' changing habits are driving the process.

What I found more interesting in the debate were some of the numbers the bank tossed out showing the growth of it's non-branch delivery:

  • Nearly 50% of deposits are made in ATMs...up amazingly from 33% six months ago. The bank didn't say whether this was NUMBER of deposits or VALUE of deposits, but it's likely the former. Also, it's unclear if remote deposits made via scanner are included in the total. That new technology is making a significant dent in branch-based deposits at many financial institutions.
  • 2.8 million customers are now using the mobile channel which was introduced in mid-2007. That's an average of about 120,000 new customer per month. However, growth appears to have accelerated slightly this year. In early Feb, the bank said it had 2 million mobile banking customers; so in the past 5.5 month, growth has been just under 150,000 new users per month.   
  • The bank has a 60% market share in online bill payment; an amazing penetration for a bank with 12% of the country's deposits. 

Note:
1. See our Online Banking Report: The Demise of the Branch (April 2006), for more on the long-term trends in the mix of branch and alternative delivery.

Comments (1)

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

By Jim Bruene on July 3, 2009 3:16 AM | Comments (1)

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

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

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

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

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

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

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

Comments (1)

Is USAA the second largest in mobile banking?

By Jim Bruene on May 18, 2009 1:08 PM | Comments

image image Last week, USAA released astounding figures on its mobile banking usage: The 10-month-old service is already used by 11.4% -- about 800,000 -- of its 7 million members, making USAA one of the largest mobile banking providers in the country (press releasesee note 1).

The mobile platform has bagged more than 13 million logins in ten months, about 3% of its nearly 500 million annual customer contacts (note 2).

With the introduction of its own native iPhone app last week (note 3), USAA now supports the three primary methods for mobile access (see screenshot below):

Only Bank of America, with 2.6 million mobile users, has publicly revealed a larger mobile base. That makes USAA number two among known user bases. However, it is highly likely that both Chase/WaMu and Wells Fargo/Wachovia have cracked the one-million-user mark and are second and third largest. 

USAA's mobile landing page (18 May 2009)

image

Notes:
1. On a side note, USAA posts its press releases in blog format which allows visitors to comment and/or subscribe via RSS.   
2. The 3% is approximated from data in the press release: 470 million customer contacts in 2008 and 13 million mobile logins since the service was launched in summer 2008.
3. Since last fall, USAA users could access their accounts via Firethorn's multi-bank iPhone app.

Comments

Banks and Credit Unions on Twitter

By Jim Bruene on March 13, 2009 9:36 PM | Comments (19)

image If you haven't been following Twitter the last few months, you may not realize it now has almost eight million monthly unique visitors according to Compete. That's almost double the traffic it had just two months ago and a nearly a nine-fold gain from a year ago.

To put that traffic in perspective, it's more than half that of the NY Times and slightly more than banking giant Wachovia (see Compete chart below).

image

Banking activity
Financial institutions are pretty new to the micro-blogging platform. In a search today, we found 15 U.S. banks and 22 credit unions with active Twitter feeds (see notes 1, 6-8). There were also and nine international banks for a total of 46.

See the table below for the non-inclusive list ranked by number of Twitter users that follow the bank's feed (note 2). Wachovia (now owned by Wells Fargo), the only major bank that has promoted Twitter on its main website, leads with 2,000 followers (see previous post on Wachovia's foray on to Twitter).

Opportunity 
Participating in Twitter is a low-cost entry into social media that can actually help save a customer relationship or three. Compared to blogging, it is much less labor intensive. It's also less of a marketing platform given the 140-character limit in posts. But in the current environment, perhaps less truly is more. By all means, find a gung-ho Facebook devotee in your bank and let him or her get you into the Tweeting game.

Table: Banks and Credit Unions using Twitter (updated 16 March 2009)

Name Twitter URL (4) Updates Followers
1. Wachovia (Wells Fargo) /wachovia 257 2,058
2. Bank of America /bofa_help 557 1,486
3. Wells Fargo (3) /wellsfargo 4 548
4. ING Direct (6) /ingdirect 50 451
5. North Shore Bank /northshorebank 194 319
6. MSU Federal CU (7) /msufcu 180 270
7. Chase /chasebank 11 260
8. Pioneer Credit Union /pioneercu 225 251
9. 1st Mariner Bank /1stmarinerbank 140 227
10. Group Health CU /ghcu 353 219
11. GLS Bank (Germany) /glsbank 279 204
12. Brewery Credit Union /brewerycu 65 194
13. Bellco Credit Union /bellco_cu 67 192
14. Banco de Chile (Chile) /bancodechile 175 181
15. First Federal /firstfederal 89 177
16. Oklahoma Employees CU /oecu 14 148
17. CU Credit Union /mycucommunity 73 147
18. Allegiance CU (7) /allegiancecu 29 141
19. Heartland CU (7) /heartlandcu 33 125
20. Hopewell Federal CU (7) /hopewellfedcu 74 122
21. Tech CU (7) /techcu 62 115
22. Ubank (Australia, 8) /ubank 151 113
23. Banco Sabadell (Spain) /bancosabadell 2,272 111
24. FORUM Credit Union /forumtalk 19 97
25. Citibank /citi_forward 16 96
26. Fidelity Bank /fidelity_bank 11 92
27. Northeast Bank /northeast_bank 5 84
28. Banco Popular (Puerto Rico) /mi_banco 15 65
29. U.S. First Credit Union /schecking 43 61
30. Oklahoma Central CU (7) /okcentralcu 5 60
31. First Arkansas Bank /fabandt 27 59
32. SEB Bank (Germany) /seb_bank 37 59
33. 66 Fed Credit Union /66fcu 8 47
34. Telesis Credit Union /telesiscu 18 46
35. University CU (7) /universitycu 18 46
36. Nicolet Bank /nicoletbank 15 43
37. Chesapeake Bank /chesbank 8 41
38. Libra Bank (Romania) /librabank 14 38
39. KU Credit Union /kucreditunion 8 32
40. TwinStar CU (7) /twinstarcu 19 32
41. Capital Credit Union /captialcu 7 30
42. NW GA Credit Union /nwgacu 18 30
43. Banco de Guayaquil (Ecuador) /bancoguayaquil 77 28
44. COP Credit Union /copcu 7 26
45. Webster Bank /websterbank 3 20
46. Friesland Bank (Netherlands) /frieslandbank 8 10

Source: Online Banking Report, 13 March 2009 (see notes 6,7,8)

Notes:
1. To be considered active, the bank or credit union had to have set up a Twitter account, customized it with its logo, have made more than 1 update or "Tweet," and have at least 10 followers. 
2. This is not a complete list. With a few exceptions, we only looked for financial institutions with "bank" or "credit union" in their name.
3. Wells Fargo's Twitter page says it will be launching soon.
4. Twitter URL = www.twitter.com/<shown below>
5. For more on bank blogging, see our Online Banking Report on Banking 2.0
6. List and totals updated with ING Direct and First Federal on 16 March 2009
7. Searched on "CU" and found eight more credit unions on 17 March 2009. Thanks Gabriel Garcia.
8. Added NAB's Ubank from comments, unsure why it didn't show up on "bank" search

Comments (19)

Mint, Quicken Online Release Registered-User Totals

By Jim Bruene on February 20, 2009 8:26 PM | Comments (1)

mint_logoWe've regularly cited third-party estimates of website traffic to Mint and other PFMs. More often that not, we'll get a comment or email taking us to task for using such inexact and/or irrelevant data. But we believe that website traffic, even a rough approximation, is a leading indicator of success.  image

Luckily, we now have better metrics for the two online leaders. In response to what appears to be a truth-in-advertising query from Intuit's general counsel (see note 1), Mint disclosed its registered-user count (note 2), which has been growing at an average of 17% per month in Q4 2008 and so far in this year. 

As of yesterday, Mint had 934,000 users, double third quarter's end-count. That's 3,400 new registered users per day (seven days a week), almost 25,000 per week. The company should pass one million before St. Patrick's day.

While this growth in registered users is impressive, what's truly astonishing is that 70% of the registered users, 680,000 so far, have entered at least one bank or credit card username/password in order to automatically download transactions into Mint.

In response to Mint's disclosure, Quicken Online reported its 650,000 registered users, currently growing at a 45,000-per-week clip. If that continues, they'll pass one million before the April tax deadline.

It looks like there's quite a battle shaping up between the two leading online personal finance specialists. And don't overlook the banks. Both Bank of America (2.5 mil as of April 2008) and Wells Fargo (1 mil as of Nov 2008) have more online personal finance users at this point.

What it means: Account aggregation, left for dead a few years ago, is making a fearsome comeback. The three biggest players, Bank of America, Mint, and Quicken Online, now have more than 4 million registered users, approximately 4% of all U.S. banking households (note 3).

Table: Mint Registered Users by Month

Month-End Registered Users* Monthly
Gain
Month/Month
% Gain
Aug 2008 404,000 -- --
Sep 2008 458,000 54,000 13%
Oct 2008 544,000 96,000 21%
Nov 2008 606,000 62,000 11%
Dec 2008 720,000 114,000 19%
Jan 2009** 864,000** 144,000** 20%**
Feb 2009*** 934,000*** --- ---
Avg gain/mo -- 94,000 17%

Source: Mint, Feb. 2009
*Registered users are anyone who has signed up with email address
** Through Jan 25 (per Mint letter, 28 Jan)
***Through Feb 19 (per
TechCrunch post, 19 Feb)

Notes:
1. Intuit's letter to Mint here.
2. Mint's response here.
3. Yodlee provides the aggregation engine for both Bank of America and Mint.
4. For more info, see our Online Banking Report on Account Aggregation and Online Banking Report on Personal Finance Features

Comments (1)

Mobile Banking Stats: 40% of Bank of America's 2 million Mobile Bankers Use iPhone or iPod Touch

By Jim Bruene on February 4, 2009 7:17 PM | Comments (1)

image Bank of America has been making the rounds with the press touting the runaway success of its mobile banking solutions. Major stories ran in American Banker and The Wall Street Journal this week.

The bank, with 29 million online banking users, reports numbers just shy of the 2-million mark in mobile. That's up from one million early this summer (post here). While it's still less than 10% of online banking customers, it's an impressive number considering fewer than 4 million mobile banking households exist in the entire country (see note 1).

Several other interesting stats from BofA:

  • More than 40% of active mobile bankers --  someone who's logged in within the past 90 days --  use an iPhone or iPod touch. That's about double the usage you'd expect given Apple's 23% share of the U.S. installed smart phone base (note 2, 3).
  • The bank believes the mobile channel is driving some new business to the bank with 8% to 10% of mobile bankers, almost 200,000, having signed up for the service within 90 days of opening a BofA account (note 4).

image

Source: ChangeWave Research, survey of 3,800 cell phone users fielded Dec. 9 - 15, 2008 (link)

Notes:
1. See our latest Online Banking Report: Online & Mobile Forecast for more details.
2. The 23% figure does not include iPod Touch.
3. One other bank provided its usage numbers to the WSJ: Mississippi's BankPlus reported 4,000 users with 60% of the usage (2,400) coming from iPhone users.
4. That number doesn't seem all that surprising. You'd expect new customers would be somewhat more likely to sign up for new delivery channels than the existing base. And given typical banking churn, 10% to 20% of a bank's customer base are new every year.

Comments (1)

Compete Reports an 8% Monthly Increase in Online Credit Card Applications, But 23% Decline from 2008

By Jim Bruene on January 29, 2009 4:14 PM | Comments (1)

imageFor card issuers, the latest online application activity is is either good news, bad news, or neither since Compete tracks only applications submitted, not approvals. This following chart was presented in its webinar today. You can request the entire deck at the bottom of its blog post.

According to Compete, there were more than 12 million credit card shoppers in the U.S. in December, up 6% from November and down 11% since a year ago. Of the shoppers, about 20%, or 2.4 million submitted an application. That was an 8% increase from Nov., but a 23% decline from a year ago. 

But Compete has no way to measure whether the card applications it tracks are approved. Recent data from Lending Club shows that less than 10% of its online consumer loan applications were approved in Q4. The big credit card issuers probably do a bit better by driving creditworthy borrowers to their sites via direct mail and online advertising.

Assuming approval rates of 20%, the 2.4 million credit apps in December resulted in about a half-million new accounts.  

image

Source: Compete, 29 Jan. 2009

Comments (1)

New Online Banking Report Available: Ten-Year Online & Mobile Banking Forecast and 2008 Recap

By Jim Bruene on January 28, 2009 6:47 PM | Comments (1)

image The latest Online Banking Report: 2009 to 2018 Online & Mobile Banking Forecast is now available. It was mailed yesterday to subscribers. It's also available online here. There's no charge for current subscribers; others may access it immediately for US$495.

The report includes our latest 10-year online banking and bill pay forecast. This year we again bumped our long-term usage forecast to 6%, up from 3%, to reflect a more robust outlook for adoption, primarily from mobile-only users. For example, we are now projecting 71 million U.S. households banking and/or paying bills online by 2013 compared to last year's forecast predicting 66 million for the same period.

Mobile banking (see note 1) access is included in the overall online banking numbers, but it's also shown as a separate line item. Based on the new open-platform standards ushered in by the iPhone and App Store, we increased both our short- and long-term adoption forecast by 10% to 20%. For example, by year-end 2011 we now predict there will be 18 million U.S. mobile banking households. A year ago we forecasted 16 million.

We also included a revised forecast for U.S. peer-to-peer lending. We cut back our short-term estimates by more than 50% due to regulatory and economic constraints on the business. A full 10-year forecast is included in the report.

Top ten innovations & trends of 2008
The report also includes a summary of the top ten innovations of the past year including the surge in mobile banking demand and the marked increase in traffic to personal finance speciality sites such as Mint and SmartyPig.  

Note:
1. A mobile banking household is one where someone has used a mobile device to access bank or credit card account info within the past six months. Includes text-based queries, but not simple broadcast alerts.

Comments (1)

neoSaej's MoneyAisle Generates $100 Million in Deposits in Q4 2008

By Jim Bruene on January 28, 2009 5:45 PM | Comments

image It's so refreshing to have some real numbers to go on, even if they are self reported. Aside from Prosper, Lending Club (here), and most recently SmartyPig (here), few of the startups we track provide meaningful metrics on their operations. That's why we use Compete website traffic estimates as a proxy for success.

Yesterday, MoneyAisle, the reverse-deposit-auction marketplace from neoSaej, released the following results for fourth quarter 2008 (press release): 

  • $1.65 billion in auctions run by consumers, up three-fold from Q3 2008 (note 1)
  • $100 million in deposits generated

That's not a lot, but we can make a few estimates from that info (note 2):

  • Assuming 80 active bank partners, the average take per bank in Q4 was $1.25 million
  • But applying the 80/20 rule to those results means that 16 banks generated about $80 million in deposits, or $5 million each
  • And conversely, the remaining 64 banks brought in just $300,000 each
  • Assuming the average deposit balance auctioned was $20,000, five thousand separate auction winners funded a deposit
  • Assuming a commission of $37 per funded auction (note 2), neoSaej would have generated $185,000 in commission income in Q4, this is in addition to license fees and monthly maintenance fees

And for those of you who still want traffic numbers, MoneyAisle's website usage (monthly unique visitors) has been trending upwards after suffering a post-launch dip in November. In December, visitors totaled just under 20,000. 

image

Bottom line: It's a promising start for the company which earned an OBR Best of the Web this summer, was picked by the audience as Best of Show in October's Finovate (video here), and was recently chosen as a top-10 innovation of the year in our most recent Online Banking Report (here).

When MoneyAisle adds integrated online account opening (powered by Andera), results should be even stronger. 

Notes:
1. Deposit-generated total is 6% of total auctions run, because consumers are not obligated to make the deposit after they run the auction.

2. My speculative estimates, not provided from the company.

3. We outlined the company in a June blog post and in the pages of our Online Banking Report on New Models for Lead Generation and Online Banking Report on Growing Deposits in the Digital Age

Comments

Out of the Inbox: SmartMoney Uses Simple 3-Question Survey to Engage Customers and Solicit Feedback

By Jim Bruene on December 2, 2008 6:21 PM | Comments

image Engaging users doesn't have to to be a long and drawn-out process with multiple passes through legal and compliance to ensure you won't end up on the 10-most-wanted list at the OCC.

All you have to do is ask customers a question now and then to show that you are genuinely listening. And with low-cost web-based surveys, the cost to conduct a short survey among your own customers is minimal.

Some sample questions:

  • What should we write about in our next newsletter/blog/website?
    (provide list of ideas plus write-in area)
  • Which offer should we put on our homepage?
    (similar to the SmartMoney example below)
  • Where should we locate our new ATM? (with list of choices)
  • How would you rate your recent experience with our call center?
    (sent shortly after a customer talks to a CSR)
  • How would you like to retrieve your balance on your cellphone (via text message, via mobile browser, via voice)

In a real-world example today, SmartMoney Magazine sent me an email (see below) requesting that I complete its "cover survey" which would take "no more than a minute." The Survey Monkey-powered survey was indeed just 3 questions and took only seconds to complete. There was no marketing (see note 1), no cross sales, and I was left with a better impression of the magazine. Besides a satisfied customer, SmartMoney gains valuable editorial feedback.

image

Note:
1. After completing the survey I was dropped on to the SmartMoney homepage increasing its pageviews and unique visitor totals for December.

2. Photo credit (via flickr): Ryan McFarland at www.zieak.com.

Comments

Peer-to-Peer Lending Volumes Worldwide

By Jim Bruene on November 12, 2008 6:09 PM | Comments (4)

image Industry blog, P2P-banking.com recently compiled a list of peer-to-peer  loan volumes from around the world. The chart is reprinted by permission below.

These numbers are cumulative, all-time volumes since inception. More than half is from Virgin Money USA which has helped individuals put $370 million in loans together since it began as Circle Lending in 2001.

Because these companies don't all use the same model, I've revised the tables somewhat, excluding: 

  • Facilitators: My definition of peer-to-peer lending excludes Virgin Money and Loanback because they do not serve as matchmakers (note 1). They do play a crucial role in putting a legal framework in place for friends-and-family loans and often end up servicing the loans as well. They are more like PayPal where Prosper/Lending Club are like eBay.
  • Microfinance markets: I would exclude Kiva as well. It's an awesome platform that allows U.S. citizens to loan money to third-world merchants at zero interest. A powerful tool for philanthropy, yes, but not really peer-to-peer. The same goes for MyC4 and Microplace.

So excluding the above companies, total worldwide originations are $262 million, with two-thirds of that from Prosper.

Here are the market shares of the 8 true P2P lenders that have originated more than $1 million since launch:

Company US$ (mil) WW Share
Prosper (US) $178 68%
Zopa (UK) $39 15%
Lending Club (US) $20 8%
Money Auction (Korea) $7.8 3%
Smava (Germany) $5.8 2%
Zopa (Italy) $4.3 2%
Boober (Netherlands) $3.1 1%
Other $4.5 2%
Total $262 100%

 

image

Source: P2P-Banking.com, 28 Oct 2008

Note:
1. This does not mean I dislike Virgin Money's business model, just that its loan volume is not comparable to the others on the list.

2. For more info on the P2P lending market, see our Online Banking Report on Person-to-Person Lending

Comments (4)

Online Personal Finance Traffic More than Doubles; PNC Virtual Wallet Grabs Second Place

By Jim Bruene on October 23, 2008 6:53 PM | Comments (3)

image As I was drilling into the latest Compete traffic numbers for the annual Online Banking Report planning issue, I noticed a significant uptick in traffic to online personal finance specialists, almost across the board.

Sept. traffic revealed a total of 1.2 million unique visitors (note 1) compared to less than 400,000 a year ago. Not surprisingly, consumers appear to be taking a closer look at their finances. 

The big three newcomers last year: Mint, Wesabe, and Geezeo saw combined traffic increase by 450,000 users, a nearly three-fold increase from 2007. Geezeo was the star percentage-wise, growing more than six-fold. But Mint accounted for three-fourths of the net gain across the existing players with 330,000 more visitors (see Table 1 below):

Also, two newcomers made a big splash last month:

  • PNC Virtual Wallet launched in July (coverage here) by PNC Bank, which trailed only Mint last month with nearly 140,000 unique visitors (see 2 below).
  • Rudder (a relaunch of Spendview) drew 50,000 visitors last month after its launch at DEMOfall in early Sept.

Granted, the PNC Virtual Wallet benefits enormously from the 2 million monthly visitors to parent PNC.com and PNCBank.com. Yet, it's still an impressive total and is encouraging for banks and credit unions considering similar efforts.

Table 1: Online PFMs launched more than 1 year ago

  Sep 2008 Sep 2007 Gain '08 vs. '07 Multiple
Mint 530,000 200,000 330,000 2.7 x
Geezeo 72,000 11,000 61,000 6.5 x
Wesabe 89,000 33,000 56,000 2.7 x
Yodlee 97,000 50,000 47,000 1.9 x
Finicity/Mvelopes 91,000 73,000 18,000 1.2 x
Buxfer 9,000 3,500 5,500 2.5 x
PearBudget 6,300 2,100 4,200 3.0 x
ClearCheckbook 6,200 2,800 3,400 2.2 x
BudgetTracker 12,000 12,000 0 Flat
  Total 910,000 380,000 530,000 2.4x

Table 2: The online PFM class of 2008

  Sep 2008 Sep 2007 Gain
PNC Virtual Wallet 140,000 0 140,000
Rudder 50,000 2,000 (1) 48,000
Expensify 9,600 0 9,600
GreenSherpa 6,300 0 6,300
RateSurfer 4,400 0 4,400
Thrive 3,500 0 3,500
Expensr 2,900 0 2,900
Banzai 2,700 0 2,700
iThryv 2,000 0 2,000
  Total 220,000 2,000 220,000
       
Grand Total 1.2 million 380,000 750,000

 Notes:

1. Sum of the monthly unique visitors from all PFM companies, visitors that went to more than one PFM provider are not eliminated from the total, so there is double counting in the totals. Data source is Compete, pulled 21 Oct 2008.

2. Rudder was previously Spendview, but we consider them to be essentially a new company.

Comments (3)

Online Financial Services Scorecard: June 2008

By Jim Bruene on September 26, 2008 6:09 PM | Comments (1)

clip_image002

The June financial shopping numbers released by Compete revealed a mixed bag as interest in credit cards, home equity, and purchase loans fell double digits compared to a year ago. However, deposit activity moved in the opposite direction.

More specifics:

  • Although credit card application volume was relatively flat (down 1% for the year and down 4% for the month), the number of shoppers decreased 39% compared to a year ago. Although the data shows only application volume, there has likely been a sharp drop in approvals, as underwriting standards stiffen and credit-worthy applicants stay on the sidelines. 
  • In June there was a slight drop in checking shoppers (down 4%) and applications (down 5%) compared to May. However, year-over-year both were up with a 32% increase in shoppers and a 6% increase in applicants.
  • However, savings shoppers increased 51% from last year and 7% from May with applications up 43% compared to last year and 24% over last month.
  • High-yield savings showed similar gains compared to a year ago, with 31% more shoppers and 30% more applications. 
  • Home equity and purchase mortgage activity were both off compared to the previous month and also a year ago. The only good news was an increase in refi activity with 10% more shoppers than May and 27% more than a year ago. But application volumes were down 21% from May and down 34% compared to last year.

About the financial services scorecard
A little over a year ago, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Notes:
1. Year-over-year comparisons were added to the chart beginning in March 2008. Because of ongoing methodology tweaks, the percentages in this table may be slightly different than if you went back to the data from a year ago and calculated the change. 

2. Leads/applicants = Leads or applications depending on whether the site tracked is a lead-generation site or an actual lender.

Comments (1)

Person-to-Person (P2P) Lending Update

By Jim Bruene on September 4, 2008 2:38 PM | Comments (1)

image Now that we are well past the mid-point of 2008, it's a good time to look at where we are with one of the most talked-about online financial subjects of the decade: person-to-person or social lending.

Currently, two U.S. companies are actively originating unsecured, multi-purpose P2P loans (note 1): 

  • Prosper: Through July, the leader in the market is running 10% ahead of its 2007 loan-origination pace. The company has funded $55 million and is on pace to do just under $100 million for the year. Website traffic is up 15% compared to a year ago (see graph below) and through July there have been 13% more loan listings (see previous coverage here, Finovate 2007 Best of Show video here; monthly volume reports here).
  • Zopa: The company, which isn't technically person-to-person (the loans are originated by six credit union partners) but definitely has a social aspect to its loan program, has not revealed any numbers, but they list 475 loans on the "browse all borrowers page." Assuming average loan size of $8000 to $9000, they are doing less than $1 million per month. Zopa is using Google AdWords to pitch "instant approval" with a credit score of 640+ (see screenshot below), an aggressive marketing move, especially combined with the 8.49% APR touted on the landing page (see screenshot below; previous coverage here; FinovateStartup 2008 Best of Show video here).

In addition, three more P2P lenders appear very close to launching or relaunching:

  • imageLending Club: The company, launched in May 2007, has been essentially closed to new business since March as they retooled loans into securities for regulatory reasons. However, the company is scheduled to present at our Oct. 14 Finovate conference, implying that they will be out of their quiet period by then (previous coverage here; Finovate 2007 video here).
  • Loanio: The startup appears to be very close to launching based on an a Sept. 3rd email sent to its house list announcing the launch "in just a few weeks" and adding in parenthesis (yes, we mean it this time!). The company will likely be the first to offer a co-borrower loan application (previous coverage here; Finovate Startup video here).
  • Pertuity Direct: The newest competitor in the space is Pertuity Direct which we wrote about last week. Its website claims a Sept. 15 launch, and we look forward to seeing their first public demo at Finovate on Oct. 14.  

Finally, several companies are looking to launch P2P services in 2008 or 2009, including Globefunder, Community Lend (Canada) and one we just heard about today, Swap-A-Debt.

Forecast revision
Last December we published our second detailed Online Banking Report on Person-to-Person Lending. In that report, we predicted just under $200 million in originations this year. However, due to the inactive period at  Lending Club, the delay in Loanio's launch, and the more conservative approach by Prosper lenders, we are lowering the 2008 forecast by 25%, with an expected total of $135 to $150 million for the year as follows:

  • Prosper ($95 to $105 million)
  • Lending Club ($25 to $30 million)
  • Zopa ($5 to $10 million)
  • Loanio ($1 to $5 million)
  • Pertuity Direct ($1 to $5 million)

P2P lending traffic from Compete (July 2007 through July 2008)

image


Zopa AdWords ad on "loanio" search

(4 Sep 2008, 1 PM PDT from Seattle IP address)

Google results from "loanio" search 4 Sep 2008


Landing page
(4 Sep 2008, link here)

Zopa landing page from Google ad 4 Sep 2008

Notes:
1. Specialists are involved in the student loan piece (GreenNote and Fynanz) along with Virgin Money and Loanback which help with person-to-person loan documentation and servicing. 

2. Top-right graphic from April 2008 ABC News segment on Lending Club and person-to-person lending.

Comments (1)

Reward Checking Account Results: $5.5 billion Down, $2.994 Trillion to Go

By Jim Bruene on August 13, 2008 7:23 PM | Comments (4)

Reward Checking banner at First State Bank (13 Aug 2008) In the year or so that they've been widely available, so-called reward checking, those high-yielding accounts that require a hefty number of debit card transactions (see note 1), have attracted quite a following.

image But besides the number of blog posts and press mentions, we've had few other metrics upon which to gauge their success. Until now. In an email to me yesterday, the company behind many of the accounts, BancVue, laid out the total rewards checking results across its client base:

  • 381 financial institutions live
  • 610,000 reward checking accounts
  • $5.5 billion on deposit in the accounts
  • $9,000 average balance
  • Opening more than 13,000 accounts per week (700,000 annual run rate)
  • Average of more than $14 million in deposits per financial institution
  • Average of 1,600 accounts per financial institution

Although $5 billion isn't even the rounding error across the entire $3-trillion U.S. retail deposit market, it's real money to the smaller banks and credit unions offering the program.  

Notes:
1. Most accounts require 10 to 12 debit transactions per month in order to earn the high yield. For more info, see our previous coverage and Finovate Startup video here.
2. Upper-right graphic comes courtesy of First State Bank, Gainesville, TX.

Comments (4)

Online Financial Services Scorecard: May 2008

By Jim Bruene on August 7, 2008 5:13 PM | Comments

compete_may08.png

May continued to show increases in both deposit and home-loan shoppers while demand for credit cards edged downward. On a year-over-year basis, almost all segments are down with the exception of home equity and home purchase.

  • Credit card shopping was down slightly (-1%) compared to April and down 7% in applicants. Conversion also declined 2% over the previous month.
  • Compared to April, deposits had big gains in both checking and savings shopping, up 8% and 5% respectively. 
  • Both savings and high-yield savings saw more than 20% gains in number of applicants compared to the previous month; however, both were down compared to a year ago.
  • Despite increased shopping volumes, home-secured lending, as measured by the number of leads and/or applications, dropped compared to last month. The largest was the 38% drop in refinance activity.
  • Conversion rates were down in all three loan categories, dropping 1% in home equity, 2% in purchase, and 4% in refinance.

About the Financial Services Scorecard
A year ago, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Notes:
1. Year-over-year comparisons were added to the chart beginning in March 2008. Because of ongoing methodology tweaks, the percentages in this table may be slightly different than if you went back to the data from a year ago and calculated the change. 

2. Leads/applicants = Leads or applications depending on whether the site being tracked is a lead-generation site or an actual lender.

Comments

Mint Site Traffic Grows by 60,000 in July

By Jim Bruene on August 7, 2008 4:48 PM | Comments (1)


According to Compete, website traffic to personal-finance startup Mint increased to 460,000 in July compared to 400,000 the month before, for a 13% increase. Site traffic has quadrupled since December, gaining 350,000 unique monthly visitors.

Comments (1)

Bank of America Hits Two Milestones: One Million Mobile and 25 Million Online Users

By Jim Bruene on June 11, 2008 4:39 PM | Comments

image As expected, Bank of America reached the one-million-mobile-user milestone this week. Last month the bank disclosed it had 840,000 active mobile users as of March 31. With 160,000 new users in the past 9+ weeks, it appears that BofA has stayed on the 75,000/mo pace of first quarter.

Even more interesting to me was the news that the bank has "nearly 25 million" online banking users. That's 3 million more than the bank had last fall, an impressive 13% gain. Six years ago, there weren't even 20 million online banking households in the entire country (see note 1).

The bank also passed along a few other mobile metrics in today's press release:

  • 40% are using mobile for money movement (bill pay and/or funds transfer within BofA accounts)
  • 80% viewed transactions and balance data (leaving 20% who check balances only)
  • In May, the bank had 4 million mobile sessions, or 4.2 sessions per user/per month, assuming 950,000 active users
  • Two-thirds of mobile users are under 35, about 13% are age 35-44 and 20% are older than 45

Note:

1. Source: Online Banking Report: 2008 through 2017 Forecast

Comments

Citibank and WaMu Rated Tops in Deposit Account Sales Process in Change Sciences Study

By Jim Bruene on May 16, 2008 11:13 AM | Comments

image Change Sciences, publishing under the moniker of its new Kantuit research service, just released its latest financial services website evaluation. The report uses proprietary user-experience modeling to rate, rank and compare 18 leading banking sites on how easy it is to find, select, and open a new deposit account online (see Table 1, inset).

Citibank and WaMu were ranked one and two and scored significantly better than the others. Wachovia was third, scoring about 20% higher (the lower the score, the better). Bank of America, Fifth Third and BB&T were in the next tier, finishing about 50% higher. Among mega-banks, U.S. Bank had the worst score, more than double the leaders. 

The Change Science score includes various components that show how a consumer may struggle with various aspects of the application process. These individual scores are totaled to come up with the final composite score shown in Table 1 right.

For example, Figure 1 below illustrates the scores for "Effort (expended) finding and learning about deposit accounts" with Fifth Third leading the way with a 0.1 score, compared to Peoples United Bank, the worst of the sample, scoring 19x higher at 1.9

Download an abstract of the research results here (registration required). The full report runs $4,000; a significant investment yes, but you could make that up with just a handful of additional good deposit accounts.  image

Comments

Mobile Banking Uptake: Bank of America Closing in on 1 million Mobile Users

By Jim Bruene on May 14, 2008 5:01 PM | Comments

Bank of America iphone mobile bankingIn its latest quarterly financial results (here), Bank of America said it signed up 224,000 new users during the quarter to bring its active mobile banking base to 840,000. Assuming the 75,000/mo pace continues through second quarter, the bank should be over 900,000 now and will surpass 1 million in the next few weeks.

Although it's a nice milestone, it's only 4% of the bank's 23+million active online banking users (here). Given that mobile is pushed frequently in the bank's online banking area, one could argue that 4% adoption is pretty anemic. But according to M:Metrics, less than 14% of U.S. mobile phone users accessed info via the mobile Web in February. So 4% of a 14% universe is much more impressive, indicating the bank has tapped almost 1/3 of the short-term potential for mobile Web-based services, a good start.

To really goose adoption, text-based solutions may need more emphasis (see Chase screenshot below). According to M:Metrics, U.S. text users outnumbered mobile Web users almost 4 to 1 in February, 110 million to 30 million.

Industry forecast update
These adoption rates are about what we expected. In the forecast published a year ago in our Online Banking Report on Mobile Banking, we were relatively bearish short term, projecting 900,000 mobile users by year-end 2007 growing to 2.5 million by the end of 2008.

With BofA reporting 840,000 and assuming they have about half of all users, the U.S. market has likely already passed the 1.5 million mark and will end the year at more than 3 million.

The adoption rate depends on how hard banks push mobile options. Along with BofA, Chase has been one of the most aggressive, showing mobile use in its advertising for several years now (previous coverage here). I love its "Text your account. It texts you back." Just seven words conveying more than most 3-minute demos.

 

Chase Bank Text Mobile banking
Comments

Online Financial Services Scorecard: March 2008

By Jim Bruene on May 8, 2008 1:27 PM | Comments

Compete Netbanker Online Financial Services Statistics March 2008

Summary
According to data from Compete's consumer panel, March rebounded from the lower traffic in February. Every product, except standard savings accounts, posted increases in the number of applications. Credit cards were the biggest gainer (up 24% in shoppers, up 13% in applications) following sharp declines the past few months. Home loans market performed similarly, with double-digit increases in applications for both purchase (up 15%) and refinances (up 12%). 

New this month, we have valid year-over-year comparisons shown (see note 1). Compared to a year ago, both checking and credit cards applicants and shoppers have risen significantly. Home loan shoppers are up slightly, but applications are up. 

Commentary

  • Credit cards saw a large jump in both shoppers and applicants. The credit crisis seems to have benefited the credit cards market as applications, especially for balance-transfer cards, have increased. Compared to a year ago, shoppers are up 47% and applicants are up 53%. However, conversion dropped by 2% from February.
  • Deposits saw overall shopper loss in all three segments during March, but applications for checking were up 2% as were high-yield savings (up 8%). Last year at this time, deposits were increasing across all segments. In March of 2008, however, applicant levels are below what they were in 2007 with 31% drop in high-yield savings applicants and a 7% decline in all savings accounts.
  • After a terrible February, refinance mortgages posted a 27% gain in shoppers as well as a 12% gain in applicants. Year-over-year refinance applications are up 32% from a year ago. Purchase mortgages also saw a similar improvement from last month with a gain of 23% over last year. Home equity had the largest gain in applications in the month of March as leads/applications (note 2) grew 34%. Year over year, however, applications are down 32% due to the housing crisis of the past few months.

About the Financial Services Scorecard
A year ago, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Notes:
1. New this month: Year-over-year comparisons are now included in the monthly table. Because of ongoing methodology tweaks, the percentages in this table may be slightly different than if you went back to the data from a year ago and calculated the change. 

2. Leads/applicants = Leads or applications depending on whether the site being tracked is a lead-generation site or an actual lender.

Comments

13% Would Use Banking in Facebook

By Jim Bruene on May 6, 2008 9:54 AM | Comments (4)

In an unscientific poll of 500 Facebook users (see note 1), we found that 13% of respondents are interested in accessing their bank balance through their Facebook account (red bar below).

image
Source: Online Banking Report, 9 April 2008, n = 500

While that's not exactly a ringing endorsement of the idea, it's potentially enough early adopters to get the service rolling. Most of the interest emanated from younger segments. For example, 18% of 18-to-24 year-olds said they'd probably use Facebook banking (gray bar below) compared to about 5% of the 25-49 group (green and yellow bars below).

image
Source: Online Banking Report, 9 April 2008, n = 500

But it will take education to move "Facebook banking" into the mainstream. The majority of respondents, 70%, said there is "no way" they'd bank within Facebook and another 13% said probably not, resulting in a strong 83% negative rating. Given well-founded concerns surrounding online security, that's not surprising. 

For more information:

Note:
1. Survey was conducted April 9 through Facebook's polling mechanism. Total respondents = 500. Respondents are self-selected so the results should not be used to forecast specific demand.

Comments (4)

Facebook Financial & Banking Apps Have Only 263 Daily Users

By Jim Bruene on March 14, 2008 12:40 PM | Comments (5)

image It's been a while since we looked at the actual usage of payment, personal finance, lending, and banking apps on Facebook (previous coverage here; see note 1). And assuming the numbers provided by Facebook are accurate, it's not good news. 

Overall, the banking and personal finance apps have anemic usage levels totaling just 263 daily users (for apps with more than 1 daily user). That does not include virtual currencies or stock tracking/investing applications (see note 2). In comparison, the most popular general Facebook app, FunWall, has more than 3 million daily users.

But the number will grow rapidly if major financial institutions add balance inquiry functionality such as (#4) MyMoney from Fiserv's Galaxy unit (previous coverage here) and mShift's Key Point Credit Union app discussed here (only 1 daily user, so it did not make our table).  Activity in Facebook personal finance apps yesterday (13 March 2008):

Name (parent) Daily Users
1. PayPal (eBay) 80
2. Billmonk (Obopay) 55
3. LendingClub* 26
4. MyMoney (Fiserv) 17
5. PayMe 14
6. Debt Manager 10
7. Prosper 7
8. FriendFunds 7
9. UPside Visa Card Balance Reader 6
10. Web Money 6
11. Buxfer 5
12. IOU (Sanjay Madan) 5
13. Split It (TD Bank) 4
14. MoneyExchange (Revolution Money) 4
15. IOU (Jonas Neubert) 3
16. Mortgage Calculator 3
17. BillTrack 3
18. Insurance Marketplace 2
19. Wesabe 2
20. FB E-Wallet 2
21. Intuit Tax Tips 2
TOTAL 263**

*See comment 1

**Does not include apps with less than 2 users

Notes:

1. You cannot make a meaningful comparison with last summer's activity because Facebook changed the way it reports usage. Previously, the company reported the number of application downloads and now it shows the much, much smaller "active daily user" total. For example, in July 2007, LendingClub had already had more than 11,000 downloads. Under the new measurement system it tallies just 26 daily users which puts it in third place (see table below).

2. The leading stock tracking app, Fantasy Stock Exchange, has 7,990 daily users. The most popular virtual currency AceBucks has 11,300 daily users.

Comments (5)

Online Financial Services Scorecard: November 2007

By Jim Bruene on January 9, 2008 4:35 PM | Comments

Compete Online Banking & Financial Services Scorecard: Nov. 2007

Commentary
The revolving credit season was off to a quick start as credit card applications posted a double-digit increase. However, all other product categories declined.

  • Monthly credit card applications rose 11% in November and conversion was up for all but one tracked company. Almost all companies experienced double-digit application growth as well.
  • Several key companies in the mortgage refinance space experienced significant losses among both shoppers and submitted leads/applications. Purchase shopper activity dropped 8% from October while applications saw a 19% drop.
  • Home equity saw a 27% decrease in shoppers, and a 13% decrease in total leads and applications.
  • In deposits, there was a slight decrease from last month in shoppers and applicants for savings and checking accounts. High-yield savings had 13% fewer shoppers. However, with large application growth turned in by several companies, total application volume slipped just 1%.

About the Financial Services Scorecard
In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Comments

Online Financial Services Scorecard: October 2007

By Jim Bruene on December 7, 2007 4:38 PM | Comments

Update, Dec. 10: The original chart, published Dec. 7, contained a mistake in the home equity application count. The correct number, shown above, is 82,362 instead of the 111,139 in the previous chart. NetBanker and Compete regret the error.

In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked. 

Commentary
Online credit card applications were up as consumers prepared for holiday shopping. In contrast, home loans continued their downward trend.

  • Monthly credit card applications rose 4% in October and conversion was up 5 points, reversing the prior month-over-month trend. 
  • Several key competitors in the home loans refinance and purchase categories saw significant losses among both shoppers and submitted leads/applications bringing total submitted mortgage activity down 11% from September.
  • Home equity saw a 14% decrease in shoppers and a 14% decline in total leads and applications submitted. Both direct lenders and lead aggregators saw declines this past month.
  • In deposits, there were 4% more shoppers across all categories (checking, savings and high-yield savings).  Only checking, however, was able to convert that into more online applications with a 7% increase.
Comments

Bank of America's Online Banking Base Up 11%

By Jim Bruene on November 21, 2007 1:24 PM | Comments

The world's largest online banking base (note 1) grew an impressive 11% year-over-year, rising to 22.8 million active users, an increase of 2.2 million from 30 Sep 2006 (note 2). 

Bill payment grew slower, up 7% or 800,000 users, ending the period at 11.6 million active users. Overall bill pay volume is $224 billion annually, or $1,600 per user per month. Bill pay as a percent of online banking fell more than one point to just under 51% (note 3).  

Online Banking     Bill Pay     % of OL using Bill Pay

2007        22.8 mil            11.6 mil              50.8%

2006        20.6 mil            10.8 mil              52.4%

Change    +2.2 mil            +800,000            (1.6%)
                +10.7%               +7.4%

Notes:
1. As far as we know, no bank in the world has more active online users; however, one could argue that PayPal, with 37.5 million active users in the latest quarter, is larger. Interestingly, ING Direct is closing in on BofA on a worldwide basis. With its Sharebuilder acquisition, ING Direct has 20 million accounts worldwide, about 30% in the United States, although not all are active, which BofA defines as being online within the past 90 days.

2. According to Doug Brown, Bank of America's SVP Product Innovation E-Commerce Channel Services, as cited during his BAI Retail Delivery presentation.

3. See Online Banking Report #137, p. 28, for totals back to 2000. 
Comments

Online Financial Services Scorecard: September 2007

By Jim Bruene on October 30, 2007 5:21 PM | Comments

Compete online financial sales chart

In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked. 

Commentary
In September, leads for home equity, mortgage purchase and refinance continued to decline. Regular savings accounts also dropped significantly, although the high-yield version savings booked an 8% increase.

Other highlights in September:  

  • Within the deposit category, checking accounts and regular savings declined; however, the high-yield category showed good growth with 137,000 online applications from two million shoppers, 11,000 more than last month.
  • While there were 8% more online credit card shoppers this month, lower conversion rates resulted in a 3% decline in submitted applications. 
  • On the loan side, both home equity and purchase mortgage categories experienced more shopping activity. But once again, a decline in conversion rates resulted in fewer submitted leads/applications. 
  • Refinance mortgages continued to slide in both online shopping activity (down 14%) and submitted leads/applications (down 8%). Several lenders saw double-digit percentage declines.
Comments

Web 2.0 Takes Over the Top-10 Internet Domains

By Jim Bruene on October 24, 2007 11:18 AM | Comments (2)

Here's a great slide from Mary Meeker's Web 2.0 Summit presentation (download at Morgan Stanley) showing the dominance of social networking sites. If you haven't been able to get management to buy off on your social media plans, circulate this slide.

These are the top 10 domains now compared to two years ago as measured by Alexa. The red sites on the left have dropped out of the top 10 giving way to the green sites. Web 2.0-oriented sites can now claim six of the top-10 slots, including four social networks: FacebookOrkut (Google), Myspace and Hi5, and two user-generated sites:  YouTube and Wikipedia.    

Also according to Morgan Stanley, worldwide Internet use passed the 1 billion mark early last year, and is estimated to hit 1.3 billion this year. The chart also shows the distribution of Internet users by region. Note the dominance of the red part of the bar, and, no, that's not Republicans, it's Asia/Pacific.

Comments (2)

Online Financial Services Scorecard: August 2007

By Jim Bruene on October 17, 2007 5:30 PM | Comments (1)

Compete's online financial services purchase activity

In April, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked. 

Commentary
In August, the continued rise in interest rates led to a drop in home equity, mortgage refinance, and credit card applications while deposit accounts and purchase mortgage applications were up.

Some highlights from the monthly activity: 

  • Credit Card applications were down 2% overall, but Chase (27%) and Capital One (5%) grew applications and conversion compared to July
  • Savings applications were up across the group with the exception of Citibank which posted a 13% decline
  • For high-yield savings, only HSBC and ING Direct saw both application and conversion growth
  • Home equity application/lead volume and conversion dropped across the group with declines observed at 9 of 16 providers
  • Purchase mortgage  application/lead volume was up over July with Countrywide and Capital One both showing notable growth
  • The refinance mortgage market was flat overall, masking strong application/lead growth at Countrywide, E-Loan and NexTag while declines were recorded at LendingTree/GetSmart, LowerMyBills and Low.com
Comments (1)

Mint.com Traffic = $17 billion bank

By Jim Bruene on October 11, 2007 4:30 PM | Comments (3)

Compete's latest data confirms the spike in traffic at three-week old online personal finance startup Mint. The startup created considerable buzz after winning the $50,000 grand prize at TechCrunch in September (see previous coverage here).  

According to Compete, Mint's 200,000 unique visitors in September equaled that of $17-billion Webster Bank, the 64th largest U.S. bank or thrift holding company according to American Banker (Q1 2007). It will be interesting to see if Mint experiences a dramatic traffic decline after the publicity-driven visits slow down.   

Traffic at Mint.com (blue) vs. Webster Bank <websteronline.com> (red)

Mint vs Webster Bank traffic

Comments (3)

Keeping Your Credit Score at 98.6 Degrees

By Jim Bruene on September 25, 2007 9:12 AM | Comments

Just like a fluctuating body temperature is an indicator of your underlying health, your credit score is a similar measure of your financial well being. Yet, in a recent poll of Facebook users age 18-24, we found that fewer than 20% had seen their credit report or credit score within the past year (see note 1, 2).

Furthermore, today's tightened credit market has put a premium on having a good credit score, even in the upper end "prime segment." Here's the tease from the top of the Personal Journal section of today's Wall Street Journal, "Lending squeeze raises the bar on credit scores." (article here, see note 3).

Clearly there is a need here. Most U.S adults, especially younger ones, should track their credit score at least quarterly. However, fewer than 10% of adults subscribe to credit monitoring services, partly because of their cost and partly because of the hassle (see note 2).

Banks, credit unions and card issuers are ideally suited to fill this gap. At a minimum, low-cost one-click access to their credit score would provide customers with an important early warning system to stave off potentially debilitating personal finance woes (note 4).

Notes:

1. Be aware that this is a completely unscientific online poll of 200 Facebook users who say they are age 18-24 in their Facebook profile. The results should NOT be projected to the larger population. It was conducted on July 23, 2007 by Online Banking Report (see note 2).

2. For more information, see the latest Online Banking Report on Credit Monitoring.

 3. And over at another Dow Jones effort, the FiLife blog, the writers have been on a bit of a mission to pressure banks and card issuers to make credit scores freely available to customers (see post here). FiLife is a joint effort between Dow Jones and IAC, the parent of Lending Tree and GetSmart.  

4. According to the FiLife article cited above, among top-10 banks, only WaMu currently provides free access to credit scores for its credit card customers (see inset).

Comments

Measuring Success for Social Media Projects (part 2)

By William Azaroff on August 14, 2007 3:45 PM | Comments (8)

Note: Part one of this series can be found here.

On blogs I visit discussing social media, one ongoing debate concerns metrics. Some claim that metrics for social media projects are not meaningful; some claim that new metrics must be developed to gauge social behaviour. Some even claim that metrics aren't needed.

I believe that it is essential to have meaningful key-performance indicators in place for a social media project, as you would for any other project. You must know what success will look like to know if the project is worth repeating or not. Some of these metrics are familiar Web metrics, some are more similar to offline advertising, some are similar to PR metrics, and some are indeed brand new and hard to measure.

For ChangeEverything.ca we measure a few things that are familiar to anyone who runs a website:

  • Unique visitors
  • Time on site
  • Referring URLs
  • Natural search results
  • Number of registered users
  • Number of active users (need to define for yourself)

We also measure "Web 2.0" stuff:

  • Our Technorati authority ranking
  • The number of RSS subscribers
  • Conversions of visitors to contributors (people who make it through the registration or content-creation funnels)

Like offline media, we measure how many people in our geographic region are aware of the site, just like we track awareness of our television campaigns. We also measure how many can link it back to our brand.

Like our PR, we try to measure the earned media the site has garnered for us, which has been significant, with lots of positive coverage on TV, radio and newspapers. We also keep track of what bloggers say about us. We consider a blogger writing positively about ChangeEverything.ca to be an unsolicited third-party endorsement. Happily, almost all blog posts so far have been positive, as have our earned media. It's difficult to criticize this project since most press coverage is about how the site has helped the community in some way. And that leads us to the most interesting metric by far.

Where we need new metrics is on the issue of real-world impact. This was not a metric we had in place prior to launchhonestly, it never occurred to us. But it became necessary because of activities happening in the real world (remember that?) due to the influence of the site. The first time this became obvious was after a bad snowstorm Vancouver in November 2006. The site's amazing community moderator Kate created a post called Got Hats? and asked for people to donate warm clothing and blankets to the homeless. This initiative took off and over the next few days, we estimate that more than 4,000 pieces of clothing, blankets, pillows, and, yes, hats were donated to local shelters, all via communication and organization on the site. The change occurred while snow was still on the ground, while the need was still very real, and even a matter of life and death. It was the first clue that we were onto something truly important.

 

There are many positive traits the site lends to the Vancity brand. ChangeEverything.ca is more than a bunch of people discussing local issues they want to change. The site has created real impact in the communities Vancity serves. Since the Got Hats? episode, we have seen the impact of the tremendous exposure a woman on the site has received for blogging in depth about her valiant attempt to give up plastics in 2007, the successful implementation of a bike share experiment in Vancouver and now a contest where people can win $1,000 to give to an organization making change for the good (appropriately called ChangeSomething).

Traditional Web metrics can't measure the human terms of this impact, and that's the beauty of social media. It spills over into people's lives, because people are in the driver's seat. We need to expand our view of key performance indicators for social media so they reflect the project's success, which now includes the true impact of these projects on our communities.

I think that explains why those of us who advocate for the appropriate use of social media are so passionate about our work.

William Azaroff is the interactive marketing & channel manager at Vancity where he develops interactive marketing initiatives, and pioneered ChangeEverything.ca, the groundbreaking change-themed online community. William also plans strategy for the online channel, with a view to its potential to help Vancity, its members and the community. William brings nine years of experience in Vancouver, Seattle and Los Angeles producing Web projects for such clients as Honda, Disney, Intuit Canada and Nike Jordan. He writes about the intersection of online branding, social media and the world of banking on his blog at azaroff.com/blog

 

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The Aging of Facebook Makes it a More Appealing Platform for Financial-Services Firms

By Jim Bruene on July 13, 2007 7:25 PM | Comments

Facebook traffic from comScoreDue to Facebook's roots as a college-only social networking site, as recently as last year you had to use a .edu email address to gain admittance, it has remained a young person's playground much longer than MySpace. However, much to the chagrin of my college-age niece and her friends (note 1), Facebook has aged rapidly this year.

As you can see in the inset, in May, comScore reported that more than half of Facebook visitors were 25 or older (see full press release here and note 2). Using this chart, we estimate the median age of a Facebook visitor was about 23 a year ago and now it's closing in on 30 (I'd guess 27 or 28 based on the comScore data). Even more frightening for the younger set: last month there were 2.6 million more unique visitors over age 35 than in the 18-24 category. We noted this trend at MySpace last year (here).

Significance for Banks
As you consider your social networking strategy, don't think it's only for the under-25 crowd. Some of your prime customers, the 30-somethings with new families, new cars, new homes, and accelerating careers, also keep in touch with friends via social networks. Refer to Online Banking Report, Social Personal Finance, for a long-term forecast and strategic options for financial institutions. Also, see our earlier post on the Top-10 Banking & Money apps on Facebook here.

Facebook Lingo Defined
For those of you new to Facebook, Ad Age ran a sidebar off its lead article this week, This 23-Year-Old has Google Sweating, explaining a few key Facebook terms:

  • Minifeed: Like an RSS feed, that automatically updates everyone on your friends list of any changes you make to your profile, including removing items. This feature caused a bit of a revolt, due to privacy issues, when introduced last year. But now it seems to be an important part of the network. It's especially critical for the viral spread of new applications such as Lending Club or Chipin. Unless they opt out, every time a Facebook user adds an application to their account, all their friends are notified in the mini-feed.
  • Poke: The virtual equivalent of smiling at a co-worker passing in the hallway; a way to connect with someone without the more formal protocols of email, text, or voice messaging.   
  • The Wall: A place to write comments on your friends profile, or respond to comments on yours.
  • Tag: Allows users to associate names with the people in the pictures they've posted. As Ad Age says, "a college grads worst nightmare when it comes to the ever-crucial job search."

Notes:

1. This summer, my niece, a college sophomore, couldn't believe that I had a Facebook account. And she was more than a bit skeptical of my claim that I was tracking the social network for my blog and newsletter. To her, it's a privileged place for her friends to communicate: uncles, aunts, and especially parents, are definitely not on the invitation list. It will be interesting to see what happens to the hip kids as the establishment invades their turf. The Wall Street Journal had a similar story this week about fellow workers and even bosses requesting to be added as friends in social networks (here).

2. comScore is reporting the demographic profile of visitors, NOT the active-user base, i.e., those that maintain profiles. Active users would undoubtedly skew younger.

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Compete's May Online Financial Shopping Scorecard

By Jim Bruene on July 12, 2007 2:20 PM | Comments

Last month, we introduced the Financial Services Monthly Performance scorecard produced by Compete. Here's the second installment, summarizing the overall performance of 23 large U.S. financial institutions and lead-generation sites. For more information, including the detailed methodology and companies tracked, refer to that post (here).

The highlights:

  • Financial shopping was down or flat in most categories, especially savings accounts; not surprising given the typical tax-time spike in April.
  • The main exception to the trend was checking, which grew a phenomenal 31% in May compared to April. 
  • The main drivers of checking account growth: Bank of America's promotion of free MyAccess Checking (see coverage here) and, to a lesser extent, Wachovia, whose Google/MSN marketing caused a major spike in traffic
  • But it wasn't all rosy in checking accounts: While BofA was experiencing 25% growth in applications, ING Direct went through a typical post-launch downturn with a 50% decline in application volume
  • Credit card conversions were up dramatically, with a 5% increase in application volume despite a 6% drop in shoppers, resulting in a 22% conversion ratio (see note 1) 

Note:

1. Compete revised its card applications show in the previous report. The revised number of card applications:
     March 2007: 1.57 million instead of 1.71 million
     April: 1.70 million instead of 1.88 million with 8% growth instead of 9% 

Comments

New Online Financial Services Performance Metrics from Compete

By Jim Bruene on June 5, 2007 4:16 PM | Comments (2)

Link to Compete website The researchers at Compete Inc. have developed a new scorecard that tracks the overall performance of 23 large financial institutions and lead-generations sites (note 1). We will publish this scorecard each month here at NetBanker and we will occasionally drill down into the data at Online Banking Report. To make it monthly scorecard easy to access, it will have its own category, <netbanker.com/compete>. 

There are a number of interesting insights from this data:

  • Card applications were up 9% even though shoppers only increased 1%, helping push conversion to a healthy 21%. In this case "conversion" means they APPLIED for the product. We do not know whether they were approved or not.
  • Checking applications were up 24% to 182,000, with the launch of ING Direct's Electric Orange having a role in that.
  • Home-secured loan activity was up sharply from March, increasing 30% in the refi and home equity categories. Purchase loans were also up 23% month-over-month.

Notes:

1. Companies tracked: 

Credit cards: American Express, Bank of America, Capital One, Chase, Citibank, Discover

Deposits: Bank of America, Capital One, Chase, Citibank/Citi Direct, E-Loan, Emigrant/Emigrant Direct, HSBC/HSBC Direct, ING Direct, U.S. Bank, Wachovia, Washington Mutual, Wells Fargo

Home Loans: Ameriquest, Bank of America, Capital One, Chase, Citibank, Countrywide, Ditech, E-Loan, LendingTree/GetSmart, Low.com, LowerMyBills, National City, NexTag, Quicken Loans, Washington Mutual, Wells Fargo

2. Definitions:

Shopper: Consumer who visited product-related content at a site in the competitive set. For the purposes of this Monthly Performance Update, a consumer can be counted for each site they visit. 

Application: Any Web form requiring the consumer to enter personal info including Social Security Number; counted only when completed.

Lead: Any Web form requiring the consumer to enter personal information, not including Social Security Number; counted only when submitted.

Conversion: = (Leads + Applications) / Shoppers

3. Methodology:

Compete's projections are supported by industry-leading data management and technology. The consumer and industry data is drawn from numerous sources and comprises the largest continuous consumer behavior database in the industry. Its proprietary data methodologies and patent-pending technology aggregate, transform and normalize this data and ensure it is representative of the entire U.S. online marketplace.

People are recruited to join Compete's member community through www.compete.com, the first website to help consumers personally benefit from clicksharing. Consumer data is also licensed from national ISPs and ASPs. This multi-source data collection methodology sets the industry standard for representative and actionable data. Members are protected by Compete's stringent privacy policy and data collection techniques that purge personally identifiable information.

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One-quarter of 50 Largest Online Advertisers are From Financial Services

By Jim Bruene on May 21, 2007 9:58 AM | Comments

Link to Freecreditreport.com by Experian It's no surprise that financial services companies are some of the largest online advertisers. It's been that way since the medium began accepting advertising in 1995. However, you might be surprised who was the number 1 financial-services advertiser in 2006: Experian with $128 million, 50% more than Microsoft's $82 million. Only five companies spent more online in 2006: Vonage, AT&T, Dell, Disney and GM.

The credit bureau and direct marketing company has expanded its direct web-based financial services presence via acquisition over the last few years and now owns prolific advertisers such as LowerMyBills.com and FreeCreditReport.com.

Most financial companies in the top-50 were in the brokerage and investment category with TD Ameritrade, Scottrade, E*Trade and Fidelity all in the $100 to $120 million category. Non-brokerages included IAC/Interactive parent of Lending Tree and GetSmart, American Express, Capital One, Bank of America, and the biggest surprise in the top-50: LoanWeb with $37 million, more than any retail bank in the country, except BofA. 

Here's the financial services companies in the top 50. Data in from TNS as cited in Online Media, Marketing, & Advertising Magazine (OMMA) last week (here). Previous NetBanker coverage is here.

Overall Rank/Company/2006 Online Advertising Expenditures

6   Experian               $128 million
9   IAC/Interactive    $123 million (includes non-financial products)
10  TD Ameritrade     $120 million
14  E*Trade                $107 million
15  Scottrade             $105 million
18  Fidelity                 $98 million
23  American Express $80 million 
25  Charles Schwab    $72 million
29  Forex Capital Markets $57 million
34  Capital One           $53 million
35  Morgan Stanley     $53 million
44  Bank of America    $43 million
48  LoanWeb               $37 million

Source: TNS, 2007

Comments

Update on Prosper.com Traffic Numbers

By Jim Bruene on May 17, 2007 1:01 PM | Comments

Last week we reported on the apparent traffic spike at person-to-person lender Prosper. Compete's Snapshot showed Prosper with 1 million unique visitors in March.

Based on that observation, Compete dove into the Prosper numbers and found that the domain had not yet been added to its more rigorous monitoring system, and in fact, there appeared to be some panel bias in the original March traffic numbers. Under Compete's revised assumptions, Prosper's March traffic estimate is a third less, just under 700,000 visitors, instead of 1-million plus. 

Also, Compete has now released its April estimates and found that Prosper's traffic declined 25% to 500,000 visitors. While that no longer puts Prosper at the same level as Suntrust, the lender does have considerably more visitors than the nation's 23rd largest bank, Comerica (see revised traffic chart below, Prosper is the blue line).

Compete traffic estimates

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Prosper Traffic Spikes, Hits Major Bank Levels

By Jim Bruene on May 10, 2007 11:54 AM | Comments

Prosper homepage Preparing a table for our upcoming report on social finance, we were slogging through website traffic at Compete.com and discovered a startling statistic. In March, traffic to the person-to-person lender Prosper.com was four-fold that of January, growing to more than 1 million unique visitors. That puts it in rarefied company, approximately the same as a top-20 bank such as SunTrust, which according to Compete had just 10% more traffic in March (see chart below).

If those numbers are accurate, and they weren't driven by unsustainable events such as a a mentions in major blogs or media, Prosper may have moved past the early adopter stage, and into the more mainstream web-based financial services arena.

It appears the traffic is converting to registered users. The last time we checked, April 25, the homepage said it had 240,000 registered users. Today, it says 270,000. That's 12% growth in 15 days.

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Jupiter and Compete Reach Opposite Conclusions on Current U.S. Demand for Mobile Banking

By Jim Bruene on May 2, 2007 10:49 AM | Comments

Market research is an amazing thing. You can take the same study and reach two entirely different conclusions. Or you can achieve totally different results by the way the question is worded, what multiple choice answers are provided, what questions preceded it, or even the tone or style of the interviewer. Then there are issues with how the sample was selected, online vs. phone, whether it is representative of a national audience, whether incentives were provided, etc. etc. etc.  

That's not to say that market research should be ignored. Just that you need to be careful with it. And if you make decisions based on market research, you need to understand how and when it was collected, what the exact questions were, and who underwrote the study.

Case in point: Mobile banking demand

In the past two weeks, two reliable research companies, Jupiter Research and Compete, Inc. released research finding on whether U.S. consumers think they will want to use mobile banking when it becomes available. This type of "what if" question is even more problematic than other types of market research. Because the participant doesn't use the service in question, the interviewer first has to paint a picture of what it might look like at some future point, then ask the respondent what their level of interest is. So, the results are highly dependent on how the hypothetical service is described, and if it's a telephone interview, how enthusiastic the questioner is about it. Imagine the difference in response to these two questions:

1. How would you like to press a button on your cellphone that gave you instant, secure, free access to your bank account balance so you didn't ever bounce a check again?

or

2. At some point in the future, you might be able to download and install a Java application over the air for your mobile device that provided a subset of the functionality of online banking ported to a 2 inch screen. And, as long as you never left your phone somewhere by mistake, it should be as secure. How excited would you be about that?

Unfortunately, I haven't seen the exact questions or methodology used to produce the following press releases, so I can't say exactly how the companies reached their conclusions. However, Compete will be presenting their finding in a free webinar Thursday, so you might want to listen in. If you can't make it, I will file a followup blog post. Full disclosure: After spending much of Q1 researching and writing about mobile banking and payments, and yes, selling reports of my findings, I'm firmly in the pro-mobile banking camp (see previous coverage here). 

Finding 1: Considerable interest in Mobile Banking

Author: Compete, Inc.

Link: http://blog.compete.com/2007/05/01/mobile-banking-rebirth/

Synopsis: In an April survey of online banking users, only 19% said they would definitely not use it, while 11% said they definitely would. The vast majority (70%) between the extremes need more info before they decide. There is a measurable advantage for the negatives (38% won't/probably won't use) over the positives (29% will/probably will), but that's doesn't seem particularly negative for a service that does not yet exist.

Note: Compete will be presenting the results in a free webinar Thursday, May 3, at 2PM Eastern. Presenters: Paul Zeckser, Director Financial Services Practice & Ryan Burke, Director, Telecommunications and Media Practice

Compete results


Finding 2: Little interest in Mobile Banking

 Author: Jupiter Research

Link: http://www.jupiterresearch.com/bin/item.pl/press:press_release/2007/id=07.04.23-mobile_banking.html/

Synopsis: Limited data was released to the public, but in a press release last week, with the title, JupiterResearch Finds Limited Consumer Interest in Mobile Banking, the company said only 8% of consumers were interested in mobile banking. No supporting data was provided. We will invite report author Asaf Buchner, who I respect greatly, to provide more background on Jupiter's findings.

Note: Below is the exact quote from the press release. The specific scenario here, "using mobile browsing to check account balances," may be part of the reason for the lower interest. Only about 10% of U.S mobile phone owners use mobile browsing today.  

Just eight percent of online consumers who own a cell phone are interested in using mobile browsing to check account balances.

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Online Banking and Marketing Statistics from Net.Finance

By Jim Bruene on April 20, 2007 4:24 PM | Comments (3)

Net.Finance 20007 landing page Since I'm a numbers junkie, whenever I'm at a conference, I try to note as many meaningful statistics as possible. By meaningful, I mean a number that provides an outsider with some insight into the business. Merely saying, "we beat our expectations by 63%" does NOT qualify, unless the speaker also shared their expectations. 

The flow of numbers was about a bit below average during the three days I attended Net.Finance, but the two professional researchers on the agenda, Jim Van Dyke of Javelin Strategy and Asaf Buchner of Jupiter Research, delivered slides chock full of statistics. I will check with them to see if they are willing to share with our readers. 

Here's some of the nuggets buried in the presentations from the other experts on stage: 

Most Eye-Opening Stat

  • Link to Prosper homepageDuring the past 14 months, more than 280,000 messages have been posted on the Prosper.com discussion forum, according to CEO Chris Larsen (see here for Colin Henderson's complete notes on this session).

    My take: That's an amazing level of consumer engagement with the new lending platform. To put that in perspective, Wells Fargo's Student Loandown blog has received 98 total comments during its eight months online.

Best Stat to Drop in a Business Case:

  • Link to VerityCU homepageShari Storm, CMO, Verity Credit Union, said that 1% of its new members named the blog when asked how they heard about Verity; the new members had an average of 2.7 accounts with $9,000 in deposits and $11,500 in loans (excluding mortgage); furthermore, the CU's blog, launched in Dec. 2004, now has 1,000 readers (see here for Colin Henderson's complete notes on this session)

    My take: While I don't recommend trying to turn this single data point into an ROI calculation, it's the first time I've heard a financial exec say something about blogging that the finance folks will appreciate (chalk up another first for Verity).

Stat that Most Contradicts My Previous Position:

  • Link to Vancity's changeeverything blogVancity's ChangeEverything.ca blog, launched commercially in Sept 2006, now has 1,000 registered users who've generated more than 2,000 blog entries and comments; in total, the site has had 45,000 unique visitors according to William Azaroff, Interactive Marketing Manager (see here for Colin Henderson's complete notes on this session)

    My take: Despite my reservations about whether it would gain traction without a financial services perspective (see our Online Banking Report on Bank 2.0 here), Vancity's unique blog has gained a small, but growing, worldwide following, and, more importantly, has contributed measurably to Vancity's efforts to help its community and create positive brand positioning for the CU. Nice work.  

Blogging/Podcasting:

  • Key Bank's most popular podcast, top stock picks by John Caldwell, has recorded 70,000 visits and 12,000 unique users, according to Interactive Marketing Manager Mickey Mencin
  • Colin Henderson, BankWatch blogger and former BMO exec, mentioned that 39% of Canadians are now reading blogs 

Online Marketing:

  • Colin Henderson also cited Forrester findings that 50% of recent financial buyers did 100% of their research online; 30% performed both on- and offline research; and just 20% conducted all the research offline. In Citibank's late 2005 new checking account promotion, the bank gave away 275,000 iPods, according to Charles DeFelice, SVP customer information environment (it wasn't specified if this was the POTENTIAL or ACTUAL number given away, since consumers had to follow through with a number of electronic activities over a period of months in order to qualify for the freebie
  • Jon Kaplan, head of Google's financial services group, said that 60% of Google users have a personalized (Google) page and that 20% of Google search volume originates from these pages
  • GE Money's SVP of Strategy Vincenzo Picone said the company has 300 million customers with $190 billion in assets across 54 countries which led to a net profit of $3.5 billion in 2006; the company has 2010 targets for 300 million unique visitors; $20 billion in online originations and 1 billion transactions via the online and mobile channel
  • U.K.'s Lloyds TSB experienced a 71% revenue lift (against a control) on its homepage by implementing Touch Clarity's (now Omniture) targeted ad server which uses a number of variables to determine which ads should be shown to an individual visitor; according to Omniture's Brent Hieggelke who showed results from a case study presented by Lloyds TSB at a recent conference

Mobile Banking:

  • Jennifer Vos, director of Citi Mobile, Citibank's new mobile banking service, said that one-third of current Citi customers have input mobile phone numbers into the bank's alert system; furthermore, the new mobile offering was piloted by 100 employees, who have recently been joined by another hundred users in the southern California market

Small Business Banking:

  • Wells Fargo has 150,000 "very active" small-business online banking users according to Eskander Matta, SVP of internet services group; businesses are making $45 million in payments per month with the bank's DirectPay service launched just a year ago

Branding:

  • 94% of ING Direct's customers would recommend it to a friend, according to John Owens, Head of Marketing

Online Banking:

  • Customer satisfaction in online banking, while on the rise, still trails online retailing by five percentage points, 78% vs. 83%, according to Larry Freed, CEO Foresee Results
Comments (3)

Mobile Payment Metrics: NTT DoCoMo

By Jim Bruene on March 26, 2007 3:55 PM | Comments

DoCoMo mobile payments in use In today's special Technology Report in Wall Street Journal, the lead article was "What's New in Wireless," by Amol Sharma. The article's main focus is mobile video and advertising, but there are several paragraphs about mobile payments, mentioning the Cingular/AT&T/Citibank cellphone payment trial through MasterCard's PayPass. The only statistical backup provided was the 1.3 million Japanese mobile users signed up for NTT DoCoMo's year-old mobile credit-card service (note 1).

That number seemed low based on what I've been hearing about the popularity of all things mobile in Asia. It turns out the 1+ million number is just DoCoMo's credit-card slice of the mobile payments pie. 

NTT DoCoMo iD credit card platform In Japan, per capita credit card usage is just one-seventh that of United States (note 2) and stored value is much more popular. DoCoMo has 20 million stored-value mobile wallets in place, 15x the number of credit users. The mobile wallet penetration is approximately 40% of DoCoMo's 52 million wireless subscribers (note 3). 

That's a healthy uptake rate for a product that was introduced less than three years ago. Even the year-old mobile credit card adoption is dramatic given the country has just 130 million credit cards outstanding. DoCoMo's market share is already higher than 1% of total cards outstanding, the equivalent of 8 million accounts in the United Sates (note 4).

Interestingly, part of the reason for the popularity of cash replacements in Japan is that the lowest paper-money denomination is 1,000 Yen, or about $8.80, making coins more common and somewhat less convenient for low-value payments compared to the U.S. and its ubiquitous $1 bill. However, the stored-value mobile wallet is expected to eventually become popular in the U.S. once merchant acceptance grows, especially in the youth and underbanked segments with less access to traditional bank cards; but it won't likely reach current levels of Japanese penetration for another five to seven years (note 5).   

Notes:

1. According to a Feb. 1 article in the Motley Fool, DoCoMo has 1.5 million users who've applied for and activated the credit card function in their phone. The number of outlets accepting DoCoMo mobile payments was expected to top 150,000 this month. DoCoMo allows other credit card issuers to use its ID platform to delivery card services to its customers. DoCoMo also began issuing its own mobile credit card under the DCMX brand last year. For more information, watch the DoCoMo's video about its mobile wallet (here). The wallet discussion begins at about the 4.5-minute mark of the 16 minute video. DoCoMo's ID credit-card platform and its own DCMX credit card discussion begins at the 6-minute mark and ends a little before the 10-minute mark. The rest of the video discusses i-Mode's international growth and is not directly related to payments.  

2. According the Federal Reserve Bank of Philadelphia, in 2004 American's made 84 credit card purchases annually per capita, vs. 11 in Japan (see report here). According to the online CIA Sourcebook, in mid-July 2006 the population of Japan was 127 million compared to 298 million in the United States.

3. According to the company, DoCoMo has a 55% share of the Japanese cellphone market.

4. The U.S. has about 800 million credit cards outstanding (according to FRB Philadelphia, see #2.  

5. See our forecast in Online Banking Report 138/139 published three weeks ago.

Comments

Future Friday: Forrester is Bullish on Online Banking Household Growth

By Jim Bruene on March 23, 2007 2:47 PM | Comments

Forrester Research is known for making conservative technology forecasts, doing a great job of not getting caught up in the early hype. For example, five years ago (May 2002), Forrester predicted there would be 38 million U.S. households banking online by 2006, about double the 20 million at the time. That prediction turned out to be about 10% to 15% shy of the actual total (see note 1). 

But in Forrester's latest online banking forecast (here), VP and Bank of America/Wells Fargo veteran Cathy Graebner, is uncharacteristically aggressive. In her report she says the U.S. market will grow to 72 million online banking households in less than 5 years, a 55% increase from Forrester's current estimate of 46 million. If that happens, penetration would be 63% of all households, or 76% of online households (note 2).

In comparison, we are projecting 54 million households, a 30% growth from our estimated 42 million online banking households at year-end 2006. Even our high-end forecast calls for only 62 million, still 10 million shy of Forrester's number.

Analysis
Normally, Forrester and Online Banking Report track pretty closely. I have a call in to Cathy to see where our assumptions differ (note 3). In many ways, I hope she's right. But I believe there is currently a ceiling for most ecommerce activities at about a 50% penetration rate (of all households), and I just don't see how online banking can move significantly past that within five years. Perhaps mobile access will bump the growth rate 3 or 4 years out, but I still don't think that's enough to get past 60 million households.  

Look at it this way. An estimated 10% to 15% of households don't even have a bank account. If you subtract those from the total, Forrester is saying that more than 70% of U.S. households with bank accounts will be using online banking less than five years from now. That would be great for our industry, but I just don't think it will happen for at least another decade (note 4).   

Read it yourself and let me know which forecast you believe is closer.

 

Notes:

1. Our parent publication, Online Banking Report, had similar view at the time, predicting in December 2002 that 43 million U.S. households would be banking online by 2006 (see Online Banking Report #89, published Dec. 10, 2002). Online Banking Report is published by the same company as this blog. According to our latest forecast (Online Banking Report #137), 42 million U.S. households were banking online at year-end 2006.

2. Penetration figure calculated by taking Forrester's 2011 online banking forecast and dividing by our 2011 total U.S. household forecast.

3. I have not read the full report, only the abstract on the Forrester website.

4. The furthest out we project is 2016, where our total still trails Forrester's 2011 prediction (see OBR 137).

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Freakonomics Meets Identity Theft

By Jim Bruene on March 17, 2007 3:36 PM | Comments (1)

When I saw the blog postings this week that Freakonomics authors, Steven D. Leavit and Stephen J. Dubner, had penned an article on identity theft, I anxiously clicked into the Sunday NY Times Magazine to read the article (11 March 2007, link here). I had hoped that the popular statistical wizards had taken on the subject of why ID theft loss estimates vary by as much as 20-fold, from a couple billion to more than $50 billion (note 1).

Unfortunately, the article, Identity Crisis, shed no light on any of the statistical anomalies nor did it offer any help with definitions, even after using this lead sentence:

There are as many varieties of identity theft today as there are varieties of, say, mushrooms.

The lightly researched article relied on the usual Javelin and FTC numbers and reached the unsurprising conclusion that merchants are the ones that most care about credit card fraud. But the authors glossed over the fact that it's the online merchants who are burned most by card fraud, due to card-not-present chargeback rules (note 2). Real-world card swiping merchants are often made whole for fraud situations provided they followed the card association rules for checking the signature scrawled on the receipt against the 1/8 inch script scribbled on the back of the card (as if that stops much fraud).

The authors also failed to realize, or at least note, that the oft-cited Javelin finding that more than half of ID theft is from people you know, includes only the situations where the victim has knowledge of who perpetrated the fraud. In round numbers, here's what the pie looks like:

  • 50% of ID theft victims don't know who stole from them
  • 25% know who stole from them, but have no relationship with the crook
  • 25% know who stole from them, and the crook was family, friend or co-worker

I believe that it's a bit of stretch to say that half of all identity theft is from related parties when it could be a little as 25% or as much as 75%.  

Blog Comments on ID Theft
Unlike the old days when the only way to interact with an article was a letter to the editor, Leavit and Dubner maintain a blog (here) where readers can sound off on the issues. The blog entry, Who Cares About Identity Theft?, went up on March 9, two days before the full article appeared in the Sunday Times. I was surprised today (March 17) to find only 29 comments on the identity theft piece, especially since the blog has more than 55,000 readers and both the print and online NY Time's columns directed readers to the Freakonomics blog.

And no one seemed to care that the authors did little to further the debate on identity theft, chargebacks, or law enforcement priorities (note 3). In fact, it appeared that only a half-dozen of the commenters had even read the full article. So we have at least a partial answer to the "who cares" question, not the blog readers (note 4).

 

Notes:

1. During the past month, I've had conversations with extremely frustrated reporters from the Wall Street Journal and Wired Magazine, who were trying to figure out what the true costs of financial fraud in the U.S. really are. 

2. I have to admit being biased here. As an online-only merchant, I pay large credit card fees, around 3% that cover the supposed "high-risk" nature of online commerce, even though I have zero recourse if the charge is later disputed as fraudulent.

3. The article had conflicting anecdotal evidence on law enforcement efforts to stem financial fraud, saying the FBI usually needed at least $100,000 in losses to get involved. The article implied, but did not explicitly say, that lesser amounts are not pursued aggressively by local police departments. Although it cited an officer from the Los Angeles County Sheriff Department's ID Theft Task Force, which at least sounds like significant enforcement action.

4. It's not so much consumer don't "care," but that they are no longer so interested in discussing it and/or they are less concerned now that many understand that they are well protected against financial loss.

Comments (1)

In 2006, 86% of credit card direct mail included online options

By Jim Bruene on March 5, 2007 11:13 AM | Comments (4)

Advertising-monitoring firm, Mintel Comperemedia reported last week that nearly 9 out of 10 credit card solicitations in 2006 directed recipients to the Web, up sharply from 56% in 2003 (see note 1, 2). Several big mailers, namely American Express, still seem reluctant to use website response as an option, at least in the mailers we see at our house.

American Express tests must show a drop in response by offering too many choices. But if you don't have the budget of American Express, which can afford to drop a mail piece in every credit-worthy household every two or three weeks, you should add website options to your direct mail creative. That way, you can at least capture a lead at your website, even if they don't ultimately accept your credit offer. 

Total mailing volume for 2006 was 9.2 billion pieces (see note 1), or about 3 per week per credit-worthy household. Two of those were from the five largest mailers listed below which accounted for more than 60% of the volume, according to Comperemedia. JPMorgan Chase accounted for 18% on its own. 

In another data slice from Comperemedia, cited by Capital One in a Feb. 2006 investor presentation (PDF here), response rates have fallen from 1.4% in 1995 to 0.3% in 2004 (see note 3).

Here's a breakdown of the billion-piece club, and their percent change compared to 2005:  

1. Chase >>> 1.7 billion (down 4%)

2. Capital One >>> 1.2 billion (up 13%)

3. American Express >>> 1 billion

4. Citibank >>> 980 million (down 2%)

5. Bank of America/MBNA >>> 920 million (down 17%)

Other top-10 mailers: HSBC (up 25%); Discover (up 29%); Barclays Bank (190 million, up 70%)

Note:

1. Comperemedia tracks mailing volume for more than 150 large financial institutions. So the figures here do not include mailings from thousands of smaller banks and credit unions. In total, those probably account for less than 5% of the total from the top-150. 

2. Comperemedia press release is here. Interview of Comperemedia director Jenny Roock by MediaPost is here.

3. Credit card response rate slide from Capital One's investor presentation (PDF) at the Debt & Equity Conference, Feb. 2006; data from Comperemedia.

Credit card industry response rates

Comments (4)

Bank of America Opens One New Checking Account per Branch per Day

By Jim Bruene on February 28, 2007 11:31 AM | Comments (6)

The folks at BAI, using research by Raddon Financial, ran the numbers on new checking account sales per branch and found that Bank of America is opening 31 new checking accounts per branch per month, or just about one per day (article here). WaMu did better with 39 per month or 1.3/day. The article said community banks typically get only about one-fifth that,  just 2 new checking accounts per week per branch.

I'm not sure exactly what those numbers mean, but someday in a meeting when you are trying to make a case for new investment in your website, you can counter the, "but customers love the branches" with, "sure they do, but even BofA, who spends more than $200 million/year advertising, only manages to sell one checking account per day per branch" (see top 2005 advertisers here). It still might not mean anything, but it makes it sound like you've done your homework.

The problem with comparing branch-account openings to online-account openings is they are not separate ecosystems. Would the account have been opened online without a nearby branch? Or did that account, opened at the branch, come as a result of research conducted online by the customer? In the U.S., you need both channels for the foreseeable future, unless you sell a financial product that doesn't need physical support, like a savings account (see note 1).

Another wild card: How do you gauge the impact of increasingly prominent website offers like this one currently running on the checking account page at <bankofamerica.com> (see note 2)? Naturally, to get the $50 you have to open the account online.

Bank of America landing page for $50 checking account offer

Notes:

1. For more information on the future of the online channel vs. branch, see our report, The Demise of the Branch, published spring 2006 in Online Banking Report (OBR 128).

2. The offer was presented to a non-customer browsing the main Bank of America site from a Seattle IP address and indicating their state of residence was Nevada.

Comments (6)

Mobile Banking & Payments 2.0 Released: The Latest from Online Banking Report

By Jim Bruene on February 26, 2007 4:07 PM | Comments (2)

OCBC Bank mobile banking serviceWe've finally wrapped up our latest report, Mobile Banking & Payments 2.0, published by Online Banking Report, our by-subscription research division (see note 1).

  • Link to the PDF abstract and table of contents here
  • Link for subscriber access, or to purchase, here

Work on this report started at BAI's Retail Delivery Conference in mid-November where we scheduled a series of briefings with the three mobile players in attendance: ClairMail, Firethorn Mobile, and mFoundry. As reported here previously, we were mightily impressed with the opportunities available in the mobile space.  

After three months of looking at mobile banking, talking to more players, and trying to develop a reasonable forecast, we have slightly tempered our initial enthusiasm. While we remain optimistic that the mobile channel will someday eclipse desktop online banking in terms of pageviews and routine transactions, in North America mobile banking is NOT a new channel, but rather an extension of existing sales and service channels (see note 2). And with few fees expected, the business case must be made on the softer retention benefits and customer service savings.   

The Forecast
U.S. mobile banking adoption compared to online banking adoptionEven with a challenging business case, most top-10 retail banks are headed to market in 2007-2008 with some form of mobile banking. We forecast that 25% of U.S. households will use mobile bank access by the middle of the next decade. The mobile banking adoption curve for the next 10+ years will be virtually identical to that of online banking from 1995 to the present (see inset above and note 3). 

But we are much less certain on which method of mobile banking will cross the chasm. Unlike Web-based banking, there are powerful entities, called wireless carriers, that stand between the bank and its customers in True Mobile Banking. So it seems that text/SMS-based services will lead the initial wave, because they are less dependent on the carrier and most under-40 users are already using them. However, long term, we believe more complete one-button (see note 4) solutions will prevail. And while we do forecast the adoption for all three methods, there are too many variables to be certain. A year from now, things should be quite a bit clearer.   

Subscribers, please post your comments about this report below, or email them directly to jim@netbanker.com.

End Notes:

1. For those of you that may be new readers, this blog is written by the publishers of Online Banking Report, an industry newsletter that began 12 years ago. Many of our blog postings are a by-product of the research we are doing for Online Banking Report, so you'll often see references to our more in-depth research published there, available by subscription only. 

2. This is different in other countries where branch and PC-based banking is less pervasive.

3. U.S. adoption by household, +/- 25%. The underlying data and assumptions for this table are in the full report, OBR 138/139, as referenced in the opening paragraph.

4. One-button mobile banking is our name for banking functions that may be called up on the mobile screen through a link on the main menu. It could be a WAP-based mobile website or a downloadable application. 

Comments (2)

New Account Totals for ING Direct's Electric Orange Checking

By Jim Bruene on February 16, 2007 2:23 PM | Comments

ING Direct debit cardYesterday, Money.com posted an article (here) citing new account totals for ING Direct's Electric Money checking account:

  • 60,000 accounts, a 1.5% penetration of the
    bank's 4 million accounts
  • $2.2 billion in new deposits, a hefty $37,000
    per account*

Two weeks ago (Feb. 1), the bank said it had attracted 42,000 accounts (see post here).

The inset is an actual Electric Orange MasterCard debit card. 

*An average of $37,001 if you ignore my $100 account

Comments

Is the United States Overbranched?

By Jim Bruene on February 7, 2007 10:20 PM | Comments (1)

Union Bank's locations in Lincoln, NE <ubt.com> Well, not so much when compared with other Western countries; however, the bigger question is whether they are all overbranched. Only Singapore, with 111 branches per million inhabitants, is in a good position cost-wise. Italy and Switzerland, with more than 700 branches per million, have their work cut out for them as they reduce the number of branches from a level twice as high per capita as the U.S. total of 372 per million.

At our sister publication Online Banking Report, we've predicted that the total number of branches in the United States will fall by about 40% during the next 20 years (see note 1). Given expected population growth, that equates to about half the number of branches per million (using the BIS baseline, our projection is that the U.S. would have fewer than 200 branches per million in 2025).  The reason for the decline is the rise of the out-of-branch channels: phone, online, ATM, and soon mobile (see note 2).

Here's some interesting data from the Bank for International Settlements <bis.org>. Click on the table below to read the five-year data trend. The 270-page PDF is located here.

Interestingly, of the 13 countries covered in the report, only Hong Kong, Singapore, Sweden and The Netherlands have fewer branches per capita than the United States. We have almost 25% less than the 13-country average. Only two countries showed an increase in the 2001-2005 period: Italy which added 1,500 branches and the United States which grew about 6,000 (see note 2).

Here's the list in order of most branches to fewest per million inhabitants:

1. Italy                 >>> 762
2. Switzerland   >>> 701
3. France            >>> 649
4. Belgium          >>> 566
5. Germany        >>> 561
6. UK                     >>> 472
<< <AVERAGE >>> 471
7. Japan               >>> 459
8. Canada             >>> 441
9. U.S.                    >>> 372
10. Sweden          >>> 295
11. Netherlands >>> 270
12. Hong Kong   >>> 249
13. Singapore     >>>  111

Notes:

1. See Online Banking Report's Decline of the Branch (#128), published May 2006.

2. Tom Brown's been writing about the trouble some banking chains have been having with the performance of their new de novo branches (see here).  

3. In 2001 and 2002, the U.S. branch total in the BIS data-set excluded credit unions.

Comments (1)

The One-Million Club: 31 U.S. Financial Institutions with Seven-Figure Site Traffic

By Jim Bruene on November 6, 2006 11:54 AM | Comments

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

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

Emigrant Direct traffic trend CLICK TO ENLARGE

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

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

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

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

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

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

Comments

Bank of America Adds 760,000 Users in Third Quarter

By Jim Bruene on October 19, 2006 11:44 AM | Comments

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

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

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

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

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

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

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

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

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

Comments

Bank Blogging Coming to Corporate America

By Jim Bruene on October 6, 2006 12:27 AM | Comments

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

Source: OpenSourceCU.com, Online Banking Report

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

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

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

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

Comments

Forrester Says 24% of Gen Y Reading Blogs

By Jim Bruene on September 13, 2006 11:05 AM | Comments

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

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

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

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

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

Comments

Financial Keyword Frequency from AOL Search Data

By Jim Bruene on August 14, 2006 5:48 PM | Comments

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

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

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

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

--JB


Rank/Search Term/Number of Searches/% of Searches that Ended in a Click (to ANY website)
Note: Click on the search term for a list of the websites visited after entering this search term

40 bank of america 5,920 70%
86 bankofamerica 3,450 71%
114 fidelity.com 2,862 77%
159 bankofamerica.com 2,280 53%
170 paypal 2,197 24%
174 www.bankofamerica.com 2,174 45%
202 free credit report 2,007 61%
215 american express 1,931 70%
259 wachovia 1,715 68%
264 wells fargo 1,691 76%
283 capital one 1,620 44%
284 zillow.com 1,616 36%
313 chase.com 1,525 57%
327 wellsfargo.com 1,460 50%
333 chase 1,454 64%
343 mortgage calculator 1,420 62%
382 www.capitalone.com 1,290 18%
391 washington mutual 1,266 78%
448 citibank 1,155 79%
457 wachovia.com 1,135 52%
488 www.wellsfargo.com 1,089 47%
509 capitalone.com 1,041 24%
525 wellsfargo 1,017 62%
528 credit report 1,014 62%
555 capitalone 985 41%
558 wamu.com 983 67%
667 checks 850 75%
674 chase bank 846 72%
689 credit cards 835 42%
708 www.bankofamerica 817 20%
731 mbna 795 78%
732 bank of america.com 795 54%
756 personal loans 775 78%
782 www.wachovia.com 761 39%
807 paypal.com 745 19%
813 zillow 739 50%
819 commerce bank 735 83%
901 wamu 685 71%
910 freecreditreport.com 682 34%
922 fidelity 675 70%
961 usbank 656 77%
984 loans 644 33%
985 providian 644 86%
1058 mypay 612 90%
1085 hsbc 601 51%
1145 usaa 570 75%
1171 americanexpress.com 563 53%
1195 us bank 553 80%
1232 ameritrade 541 60%
1249 discover card 536 65%
1251 etrade 535 65%
1309 auto insurance 518 51%
1319 aetna 516 78%
1333 www.wamu.com 512 71%
1371 www.zillow.com 501 25%
1388 usbank.com 496 63%
1396 orchard bank 493 50%
1425 wells fargo bank 484 75%
1446 payday loans 479 72%
1449 citizens bank 478 74%
1488 bank one 469 73%
1494 suntrust 467 82%
1502 wwwbankofamerica.com 464 21%
1529 www.providian.com 458 76%
1548 www.citicards.com 452 35%
1582 wachovia bank 444 52%
1630 experian 435 57%
1648 americanexpress 431 59%
1655 www.bank of america.com 430 44%
1663 national city bank 427 77%
1693 www.chase.com creditcards 420 52%
1714 bad credit loans 416 80
1715 providian.com 416 79%
1801 credit reports 403 63%
1823 usaa.com 400 62%
1833 citicards.com 397 48%
1873 www.americanexpress.com 392 38%
1879 american express.com 391 30%
1883 annualcreditreport.com 391 62%
1912 bankone 386 75%
1927 life insurance 385 60%
1964 zillo.com 380 17%
1978 countrywide 376 50%
Comments

Best Internet Banks from Global Finance Magazine

By Jim Bruene on August 8, 2006 11:07 AM | Comments

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

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

Consumer Internet Banks:

Best investment management services: Bank of America

Best bill payment and presentment: Bank of America

Best online consumer credit: Wells Fargo

Best website design: Wells Fargo

Best integrated consumer bank site: Bank of America

Best information security initiatives: Bank of America

Best online deposits acquisition: TD Bank Financial Group
-

Corporate/Institutional Internet Banks:

Best online cash management: Citigroup

Best trade finance services: Citigroup

Best website design: Wells Fargo

Best integrated corporate bank site: Wells Fargo

Best information security initiatives: JPMorgan Chase

-

-

Global Finance Magazine's Best Internet Banks for 2006

Country

Consumer

Corporate/Institutional

Argentina

Banco Rio de la Plata, S.A.

Citigroup

Australia

HSBC

Citigroup

Austria

RZB

RZB

Bahrain

Citigroup

--

Belgium

Citigroup

--

Bolivia

--

Citigroup

Brazil

Banco Bradesco

Banco Bradesco

Brunei

HSBC

--

Cameroon

--

Citigroup

Canada

TD Bank Financial Group

TD Bank Financial Group

Chile

Citigroup

BBVA

China

Ind. & Com’l Bank of China

Citigroup

Colombia

Citigroup

BBVA

Congo

--

Citigroup

Costa Rica

--

Citigroup

Cote D'Ivoire

--

Citigroup

Dominican Republic

--

Citigroup

Dubai

National Bank of Dubai

National Bank of Dubai

Ecuador

--

Citigroup

Egypt

Citigroup

Citigroup

El Salvador

--

Citigroup

Finland

--

Citigroup

France

--

Citigroup

Gabon

--

Citigroup

Germany

Citigroup

JPMorgan Chase

Greece

Citigroup

Piraeus Bank/Winbank

Guatemala

--

Citigroup

Haiti

--

Citigroup

Honduras

--

Citigroup

Hong Kong

HSBC

Citigroup

India

ICICI Bank Ltd.

ICICI Bank Ltd

Indonesia

Citigroup

Citigroup

Ireland

--

Citigroup

Israel

--

Citigroup

Italy

--

Citigroup

Jamaica

--

Citigroup

Kenya

--

Citigroup

Korea

--

Citigroup

Kyrgyzstan

AsiaUniversalBank (AUB)

AsiaUniversalBank (AUB)

Malaysia

HSBC

OCBC

Mexico

Banamex

Banamex

Netherlands

--

Citigroup

Nigeria

--

Citigroup

Oman

BankMuscat

--

Pakistan

Citigroup

Citigroup

Panama

--

Citigroup

Paraguay

--

Citigroup

Peru

BBVA

Citigroup

Philippines

Citigroup

Bank of the Philippines

Poland

Bank Millennium

Citigroup

Portugal

Millennium BCP

Millennium BCP

Puerto Rico

Banco Santander

Citigroup

Qatar

Qatar National Bank

Qatar National Bank

Russia

ZAO Raiffeisenbank

Citigroup

Saudi Arabia

Samba

Samba

Senegal

--

Citigroup

Singapore

Citigroup

--

Spain

BBVA

Citigroup

South Africa

--

Citigroup

Sri Lanka

HSBC

--

Switzerland

--

Citigroup

Taiwan

Citigroup

Chinatrust Com’l Bank

Tanzania

--

Citigroup

Thailand

Citigroup

Citigroup

Trinidad & Tobago

--

Citigroup

Turkey

Garanti Bank

Akbank

Uganda

--

Citigroup

United Arab Emirates

HSBC

HSBC

United Kingdom

Citigroup

HSBC

United States

Bank of America

Citigroup

Uruguay

--

Citigroup

Venezuela

Banco de Venezuela

BBVA Banco Provincial

Zambia

--

Citigroup

Source: Global Finance Magazine <gfmag.com>, July 8, 2006

Comments

Top U.S. Financial Brands

By Jim Bruene on July 29, 2006 10:07 AM | Comments

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

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

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

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

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

-- JB

Notes:

  1. Measured media spending from TNS Media Intelligence includes spending in consumer magazines, Sunday magazines, local magazines, b2b magazines, local and national newspapers, network TV, spot TV, syndicated TV, network cable TV, network radio, national spot radio, local radio and Spanish-language magazines, newspapers, and TV. It does not include Internet spending.
  2. Advertising Age's definitions of financial services are slightly different than ours, since they show industry spending of $4.4 billion while our list of the 19 financial brands amounts to $4.8 billion.
Comments

Online Banking by Businesses Surpasses 50%

By Jim Bruene on June 16, 2006 11:09 AM | Comments

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

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

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

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

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

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

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

Online banking features
And what are they doing online?

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

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

Comments

Online Advertising Spending for Financial Services Companies

By Jim Bruene on May 17, 2006 6:23 PM | Comments (1)

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

2005 Advertising Expenses, in millions
Internet_spending_2005_2004

Comments (1)

Citibank's Forecast for Online Savings

By Jim Bruene on May 5, 2006 9:25 AM | Comments

Google_onlinesavingsaccount 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

Comments

Contactless Payments Systems are the Future

By Jim Bruene on April 29, 2006 1:12 PM | Comments

Contactless payments systems in their various stripes are the future of retail point-of-sale systems, and banks still own the networks. But unless they stop trying to control the process, they could lose the system to merchants with their own private-label card programs, thinks Bruce Cundiff, a research analyst with Javelin Strategy and Research.

There’s really nothing to stop such merchants from outmaneuvering the banks, if they want to, he says. “The possibility exists among those merchants considering contactless, and really have a robust card issuance card network to begin with. They’re well-versed in credit, debit, and closed-loop card operations—and they see their private label brand as a lower cost channel.”

The merchants have plenty of good reasons for moving away from bank-owned cards. Doing so would not just give merchants more money from each transaction, it would also reinforce customer loyalty—making for more repeat business—and enrich marketing programs by giving merchants better access to the customer data in the payments stream.

Merchants increasingly view private-label, contactless payments as their best bet for driving revenue. According to Cundiff’s research, 20 percent of merchants considering enhancements to point-of-sale payments consider the technique among the most productive choices they can make. Only signature debit (31 percent) and ACH payments (33 percent) scored higher among merchants as possible new payments options.

Even worse news for banks: Cundiff’s survey of 900 retailers included all sorts of merchants, from large chains to the iconic Mom-and-Pop store. “We reached out to all types of merchants, even to those with only one location,” he says.

The irony here is that banks started this phenomenon in the first place.

“Contactless payments are the wave of the future because issuers like (JPMorgan) Chase got into the game,” he says. It was Morgan Chase’s decision to jump into contactless payments with both feet that solved the chicken-and-egg question surrounding contactless payments, because it was a signal to cell phone manufacturers that there would be a market for RFID (radio frequency identification) chip-enabled cell phones that can facilitate payments. “Prior to that, merchants were saying ‘It’s not broke, and I’m not going to fix it. They didn’t think people were going to come in and ask ‘Where’s your contactless terminal?’”

But that historical fact is irrelevant to the future, because with the genie out of the bottle, the challenge for issuers is to do everything they can to enable the technology now, before merchants do it for them. And since, as Cundiff’s research indicates, those merchants are a substantial fraction of the overall universe, the prospect that banks could be disintermediated by these merchants is a very strong possibility.

The fact that banks will have laid the foundation for this turn of events by educating merchants about the benefits of the technology is merely one of life’s injustices; the most disturbing element in this scenario is that bank disintermediation is entirely avoidable, if institutions will just make it in the merchants’ interest to work with the banks—even if that won’t be so easy. “If I’m Macy’s, and I’ve invested millions of dollars in contactless, I’m going to make sure that as many transactions that flow over that system are going to be Macy’s cards,” says Cundiff.

That prospect will be made easier by the widespread availability of cell phones that can make payments, he adds. The logic is perfectly clear, if brutal: With so many people carrying payments-enabled cell phones, he says, it makes perfect sense for stores to offer to download their own card onto a customer’s cell phone at the point of sale. Then, unless the banks have already beaten the merchant to it, more and more payments volume will go to merchant cards—edging out the bank and cutting into the fastest-growing segment of payments-fee revenues.

How to avoid this? “They (banks) need to consider the fact that they need to work with the merchants in a more integrated fashion—especially a large merchant that has a high profile and has plenty of locations and payments volume,” he says. A promising tactic to make sure the banks are still involved is to approach the merchant and offer to issue a co-branded, contactless card.

But to do this, banks have to recognize that contactless payments are the key to the future at the point of sale, and that they either turn the lock, or don’t. And if they do, they either continue to insist that everything be done their way, or they can start working with their customers to integrate themselves into that next generation of payments.

Luckily, the best banks already get this, says Cundiff. When Morgan Chase went to market last year with their Blink contactless cards, for instance, “they were talking about how they had to approach merchants and not only build acceptance, but build affinity for the product with both cardholders and merchants—that meant co-marketing agreements and signage,” he says.

But what this also means is an apparent shift in the balance of power between issuers and merchants. While some will argue that issuers have always valued their customers and tried to accommodate them, that posture is undermined some by the ongoing interchange war: After all, if the issuers had always been so accommodating, the years of complaints from merchants that interchange was too high would have resulted in adjustments—not lawsuits.

At this point—as many observers have argued—the better part of valor for issuers may be collaboration with merchants instead of battle, lest contactless, private-label cards prove to be yet another army rising on the issuers’ flanks. (Contact: Javelin Strategy and Research, Bruce Cundiff, 925-225-9100)

Comments

The Truth about ID Theft from Javelin Strategy

By Jim Bruene on February 13, 2006 1:15 PM | Comments

Judging by media reports, almost everyone in the civilized world has lost their identity to cyber-criminals. But while there has been an unending torrent of news about data breaches and related identity thefts, the damage has been much less drastic than that, says a study from Javelin Strategy & Research.

“The impression in the general public is that identity fraud is spiraling out of control, but what we came away with is the contrary; the growth [in the phenomenon] has been contained,” says Rubina Johannes, the Javelin research analyst who wrote the report.

Continue reading "The Truth about ID Theft from Javelin Strategy" »

Comments

Economic Outlook 2006

By Jim Bruene on January 13, 2006 4:16 PM | Comments

If 2005 turned out to be a lot more eventful than anyone expected—the virtual disappearance of monoline banks and the frontal assault on interchange are only two examples—then there’s no reason to expect 2006 to be boring.

The M&A outlook alone promises to give this newsletter plenty to write about: The vast amount of private equity money now looking for a home almost guarantees it, even if the recently inverted interest rate and interest swap curves may promise some sort of recession.

Continue reading "Economic Outlook 2006" »

Comments

Desktop Financial Marketing Demand

By Jim Bruene on December 27, 2005 4:35 PM | Comments

Southwest_ding_screenIn a study released by market researcher Compete, Inc. <compete.com>, online users surveyed overwhelmingly said they wanted more information from their financial service providers, and they were willing to download a special application or plug-in to facilitate the information exchange (click on inset to see closeup of Southwest Airlines DING service).

Key findings:

  • 73% would like to be made more aware of new offerings and services
  • 69% would download a desktop application so that they could receive useful information from their financial services provider on a regular basis
  • 78% would do so if the program protected them from fraud
  • 5% would be unwilling to go online to receive information from financial services

Analysis
The success of Southwest Airline's DING service (NetBanker Dec 5), which puts Southwest right on the computer desktop, along with toolbars from eBay, Google, and most recently Bank of America (NetBanker Dec 12), have not gone unnoticed in the financial services community. Until email trust issues are solved, which may take three or four years, a direct connection to the user's desktop makes good business sense. As Compete's data shows, more than three-quarters of consumers said they would download a desktop application, as long as they felt it would be a security improvement to do so.

Financial institutions should try to add a "safe and secure" theme to all account management tools, from email alerts to electronic statements and more.

--JB

Comments

Top 20 Banks Worldwide

By Jim Bruene on September 30, 2005 4:07 PM | Comments

In case you need a stretch goal for your 2006 business plan, here are the 20 largest banks in the world, ranked by assets (in US dollars on 31 Dec 2004). By country there are 4 U.S. banks, 3 UK, 3 Paris, 3 Tokyo, 2 Germany, 2 Amsterdam, 2 Swiss, and 1 Spain. The biggest bank outside North America, Europe or Japan is #53 National Australia Bank in Melbourne ($282 billion).

  1. UBS AG (Zurich): $1.53 trillion
  2. Citigroup (New York): $1.48 trillion
  3. Allianz AG (Munich): $1.36 trillion
  4. ING Group NV (Amsterdam): $1.36 trillion
  5. Mizuho Financial Group (Tokyo): $1.30 trillion
  6. HSBC Holdings PLC (London): $1.28 trillion
  7. Credit Agricole (Paris): $1.24 trillion
  8. BNP Paribas (Paris): $1.23 trillion
  9. JPMorgan Chase (New York): $1.16 trillion
  10. Deutsche Bank AG (Frankfurt): $1.14 trillion
  11. Royal Bank of Scotland Group PLC (Edinburgh): $1.12 trillion
  12. Bank of America (Charlotte): $1.11 trillion
  13. Barclays PLC (London): $992 billion
  14. Mitsubishi Tokyo Financial Group (Tokyo): $980 billion
  15. Credit Suisse Group (Zurich): $963 billion
  16. Sumitomo Mitsui Financial Group (Tokyo): $897 billion
  17. ABN Amro (Amsterdam): $829 billion
  18. Societe Generale (Paris): $819 billion
  19. Santander Central Hispano SA (Spain): $784 billion
  20. Morgan Stanley (New York): $775 billion

Reference: American Banker, 29 Sept 2005 for the 100th largest banks in the world

For the top 150 largest U.S. financial institutions, refer to the resources section of our main website.

--JB

Comments

Online Banking Confidence Still at 60%

By Jim Bruene on August 9, 2005 1:36 PM | Comments

The problem with most published information on consumer attitudes is that they don't show the trend. It's interesting to see that a certain portion of the population expresses concern about ecommerce security, but it's not really actionable unless you see it in context. That way you know if the concern is growing, stable, or lessening. Or if consumers are more concerned about branch lobby security, telephone, or mail security.

Kudos to Informa Research for publishing a table showing consumer attitudes on online banking security dating back to 2000. As you might expect, consumers are significantly more confident than they were five years ago (59% vs. 49%), but there has also been a substantial drop-off since 2003 (59% vs. 70%).

Percent of consumers that Completely or Strongly Agree with the following statement:
Internet-based transactions handled by financial institutions are safe and secure

2000  49%
2001  56%
2003  70%
2005  59%
-----------_

Source: Informa Research, Aug. 2005, n = 1690

Analysis
Taking a cup-is-half full approach, we are pleased to see that the majority of consumers still consider online banking to be safe. Although the drop-off from 2003 is a concern, we've probably hit bottom, barring any dramatic breeches in the near future. As banks institute security upgrades such as multi-factor authentication, broader security alerts, and secure messaging, consumer confidence will grow.

--JB

If you'd like to learn more about the future of online banking, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

Comments

1.4 billion More Credit Card Mailers Hit the Recycle Bin

By Jim Bruene on July 26, 2005 9:36 AM | Comments

Junk_mailSome bad habits are harder to kick than others. In banking, the preapproved credit card mailing is apparently as addictive as nicotine. How else can you explain the record 1.4 billion solicitations mailed in Q1 2005 according to researcher Synovate? (">see previous article on 2004 mail volumes)

We can't speak for the economics of the recent mailings. On a macro level, things are going pretty well. Other than the sub-prime specialists, most credit card companies have weathered the economic slowdown of the past years admirably. However, we still think the online channel is vastly underused as a credit marketing vehicle.

Analysis
First, we'll crunch some numbers to compare traditional direct mail (DM) to online marketing (OM):

***DM***
1.5 billion pieces times $1 per piece = $1.5 billion in marketing
Fraud = 0.04% x 1.5 billion = 60,000 bad accounts x $2500 = $150 million
Teaser rate = 3% subsidy x $1.2 billion outstanding = $360,000 million
Total cost of program = $2 billion

===> Response = 0.4% times 1.5 billion = 600,000 good accounts

DM acquisition cost = $333 per good account

***OM***
30 million online banking households x $5 for 90-days of online credit offers = $150 million
Teaser rate = none
Fraud = 0.04% x 30 million =  12,000 bad accounts x $2500 = $30 million
Total cost of program = $180 million

===> Response = 30 million x 2% = 600,000 accounts

OM acquisition cost = $30 per good account

Implications
Depending on a multitude of factors, a credit card issuer can still make an account costing $333 profitable over its lifetime, but it's not going to be easy, especially with costly rewards programs demanded by most good customers these days.

Why not divert some of the direct mail budget to online marketing programs that eliminate the paper from the equation?

Every credit-worthy online banking customer should have preapproved credit available to them at all times. And it should be very visible when they are conducting activities that could indicate a potential need for extra cash, such as paying bills.

Alternatively, preapproved offers could be timed to appear at login when account balances dip below historical levels indicating potential cash flow difficulties for the consumer.

The beauty of this approach is that it's more about timing than price. Consumers needing $500 for the orthodontist today will be more concerned about a fast, convenient advance rather than playing the field to bag a 0% teaser rate and/or maximum rewards points.

The twin benefits of online credit marketing:

  • lower marketing expenses
  • less dependency on teaser rates and rewards programs

For an extended discussion of online credit card and loan originations, see:

Online Banking Report subscribers will receive updates to these reports this fall. 

-- JB

 

Comments

Phishing Awareness Less Than 30%

By Jim Bruene on July 22, 2005 3:55 PM | Comments

We've warned against using too many scare tactics on your website (see OBR 119, Marketing Security). Here's data to support that argument.

The latest Pew Internet Project survey (PDF) found that more than 70% of Internet users had either never heard of the term Internet phishing (15%) or were unsure of its meaning (55%), leaving just 29% who said they had, "a pretty good idea of what the term meant." In comparison, 88% of Internet users had a pretty good idea of what Spam meant, 78% knew Firewall and also Spyware, while 68% understood Internet cookies, and even 52% knew Adware.

--JB

Comments

Debunking Search Marketing Myths in Banking

By Jim Bruene on June 30, 2005 4:12 PM | Comments

Contributed by Mike Bailey, Compete, Inc.

Compete_logo_1Every day millions of consumers use the internet to search for new deposit accounts, loans, and credit cards. As a financial marketer you understand connecting to the growing online demand for financial products and services is a competitive necessity.

But what is the most effective way to understand and even predict how a potential customer thinks and behaves online? What search strategies will be most effective to allow you to tap into an online community of potential customers?

To find the answers, Yahoo! Search Marketing sponsored a study, conducted by Compete, Inc., a predictive analytics firm specializing in the financial services industry. The results provide some surprising insights that can dramatically influence your success in attracting and retaining customers.

First let’s look at two of the search “myths” we uncovered:

Myth #1 – People searching for credit online are not good prospects

The first thing we discovered is that consumers who use search to research deposit, loan and credit card products are affluent, have great credit and have a higher likelihood of applying for the products they have searched for than consumers who use other channels for their research. With 49% having an average annual income of more than $60,000, these prospects are 67% more likely to start an application than a typical online shopper and loan searchers are 59% more likely to apply.

Myth #2 – Brand names are not relevant in search marketing because those searching for specific banking institutions must already be customers there

As it turns out, searchers who type in a specific retail bank name are not just looking to log in to their existing accounts. A full 30% are potential new customers researching new accounts. And of those 30%, about 80% are looking for an alternative financial institution. So in search marketing, your brand and the terms associated with it provide three opportunities:

  1. Service your own customers
  2. Acquire new customers looking for specific services
  3. Access competitors’ customers

Most financial institutions have worked hard and spent marketing dollars to build a brand with positive and credible attributes. The good news, as our study shows, is that consumers looking for deposit and loan services hold brands in high regard. Consumers searching for particular brands make more than two-thirds of the search-generated deposit applications in a typical month. And a hefty 80% of credit card shoppers start their online searches with brand names, including the highly advertised brand names that you would expect, as well as partner and affinity cards, such as “air miles card.”

So how do you achieve better results with your online marketing? We recommend three strategies:

  1. Establish a balanced portfolio of terms. We have seen that deposit and loan searchers balance the types of terms they use. Credit card searchers, on the other hand, are inclined to research brand-related terms, including partner cards and affinity relationships. As a marketer you will need to adjust your portfolio of keywords and terms to make sure you have as broad access as possible to all potential customers.
  2. Leverage brand terms to attract deposit customers. Consumers who look online for major retail bank brands are most interested in deposits and cards and least interested in loans. Create copy that reflects this insight and tailor your incentives toward what your customers want.
  3. Measure and reflect offline conversions in search marketing ROI calculations. Without measurement how will you know how effective your efforts are and how to make adjustments? At least 50% of conversion volume occurs offline at a branch or call center, but the bank, product or service was researched online first – so tie your offline transactions to search.

Online search is a powerful consumer tool allowing people to easily find the information they need to make decisions about banking and financial products. As a marketer, make sure to do the research and analysis so you can create the most effective multi-channel and measurable marketing programs.

Mike Bailey is Managing Director of the Financial Services Practice at Compete, Inc., headquartered in Boston

Comments

Keeping Tabs on the Financial Blogosphere

By Jim Bruene on June 23, 2005 10:58 AM | Comments

Blogpulse_logo_1 Writing in The Wall Street Journal's MarketPlace section, William Bulkeley discusses a new technique for tracking consumer opinions of products, companies, and other topics. The article, Marketers Scan Blogs for Insights, explains how marketers, PR departments, and brand consultants are using free and not-so-free tools to scan the so-called "blogosphere."

We tested Intelliseek's BlogPulse on some security topics we've been researching and found it to be an effective tool. There were more blog citations than we found in a Google search, and they were better organized. Also, BlogPulse provides a trending tool to gauge the relative strength of a search term over the past 6 months.

Blog_plus_trendingHere we compared "phishing" to "online banking" and found similar activity levels for both terms (click on the inset for a better look).

While this tool won't replace traditional market research, it may be worth checking out from time to time.

--JB

Comments

2004 Online Financial Services Ad Spending

By Jim Bruene on June 7, 2005 2:54 PM | Comments

JP Morgan Chase and Citibank led all banking and lending companies in online ad spending according to the most recent American Banker survey of financial services spending (May 2005).

Chase’s $50 million in online advertising was 21% of its entire advertising expense, the highest among major banks, and considerably above the 11% online share across all financial services companies. In comparison, Citi’s $49 million spent online was only 9% of its total advertising expense, slightly below the industry average.

NetBank, the 16th biggest online advertiser, was the percentage leader, funneling all but $100,000 of its $4.9 million in advertising into online initiatives. Two other major online advertisers spent more than half their money online last year: ING Direct spending 60% of its $40 million total online, and MBNA spending more than half its $14 million online.

Lending Tree, Quicken Loans, HSBC, Sovereign and East-West Mortgage all devoted about one-third of their advertising into the online channel.

Top-20 Financial Institutions Online Advertisers*
2004 Online Advertising (% of total advertising)*
1. JP Morgan Chase  $50 million (21%)
2. Citigroup              $49 million (9%)
3. American Express $28 million (9%)
4. Bank of America    $25 million (9%)
5. ING Direct            $24 million (60%)
6. Lending Tree        $22 million (31%)
7. Ameriquest           $16 million (13%)
8. Quicken Loans       $10 million (33%)
9. Wells Fargo           $9.2 million (14%)
10. HSBC                  $8.3 million (39%)
11. MBNA                  $7.0 million (51%)
12. Wachovia            $6.3 million (7%)
13. E-Loan                $6.1 million (21%)
14. NetBank              $4.8 million (98%)
15. Discover             $4.7 million (6%)
16. GM                     $3.8 million (4%)
17. Royal Bank          $3.2 million (12%)
18. Sovereign           $2.8 million (33%)
19. East-West Mtg.    $2.7 million (32%)
20. WAMU                $1.9 million (2%)

*Banking, Lending, Mortgage, or Credit Card segments only, does not include online brokerage, insurance, or investments.

If you look at the brokerage and mutual fund category, the spending accelerates. Four online brokers Ameritrade ($65 million), Scottrade ($63 million), Schwab ($58 million), and E*Trade $52 million) each outspent even the largest financial institution, and Netstock Direct ($32 million) outspent all but Citi and Chase.

Top-10 Brokerage & Mutual Funds

2004 Online Advertising (% of total advertising)

1. Ameritrade   $65 (64%)

2. Scottrade     $63 (87%)                              

3. Schwab        $58 (35%)                              

4. E*Trade        $52 (77%)                              

5. Netstock       $32 (99%)                              

6. Harrisdirect  $24 (78%)                              

7. Vanguard      $12 (31%)                              

8. TD Bank        $10 (17%)                              

9. Fidelity        $5.3 (4%)                               

10. T.Rowe Price $3.8 (5%)

Download the Excel file with more details.    

 

--JB                     

Comments

Bank of America Tops One Billion Online Sessions Annnually

By Jim Bruene on April 27, 2005 12:21 AM | Comments

Also at the Net.Finance conference today, Linda Worrell from Bank of America reported that its online channel handles more volume than the call center and ATM network combined.

Here's the breakdown:

13.1 million active online banking customers login in to their accounts an average of 10 times per month. That's 130 million sessions monthly, or 1.6 billion annually.

In comparison:

  • the call center handles 825 million calls annually
  • the 16,000-machine ATM network processes 840 million transactions
  • its 5,800 branches handle 600 million

-- JB

If you'd like to learn more about the future of online banking, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

Comments

Synovate Reports Credit Card Direct Marketing Futility

By Jim Bruene on April 11, 2005 7:17 PM | Comments

Card_solicitations_1

Synovate reported the results of their annual tracking study of U.S. credit card solicitations. Like the number of branches, the totals just keep growing, despite the inevitable decline in their effectiveness.

In 2004, the U.S. card issuers sent a record 5.25 billion solicitations, to about 75 million households (71% of all U.S. households). It averaged 5.7 offers per month, or 70 annually. And you don't need a degree in economics to predict the results: record low response rate of 0.4%, down 2/3 from as recently as 6 years ago (1.2% response in 1998, see chart above).

Analysis
It's almost surprising that the average household gets less than 6 card offers per month, we've gotten that many in a day. And no one here has responded to an offer since the last century. 

But I digress. The point is that financial services marketing departments all over the country are looking for cost-effective alternatives. If you figure traditional DM costs $1 per piece when you load in all costs, the acquisition cost has increased from $80/acct in 1998 to $250/acct in 2004. 

And thanks to the spam overload and phishing hype, it doesn't seem like email will be the answer anytime soon.

What's left? It's that captive audience called online bankers. Here is a group of customers you know extremely well, thanks to tracking their bill pay activity, and that come to you several times a week on average. Grab some of that DM budget this year and show what kind of sales you can deliver. 

--JB

Comments

More Online Fraud Statistics from Gartner

By Jim Bruene on March 3, 2005 12:38 PM | Comments

Fruad_solutions_grid_from_gartnerFraud-fighting vendors, Quova and Cyota hosted a webinar today featuring Avivah Litan, from Gartner.

A couple interesting Gartner stats that you can use in trying to gain additional resources to boost your authentication procedures:

  • Within 3 years (YE 2007), 60% to 75% of U.S. banks will use more than username/password at login. That's up from zero today.
  • In the year prior to Gartner's April 2004 consumer research, a projected 1.8 million consumers gave up their account info to phishers; this group was three times more likely to have been victimized by online fraud.

You should be able to view an archived version of the webinar at Quova within the next day or two.

--JB

Comments

Identity Theft Statistics from Javelin Research

By Jim Bruene on January 26, 2005 5:09 PM | Comments

Building on last year's FTC study, Javelin Strategy & Research and the Better Business Bureau, released the latest study of financial fraud and identity theft in the United States. A similar level of fraud was found in the late-2004 polling compared to the FTC survey fielded in mid-2003.

How_personal_information_stolen_click_toBoth studies found that just under 5% of U.S. adults, around 10 million, had been victimized in the prior 12 months, with total losses, primarily to financial institutions, of about $50 billion.

One of the major conclusions is that consumers are more likely to be victimized through offline methods compared to online methods, leading Javelin to conclude in their press release:

Internet-related fraud problems are actually less severe, less costly and not as widespread as previously thought.

However, this conclusion that is disputed in Bob Sullivan's MSNBC article by both Gartner's Avivah Litan and FTC attorney, Lois Greisman.

Here are the key findings:

How was your personal information obtained (i.e. stolen)?
     6%  via online methods
     36% via offline methods
     58% don't know

There are two ways to look at those numbers.

The Javelin take: Of those that know how it happened, offline identity theft outnumbers online identity theft 6-to-1, so let's not overstate the online threat.

The Gartner take: In consumer research, much of the online fraud will be self-reported in the "do not know" category, so the data is inconclusive. Avivah Litan says in the MSNBC article:

The general population doesn't really know how the information is stolen especially, with credit card fraud. If you do have a good guess, it usually is because you are in a fight with family member or neighbor. The study is biased towards people who know how it happened.

Our Take
Anytime you have a survey where the majority of participants select, "don't know," it is difficult to draw precise conclusions.

We think these results are promising for the fraud-fighting potential of the online channel, but they don't vindicate it either.

If you assume that the same 6-to-1 offline/online ratio applies to the "don't know" category, that means about 10% of last year's identity theft occurred via online methods, or 1 million cases costing $5 billion dollars.

Regardless of what the analysts say, that's a problem that needs fixing.

-- JB

Resources:

 

Comments

Baseline Online Broadband Usage Statistics

By Jim Bruene on January 17, 2005 3:37 PM | Comments

Here are the Yankee Group's baseline PC and online usage forecast, as cited by The Seattle Times today:

2003: 112 mil US HHs >>> 74 mil online >>> 30% broadband
2004: 113 mil US HHs >>> 78 mil online >>> 38% broadband
2005: 114 mil US HHs >>> 80 mil online >>> 45% broadband
2006: 115 mil US HHs >>> 81 mil online >>> 52% broadband
2007: 116 mil US HHs >>> 83 mil online >>> 58% broadband
2008: 117 mil US HHs >>> 84 mil online >>> 63% broadband

How to read: In 2003, 74 million of the total 112 million U.S. households went online through their home computers; 30% (22 million) of those going online use a broadband connection, the remainder (52 million) use a dial-up connection.

See Online Banking Report (#114) for the corresponding online banking forecast.

--JB

Comments

Branchless Banks now Hold 2% of U.S. Retail Deposits

By Jim Bruene on January 13, 2005 10:36 AM | Comments

The Wall Street Journal published a story today that marks the growing importance of branchless online banks, Online Banks are Boosting Yields. Our sister publication, Online Banking Report, was the source for the article's market statistics on branchless banks, which have developed a small, but significant following around the world.

In the United States, there are several dozen branchless banks, but more than three-quarters of the total branchless bank deposits are held by two banks, ING Direct and E*Trade Bank. Total branchless bank* deposits in Q3 2004 were about $65 billion, or 1% of all U.S. deposits, or about 2% of all deposits under $100,000. See below for more specific details.    

Branchless Bank Deposits
As of Sept 30, 2004, the deposit totals of the major branchless banks are as follows:

ING Direct       $26 billion in 1.9 million accounts ($14,000/acct)
E*Trade Bank  $23 bil in 2.3 million accounts ($10,000/acct)
NetBank          $2.7 bil in 200,000 accounts ($14,000/acct)
Everbank         $2.3 bil in 370,000 accounts ($6,200/acct)
All the rest      $5 to $10 billion total
--------------------------------------
Total               $60 to $65 billion

Total US Deposits
The total amount of deposits held in U.S. commercial banks on 9/30/04 was $6.4 trillion including retail and commercial deposits.

If you look only at deposits of $100,000 or less (a proxy for retail deposits), total deposits were $3.7 trillion.

Branchless Bank Deposit Market Share
Branchless banks hold about 1% of all U.S. deposits ($65/$6400).

Looking at just deposits under $100k, branchless banks hold just under a 2% share ($65/$3700), actually 1.8% if you want to be more precise.

Source: FDIC

What it Means
It's not as big of a splash as Amazon made in books, but it's a solid start for an niche about 7 years old (Netbank started in 1997). I expect it will continue to grow 25% to 35% per year for the rest of the decade, eg, doubling the branchless banking deposit base every 2 to 3 years.   

*We define "branchless bank" as a separately branded insured depository institution that derives the majority of its business through direct methods (mail, phone, online) with minimal brick and mortar presence. We are excluding direct banking units operating under lending or insurance brands such as Principal Bank, State Farm Bank, IndyMac, MBNA, and so on.

--JB

Comments

TowerGroup posts Realistic Estimate of Phishing Fraud Losses

By Jim Bruene on December 2, 2004 4:29 PM | Comments

Link: TowerGroup

The financial services analyst continues to weigh-in on the estimated losses due to phishing and identity theft, with the latter becoming a catch-all for all financial fraud. Estimates from the FTC, Gartner, and Javelin have run into the billions.

Many media outlets have jumped on these estimates and made the incorrect leap that the losses were due solely to online fraud and phishing. Now, much more slowly the story is emerging that the actual online portion of these fraud losses is much smaller. Some even argue that online banking has reduced the total amount of fraud since consumers are able to pay closer attention to their accounts.

TowerGroup's latest report on phishing losses pegs the 2004 loss at $140 million worldwide; or about $1 per online banking household. That's still a big number, and one that seems a bit high in our view, but it's far less than the billion-plus implied by Gartner earlier this year. It's also much less than the $500 million figure (for US only) recently released by the Ponemon Institute in a study commissioned by NACHA and Truste.

So is the online channel a help or detriment to the age-old battle against crime? From a monetary perspective, we believe it's been a net loss so far. As Tower pointed out, it's not just the actual losses, financial institutions spend far more in prevention and detection than they lose to the crooks.

But long-term, we are absolutely convinced it will be a much safer environment for banking compared to the paper-intensive processes it replaces.

-- JB, jim@netbanker.com

Comments

Online Banking Report #105/106: E-Service 2.0

By Jim Bruene on April 29, 2004 4:04 PM | Comments

The latest report from Online Banking Report was published today, E-Service 2.0: Service with a :)

Subscribers may access the report immediately at Online Banking Report.

Others may download the abstract.

Comments

Overall US Web Traffic Metrics

By Jim Bruene on December 9, 2002 3:48 PM | Comments

Overall Web Traffic

Table 1

U.S. Web Activity
millions of adult (18+) users, Q2 2001

Sources: Nielsen NetRatings, 11/02; estimated from panel of 62,000 U.S. at-home users, and 8,000 U.S. at-work users
* averages across active users    hrs = hours; min = minutes; sec = seconds

Table 2

U.S. At-Home Connection Speed

millions of adult (18+) users, Q2 2001

Source: Nielsen NetRatings, 3/02; estimated from panel of 62,000 U.S. at-home users, and 8,000 U.S. at-work users

Table 3

U.S. At-Work Connection Speed

millions of adult (18+) users, Q2 2001

02-dec-h3.jpg

Source: Nielsen NetRatings, 3/02; estimated from panel of 62,000 U.S. at-home users, and 8,000 U.S. at-work users


 

Table 4

U.S. Internet Access by Location (2001)

millions of adult (18+) users

02-dec-h4.jpg

Source: MRI CyberStats (Mediamark Research), 10/01

(1) From 26,000 face-to-face at-home interviews from March ‘00 to April ’01; (2) From 20,000 personal interviews
conducted between Sept. ‘98 and Aug. ’99; (3) From home, work, or other location

Table 5

U.S. Internet Access by Annual Income (2001)

millions of adult (18+) users

02-dec-h5.jpg

Source: MRI CyberStats (Mediamark Research), Spring 2001 data, 10/01

Table 6

U.S. Internet Access by Age (2001)

millions of adult (18+) users

02-dec-h6.jpg

Source: MRI CyberStats (Mediamark Research), Spring 2001 data, 10/01

Table 7

U.S. Internet Access by Gender

millions of adult (18+) users

02-dec-h7.jpg

Source: MRI CyberStats (Mediamark Research), Spring 2001 data, 10/01

Comments

Web Usage Worldwide (US and International)

By Jim Bruene on December 8, 2002 3:38 PM | Comments

Web Usage Worldwide

 

Table 1

Web Users Worldwide by Region
millions of users (any age)

Source: NUA, 1/98, 1/99, 2/00, 10/01, 11/02, www.nua.ie             ina = information not available

*interpolated by OBR from Sep. 99 and Feb. 00 NUA data

 

The number of Web users worldwide in September was just over 600 million, up 10% from year-end 2001 according to NUA, which compiles Web user estimates from around the globe. Nearly all the growth comes from the Asia/Pacific region, which has added 40 million users this year and is now larger than North America (187 million vs. 183 million). Country-by-country breakouts are available on the NUA Web  www.nua.ie  

 


 

Table 2

The Nifty Fifty (U.S.)

02-dec-g2.jpg

year when more than 50% of U.S. adults did the following

1995: half of all adults use a PC at home or work (now 70+%)

1997: half of all PC users are online (now 80+%)

1999: half of all adults are online (now 60+%)

1999: half of all adults use a PC at home

2001: half of all adults have ever made a purchase online

Source: Harris Polls: Harris Interactive telephone surveys of more than 2,000 adults (see Table 24, for more)

*49% as of Sept. 2000

**48.2% as of March 2001


 

If you remember nothing else from this report, make sure to commit these numbers to memory (in round numbers):

70+% of adults use a PC
80+% of those PCs are online
60+% online penetration of all adults (U.S.)

 

 

 


 

 


 

Web Usage U.S.

As of September, Nielsen NetRatings  www.netratings.com  estimates that 178 million U.S. individuals (all ages), or 62% of the U.S. population, have access to the Internet, an increase of
30 million since Sept. 2000, but only 3 million more than a year ago. However, active users were up
 10 million from a year ago to a total of 121 million, 68% of those with Internet access.

Table 3

U.S. Web User Trend
millions who have ever used the Web

Sources: 1999-2002: Nielsen NetRatings, 11/02; Total Universe = number; population estimates from U.S. Census Bureau
of users of all ages (age 2+) with Internet access at home or work;
Active Users = subset of Total Universe, those who use the Internet that month; estimated from panel of 62,000 U.S. at-home users, and 8,000
U.S. at-work users
1996-1998: age 16+ users from IntelliQuest, www.intelliquest.com ;

1995: CommerceNet/Nielsen

(1) Feb. ‘00 total; (2) Nov. ‘99 total; (3) Jan. ‘99 total; (4) Nov. ‘97 total

Comments

Online Banking Usage and Activities Metrics

By Jim Bruene on December 6, 2002 3:18 PM | Comments

Table 1
Online Banking vs. Other Internet Activities
percent of total

02-dec-e1.jpg

Source: Pew Internet Project, 11/02

Table 2
Online Banking Activities

02-dec-e2.jpg


percent of online bankers* who have performed the following activities during past 6 months

Sources: OBR 6/02 (n = 191); Question: “Which of these ONLINE activities have you done in the past 6 months?”
*Qualifying activity: considered an online banker if the respondent had done any one of these activities

 

Despite what you might think after hearing all the horror stories from customer service, user satisfaction is very high with a 95% positive rating in 2002, an excellent score for any consumer service. This year only 3% of online banking users said they were not satisfied, down from 9% in 2001 (Table 3, below). Dissatisfied users mostly cited technical issues, such as service interruptions or slow processing (Table 4, below).

Table 3
Satisfaction Ratings of Online Banking Users
percent of total, Q2 data from each year

02-dec-e3.jpg

Source: American Banker/Gallup Consumer Survey 2002 of 1,000 household heads interviewed between Feb. 6 and March 10, 2002; 2001 Consumer Survey of 1,001 household heads interviewed between Feb. 14 and Mar. 16, 2001; 2000 Consumer Survey included 1,000 respondents interviewed between May 23 and June 18, 2000; respondents must have at least one account with a financial services provider to qualify (checking, deposit, mutual fund, brokerage account, loan, or credit card); the 8% to 12% so-called unbanked households are excluded from the survey; error estimated at +/-  3% (95% confidence).

Table 4
Reasons for Dissatisfaction with Online Banking1
percent of dissatisfied users citing each reason, Q2 data of each year

02-dec-e4.jpg

Source: American Banker/Gallup 2000, 2001 Consumer Surveys

(1) Warning: Comparison between years has little meaning due to very small sample sizes:
      n = 59 in 2001, n= 30 in 2000

(2) Of course, the majority of online banking users get the service for free.

Comments

Web Traffic at Major Banks Through The Roof

By Jim Bruene on December 5, 2002 2:52 PM | Comments


 

Web traffic at major banks went through the roof during the past year with 57 million visitors in September at the 27 most-visited banking sites1, a 3-fold increase over traffic a year earlier. Much of the 40-million increase2 can be attributed to credit card customers paying their bills and reviewing statements online at Citi, Chase, BofA, Wells, First USA (Bank One), and PayPal. Table 13 below lists Web traffic at 27 financial institutions, including PayPal1, that have more than 200,000 monthly unique visitors according to comScore Media Metrix.

1 57 million is the sum of unique visitors at each banking domain; i.e., the total is NOT a unique visitor total since it double counts, for example, someone who visited Wells Fargo and Citibank during the same month.

2 When reviewing the data, keep in mind we used different sources for the historical figures, so the data is not directly comparable over time.

We consider PayPal a banking alternative since it offers bill payment, funds transfer, money market, debit and credit card products.

 

Table 1

Top 27 Most Visited Banking Sites


unique monthly visitors in thousands (‘000s)


Sources: Web traffic: 2002 - comScore Media Metrix; 2001 -- Plurimus, 8/01; 2000/1999 – PC Data Online; Registered users: Companies and OBR estimates, 11/02

e = OBR estimate, +/- 33%       a = active users

Reg. users = registered users for online access, not necessarily active

1Rollups are straight additions of the Websites shown; overlapping users (i.e., non-unique) are NOT factored out

 


 

Table 2

Financial Sites (U.S.)


02-dec-D4.jpg

unique monthly visitors in thousands (‘000s)


 

Source: 2002 – comScore Media Metrix; 2001 – Plurimus; 2000 – Nielsen/NetRatings
Comments

Numbers in the News for Online Bank Usage

By Jim Bruene on April 4, 2002 1:20 PM | Comments



Comments

Top 10 Online Innovations & Milestones of 2000

By Jim Bruene on December 4, 2000 10:11 PM | Comments


 


Source: Online Banking Report, 12/00

*The 10 innovations and milestones that will have the greatest long-term impact/significance.

1Mr. Nandra of the Cambridge Group made convincing arguments in two keynote speeches at BAI’s Retail Delivery about the importance of finding unmet consumer demand as a way to grow your business.

Comments

Recap of Past Years Top 10’s in Internet Banking

By Jim Bruene on December 3, 2000 10:00 PM | Comments
00-12-tentop.jpg

Source: Online Banking Report, 1995 – 2000             

*1995 list is not directly comparable; it simply lists the top 10 financial Web sites of the year.


 

Top 10 Industry Events


 

1

 

Net-Banking Usage Soars: It’s funny how quickly things change. Just a year ago everyone was talking about the Cyber Dialogue survey (released Aug. 19, 1999) which revealed online banking usage had stalled at 6.3 million users with virtually zero year-over-year growth with as many people dropping out as were signing up. We were skeptical of the data at the time, and now it turns out it was either erroneous or a statistical anomaly. In late 2000, Cyber Dialogue released new results showing 75% growth in online banking users from third quarter 1999 to second quarter 2000. It will be a couple months before year-end numbers are in, but it appears the online banking user base may have grown 60% to 80% or more in 2000.

2

 

Banks Trip over Themselves to Embrace Account Aggregation: We believe in account aggregation for the long haul. In fact, Citibank’s myciti.com, a site built by Yodlee, was named our number one innovation of the year .  But given the sparse customer demand for the service, we don’t quite understand the big-bank feeding frenzy surrounding it. A year ago, not a single bank, large or small, had publicly endorsed the service. Now, most of the top retail banks have either launched the service or will launch it within the next 6 to 9 months.

Interestingly, the Internet-only banks, which are presumably more in touch with online users, have been slower to adopt aggregation. Virtual Bank and DirectBanking.com are the only two Net-only banks live with the system today, and NetBank has a beta test with 6,000 users in progress.

Does this mean the big banks are out-maneuvering the Net-only banks? We don’t think so. We believe the Net-only banks are simply being pragmatic, rolling out the service after more of the bugs have been ironed out. These companies realize significant costs are associated with educating consumers, staff, and vendors about the ins and outs of account aggregation. Without deep pockets to draw from, the Net-only banks are content to wait, taking the role of fast follower instead of leader.

Dick Vague, CEO of Juniper Bank, told us at BAI’s Retail Delivery last month that his Net-only bank would introduce aggregation in first quarter 2001, not because they expect users to flock to the service in the short-term, but so the bank can gain experience selling and servicing aggregation before it takes off.

3



Net Finance Market Caps Plummet
: During 1999, market caps skyrocketed giving Net startups unprecedented power to influence the Internet financial services market. After the 2000 crash, things are back to normal with startups fighting every day for revenue, investors, and survival. Overall, this trend is likely to favor the incumbents. But the plethora of media attention surrounding stock declines and bankrupt startups negatively affects the ability of even established companies to get internal funding for new Net-related projects.

4


Net-only Bank Brands Regroup
: Closely related to number 3, several of the higher-profile, and higher-cost, Net-only efforts were scuttled or scaled back: Citibank ditched the Citi f/i brand and went instead with the Yodlee-built myciti.com account aggregation site; WingspanBank began touting its Bank One relationship in advertising; X.com drops out of retail banking to focus 100% on its PayPal payment system; and NextCard shelved its retail banking plans for NextBank.

5

 

Turnkey Interbank Funds-Transfer Systems Become Widely Available (from vendors): Although it will be a year or two before these services are widely available for end-users, we believe the programs from CashEdge, ECash Technologies, and CertaPay, along with home-grown systems at bigger banks, will become a must-have feature across all online banking programs. Unlike account aggregation, interbank funds transfer is straightforward and doesn’t require customers to be trained on the system or educated on its benefits.

6


The “Bill Presentment at Bank Sites” Fantasy Fades Away
: With the demise of Microsoft’s bill presentment play, Transpoint (sold to Checkfree, Feb. 15, in a stock transaction valued at $1 billion at the time), the future of bank-facilitated bill presentment looks considerably dimmer.

We’ve debated this issue with execs from Checkfree and other payment companies for years. The payment vendors paint a rosy picture of tens of millions of consumers logging into master bill-pay consoles housed at their bank’s Web site. We never bought it. We couldn’t understand how the extra effort to post bills at a third party could be justified when billers and consumers can exchange bills, payments, and questions directly through email; an interface already mastered by most Web users.

If you’ve ever been to a bill presentment conference, you’ve probably heard Richard Crone’s diatribe against retail bank involvement in the space. His “bills are compelling content” argument for the so-called “biller-direct” model is slowly coming to fruition. Crone recently left CyberCash and is marketing his expertise as an independent consultant once again.

Contact: Richard Crone, rcrone@aol.com , (650) 592-4006.

7



One Million Hours1 Wasted in “Wireless Strategy” Meetings
: If you are in North America, you are wasting your energy planning for the wireless Web. Sure, some day we’ll all use the Web from a wireless device. As a matter of fact, 20 or 30 years from now there won’t be keyboards or modems or monitors. We’ll just speak into a mike embedded in our clothes (or skin) and receive answers directly to a speaker or screen mounted in a similar fashion.2

While these technologies make great science fiction, banks should not be wasting energy on them in 2000 or 2001. Rather than debating how your services work on a 2-inch screen in a coffee shop in Northern California, concentrate on how to service customers effectively with an email-based service optimized for an office or den in Peoria. If you do that right, you’ll have something that works for desktop PCs, tiny wireless devices (that receive standard email), and anything in-between.

8


Net Banking Becomes Far Easier to Use
: Many banks went through exhaustive Web makeovers this year. As a result, navigation is better, copywriting is more professional, graphics are more appropriate, servers deliver pages much faster, online banking demos do a better job selling, online applications are understandable, and online banking login is on the home page. As a result, Web banking programs have become much more popular, especially for novice users.

9

Y2K Task Forces Redeployed: It seems so long ago, but remember how many resources were sucked into that non-event in 1998 and 1999? This year, Web banking received far more IT attention, and it showed.

10

Fraud Made a Bad Situation Worse for Online Retailers: While Net retailers were far less popular with investors, employees, and suppliers, one group enthusiastically embraced the B2C sector: thieves. While fraud levels were a closely guarded secret at most retailers, a few revelations, such as Expedia’s disclosure that it was taking a Q1 2000 charge of $4.1 million to cover credit card fraud, provided a glimpse of the magnitude of the problem.

The significance for online banking is clear: merchants desperately need a solution that works better. PayPal for one is working on a payment system that bypasses the credit card system and delivers good funds to merchants for about the same price as the “non-guaranteed” (card not present) funds from a credit card purchase. Banks also have the opportunity to step in and create workable good-funds systems that protect both online buyers and sellers from fraud and loss of privacy.

1The one-million number is a wild guess and is probably on the high side, but it sounds good. Derivation: 10,000 financial institutions times 10 people involved per company times 10 hours per person.

2Our favorite fictional vision of the Web’s future is Neal Stephenson’s “Snow Crash,” a widely acclaimed sci-fi book first published in 1994.

Comments

Online Strategy Matrix for 2000 Organized by Overall Bank Goals

By Jim Bruene on June 5, 2000 9:17 AM | Comments

The strategy matrix follows the same format as last year. This year we’ve updated the matrix with more tactics that incorporate screen scraping and person-to-person payment technology now that they are widely available. This long matrix has been organized into five overall bank goals:

 

Goal

1.    Increase new product sales
2.    Upsell existing products
3.    Improve customer retention/satisfaction
4.    Increase brand awareness online
5.    Improve bank financial performance
6.    Addendum: Fee-based service matrix














 

*Features to put you at parity with the best online competition.               ** Differentiating strategies place you (temporarily) ahead of your online competition


 

Comments

Online Banking User Needs Matrix

By Jim Bruene on June 4, 2000 9:01 AM | Comments

Before we launch into product and marketing strategies, let’s step back and reflect a moment on what users are trying to accomplish when they sign-up for “online banking.”



Source: Online Banking Report, 6/000

1We call it the illusion of real-time processing, because users don’t so much care whether a transaction is processed in real-time or batch mode, 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; for example, we recently happened upon Legacy Bank’s Web site when we saw its CEO quoted in an article in American Banker (see screenshot below)

3We are fully aware that the advertising research says that pictures of happy people make your bank seem more user-friendly; that works fine in the branch and take-one brochure rack, but it works the opposite on the Web where users must wait to download the pretty pictures

Comments

Banking Metrics for Delivery Channels

By Jim Bruene on May 17, 2000 10:05 PM | Comments (1)


 Once again, bricks and mortar showed surprising strength with a net gain of 1,432 branches in 1998. With 74,408 total branches, the U.S. has one bank branch for every 1,350 households.  The total number of banks and thrifts entities declined by 462 to 10,461. Interest in new charters continued its upward trend with 222 issued in 1998, 22 more than in 1997, and the highest single-year total since 1988. But, branches share of transaction volume has been falling, from 54% in 1994 to 40% in 1999. The telephone channel has picked up most of this growing its share from 12% to 22%. Online accounted for just 2% of transaction volume in 1999 (Table 3).


 

Table 1

Number of Bank and Thrifts Operating at Year-End (U.S.)

Source: FDIC, 12/99                 *Total new bank and thrift charters; in 1998, 194 were new banks, 28 were new thrifts


 

Table 2

Retail Delivery Channel Usage (U.S.)

Metric

1999

U.S. HHs that own a PC

50%

U.S. HHs that have access to the Internet

33%

Consumers aware of home banking

66%

Total retail banking transactions*

32 billion

Number by ATM/Phone/PC

16 billion

U.S. HH using online banking

7%

Average transactions over all channels

15/mo

Average number online transactions

12.4/mo

Average branch transactions

7/mo

Source: PSI nationwide study of responses from 3,217 U.S. HHs, Dec ’99.
* Transactions are any info exchange initiated by a consumer including cash withdrawals, deposits, account inquiries, investment trades, funds transfers, statement requests, product/rate information requests, new account sales, stop payments, and problem resolution.

Table 3

Transaction Volume by Channel (U.S.)

Channel

1994

1999

Change

CAGR

Points

%

Branch

54%

40%

(14%)

(26%)

(5.8%)

In-store

2%

3%

1%

50%

8.5%

ATMs

22%

24%

2%

9%

1.8%

PC

--

2%

n/a

n/a

n/a

Mall

5%

3%

(2%)

(40%)

(9.7%)

Telephone

12%

22%

10%

83%

13%

Other

5%

3%

(2%)

(40%)

(9.7%)

Total

100%

100%

n/a

n/a

n/a

Source: PSI 12/99 (see footnote on Table 3)


 

Table 4

Channel Usage: Online Bankers vs. Offline Bankers

percent of customers using each channel

Source: Cyber Dialogue, DMDNY 2000 Presentation, 5/24/00, www.cyberdialogue.com from interviews of 12,000 consumers each quarter

1Customers currently USING online banking

2Customers currently NOT USING online banking

3Customers comfortable with phone banking are likely candidates for online banking

Table 5

Transactions: Online Bankers vs. Offline Bankers

percent of customers using each channel

Source: Cyber Dialogue, DMDNY 2000 Presentation, 5/24/00, www.cyberdialogue.com from interviews of 12,000 consumers each quarter

1Customers currently USING online banking

2Customers currently NOT USING online banking

Comments (1)

Impressive Gains for Online Brokerages

By Jim Bruene on May 16, 2000 9:55 PM | Comments

 


 

Online trading continued to improve on its popularity accounting for 48% of all retail trades in the second half of 1999, up from 37% in the first half of the year (Table 8).The major online brokerages chalked up impressive gains in account and asset growth during first quarter. Schwab retains the number one position in total assets and trading activity, while Fidelity maintained its number one position in total number of accounts (Table 4). In February, Ameritrade.com combined with its onmoney.com unit overtook E*Trade as the busiest online brokerage site. During April, 3.4 million visitors came to Ameritrade/OnMoney, placing the brokerage in fifth place among all financial services companies . Only X.com, NextCard, Intuit, and Providian had more traffic.


 

Table 4

Largest Online Brokers

thousands of active online accounts

Sources: Piper Jaffray Inc. 4/2000, and individual companies www.ecinvestor.com , Stephen Franco is contact at Piper Jaffray, (415) 984-4646; The data represents all online trades in North America. It does not include automated telephone trades or trades placed with a human broker; historical numbers have been adjusted, as new data became available. 1Growth in “OTHER” is primarily from MSDW and Webstreet, which have not released first quarter numbers.


 

Table 5

Web Traffic at Top 16 Brokerage Sites

unique monthly visitors (thousands)

Source:  PC Data Online ; Gomez Advisors Spring 2000 Broker Scorecard, rank among 56 providers <gomez.com>; 1Includes etradebank.com, telebank.com telebankonline.com ; n.r.=not rated


 

Table 6

Online Brokerage Forecasts

millions of active online accounts and households**


Source: companies    11998 total; 2April 1999; 3CAGR = 22% for accounts, 39% for households

 

Most analysts predict continued growth in the penetration of online investing and investment research within the population as a whole. For example, eMarketer, consolidating views from a number of financial services researchers, predicts that the penetration rate of online trading will grow from 6.2% today to 11% in 2002, and the percentage doing online investment research will grow from 28% of online users today to 38% (Table 7). In 1999, Forrester predicted that this year approximately 50% of retail equity and mutual fund trades would occur online (Table 8).

 

Table 7

Active Traders vs. Researchers

millions of online accounts**

Source: eMarketer, eFinancial Services Report, 12/99  www.estats.com


 

Table 8

Percentage of Retail Orders Received Online

 

Type of Investment

1998

2000

CAGR

Equities

19.5%

48.3%

57%

Mutual Funds

19.8%

48.3%

56%

Fixed Income

1.4%

13.3%

210%

Foreign Exchange

0%

2.7%

n/a

Commodities

0%

2.3%

n/a

 

Source: Forrester, 1999

Onmoney.com is drawing 1.6 million unique users per month, but only 220,000 have stayed long enough to register; 40,000 of those have signed up for account aggregation from VerticalOne. In our view, the home page could use less noise and more focus.

Comments

Web-based Delivery Make Online Insurance A Sure Winner

By Jim Bruene on May 15, 2000 9:46 PM | Comments

Similar to electronic bill payment, online distribution of insurance has a promising future, but results so far have been disappointing, especially to investors. Witness the slide in share price at popular provider: InsWeb, whose stock has fallen from its July 1999 peak of $44/share to the $2.50/share (5/31/00). But also like electronic bill payment, the economic advantage of Web-based delivery make online insurance a sure winner. What we don’t know is whether it will be a few years or a few decades for it to take hold (Table 3).

 

Table 1

Web Traffic at Top Insurance Sites

unique monthly visitors (thousands)

Source: PC Data Online www.pcdataonline.com ; Gomez Advisors Spring 2000 Insurance Scorecard; rank among 56 providers, www.Gomez.com ; 5/00 n.r.=not rated.


 

Table 2

Online Insurance Application Volume, 1999

application volume

Company

Q3

Q4

Qtrly Growth

Num

Share

Num

Share

Num

%

InsWeb

680,000

34%

610,000

27%

(70,000)

(10%)

Quicken InsureMarket

450,000

23%

460,000

20%

10,000

2.2%

QuoteSmith

250,000

13%

390,000

17%

140,000

56%

Others

620,000

31%

840,000

37%

220,000

35%

Total

2.0 mil

100%

2.3 mil

100%

300,000

15%

Source: Piper Jaffray, 4/00

Table 3

Online Insurance Sales by Type, 1999 – 2003

$ in millions

Type

1999

2000

2001

2002

2003

CAGR

$

% Tot

Auto

$194

75%

$351

$681

$1,419

$3,198

200%

Term Life

$52

20%

$78

$130

$256

$601

180%

Home

$11

4%

$24

$53

$128

$335

235%

Total online

$257

100%

$453

$864

$1,800

$4,130

200%

Influenced online, sold off-line

$1,640

n/a

$1,850

$2,640

$3,900

$6,970

143%

Grand Total*

$1,900

n/a

$2,300

$3,500

$4,750

$11,000

155%

Source: Forrester Research, 1999

*In comparison, total industry premiums were approximately $700 billion in 1999

Comments

Sizing the Web-based Lending Market

By Jim Bruene on May 14, 2000 9:33 PM | Comments

Sizing the Web-based lending market is difficult:

  •  The public pure Web-based lenders provide useful sales data, especially E-Loan, Mortgage.com, Finet (Table 4 to 6) and Lending Tree (Table 7 - 9); but they have relatively low share compared to traditional lenders who originate the majority of online loans but don’t usually report Internet volume separately.
  •  Many loan applications are multi-channel; applicants may have surfed the Web for rates, then applied in person or by phone.
     

At year-end 1998, the total outstanding debt by U.S. households amounted to approximately $5.4 trillion (source: U.S. Federal Reserve). There were more than 21,000 financial institutions providing the credit (source: U.S. Census Bureau). Forrester Research projected that $1.9 trillion in new loans were originated during 1999, with $25.7 billion (1.3%) originated online. It expects the online share to grow to $168 billion (9.5% of total) by 2003 (Table 2), for a compounded annual growth rate of 60%.


Table 1

Projected Online Loan Originationsns

number in thousands, dollars in billions

Source: Forrester, 1999             

OL %= percent of the dollar volume originated online            

1Total originated on- and off-line


 

Table 2

Projected Online Mortgage Originations

billion $

Source 1999 2000 2001 2002 <2003

CAGR

Forresterer

$19

$32

 

 

$91

48%

Piper Jaffray

$20

$35

$50

$80

$100

50%

Deutsche Bank

 

$60

 

 

$250

61%

Jupiter (high)

 

 

 

 

$155

n/a

Jupiter (low)

 

 

 

 

$101

n/a

eMarketer

$7.2

$26

$49

$74

$102

70%

  Average

$15

$38

$50

$77

$133

71%

Source: companies

Table 3

Online Mortgage Originations by Quarter, 1999

billions of dollars

 

Q1

Q2

Q3

Q4

Total
Total residential mortgage volume

$351

$381

$309

$247

$1,288

Internet enabled (retail B2C)

$2.0

$2.3

$2.0

$2.1

$8.4

  % on Net

0.58%

0.61%

0.63%

0.83%

0.65%

Source: Piper Jaffray, 4/00

Table 4

Online Mortgage Originations, Q3 & Q4 1999

billion $

Lender

$ Volume

Change

% of Tot

Q3

Q4

$

%

E-Loan

$301

$300

($1)

0%

17%

Mortgage.com1

$149

$186

$37

25%

8%

MortgageBot (M&I)

$64

$51

($13)

(20%)

3%

Finet1

$40

$59

$19

48%

2%

American Home Mtg

$40

$79

$39

98%

2%

Mult--lender sites

$511

$615

$104

20%

25%

Others

$852

$764

($88)

(10%)

40%

Total

$1,958

$2,054

$96

5%

100%

Source: company reports and Piper Jaffray, 4/00

1B2C share of total company volume


 

Table 5

Online Average Loan Size1, 1999

Lender

Q1

Q2

Q3

Q4

Mortgage.com

$189,000

$190,000

$193,000

$189,000

E-Loan2

$194,000

$187,000

$102,000

$55,000

Finet

$193,000

$188,000

$173,000

$155,000

Lending Tree

$65,000

$42,000

$28,000

$35,000

Source: Piper Jaffray

1Includes all types of consumer loans originated by the companies

2Average loan size fell due to acquisition of BofA’s Internet auto loan unit

Table 6

Online Acquisition Cost for Mortgages, Q1-Q3 1999

Lender

Num. Booked

Q1-Q3 Spending

Acquisi-tion Cost

Cost per Thousand Dollars Booked

Mortgage.com

12,057

$13.2 mil

$1,092

$5.73

E-Loan1

6,693

$20.6 mil

$3,077

$17.23

Finet

3,512

$3.9 mil

$1,113

$6.71

Lending Tree

14,743

$12.1 mil

$821

$24.16

Total

37,005

$49.8

$1,346

n/a

Source: Piper Jaffray

1Includes home equity and sub-prime loans referred to other lenders

Lending Tree

Lending Tree first revealed its operating metrics in registration statements prior to going public Feb. 15. The company has continued to provide enough operating details to make it a good source for online lending trends.

In 1999 the company transmitted 186,000 loan applications (aka “qualification forms”) to its network of 104 lenders (Table 47). The total dollar volume transmitted was $16.2 billion. The average loan amount applied for was $88,000. More than 27,000 loans were closed amounting to $941 million in loans and lines. These results sound a little better than they really are because a substantial number of the loans (60% in Q1 2000) were credit cards cross-sold to applicants for other products (see Table 45 for a breakout in Q1 2000). Applicants earned rebates as high as $500 for taking the credit But even backing out credit cards, in Q1 2000, Lending Tree closed 7,500 loans for an annualized rate of 30,000 loans worth nearly $2 billion, a healthy amount of activity in a market sector barely two years old.

00-may-Loans2.jpg

Lending Tree’s current tag line, “When banks compete you win,” strikes a chord with consumers.

Table 7

Lending Tree Revenue by Loan Product1, Q1 2000

dollars in millions

Loan Type

Applications

Closed Loans

Rev-enue

Num.

$

Num

$

Mortgages

58,521

$9,939

1,737

$277

$1,936

  % of total

44%

85%

18%

56%

47%

Home equity

30,817

$1,238

4,060

$166

$1,551

  % of total

23%

11%

43%

18%

37%

Credit card

15,672

$78

1,7861

$91

$701

  % of total

12%

1%

19%

2%

2%

Auto loans

24,707

$452

1,620

$35

$462

  % of total

18%

4%

17%

7%

11%

Personal loans

4,343

$40

269

$3.6

$46

  % of total

3%

0.3%

3%

1%

1%

Total1

134,060

$11,747

9,452

$491

$4,141

   less cards

118,388

$11,669

7,666

$482

$4,071

Source: company, 5/00

1Does not include 14,569 cards, $73 million in credit lines, and $232,000 in revenue cross-sold to other loan applicants

Table 8

Top Lending Tree Lenders* by Closed Loan $

Mortgages Home Equity
CMP Mortgage Bank One
iOwn.com Citibank
mortgage.com PNC Bank, FSB
MortgageSelect.com Provident Bank
New Century Sovereign Bank
Total lenders: 74 Total lenders: 49
Auto Loans Personal Loans
Auto Refinance Source Chase
Giggo.com The Dime Savings Bank
SmartFinance.com Sovereign Bank
Sovereign Bank Synergy FSB
Synergy FSB  
Total lenders: 13 Total lenders: 6
Credit Cards  
Aspire Card Services  
First USA  
Merrick Bank  
Total lenders: 7  
Grand Total 104 lenders

Source: company, total lenders as of 3/31/00; top lenders for the month of Oct. 1999, based on loans closed


 

Table 9

Lending Tree Metrics

1Includes a large number of credit cards cross-sold to other loan applicants which earns the applicant a substantial rebate at closing; in Q1 2000 there were cross sales of 14,569 cards, $73 million in credit lines, and $232,000 in revenue (see Table 7); 2Excludes revenues from licensing its platform technology; 3 Does not include the cost of the sales staff

Table 10

Web Traffic at Top Mortgage and Loan Sites

unique monthly visitors (thousands)

Source:  PC Data Online www.pcdataonline.com ; Gomez Advisors Summer 2000 Mortgage Scorecard, rank of 26 total www.gomez.com ; 5/00          

 n.r.=not rated

Comments

Average Banking Costs per Household

By Jim Bruene on May 10, 2000 8:59 PM | Comments

If you are looking for industry average revenue numbers to plug into a business case, BAI and PSI Global published useful numbers in their March 1998, Profiting from Change  in the U.S. Payments Industry (Table 1). Although somewhat dated now, its still a useful starting point. For a better understanding of how the numbers were derived, we recommend purchasing the 85-page BAI study at (312) 683-2464, or  www.bai.org/profiting  cost is $150 for members, $250 for non-members.

Table 1 Bank Payment System Revenue1 (U.S.)

billions of dollars (except per household)

 

Type

Total (billions)

Per HH2

% of Total

Fees    
checking fees, total

$21.2

$212

27%

    monthly and per item fees

$9.1

$91

12%

    NSF/OD fees

$8.1

$81

10%

    check printing charges

$4.0

$40

5.1%

money orders, cashier checks

$0.6

$6

0.8%

ATM fees

$2.2

$22

2.8%

ACH, wire fees

$0.9

$9

1.2%

com’l services such as lockbox

$0.7

$7

0.9%

EBT transactions

$0.7

$7

0.9%

correspondent processing

$1.0

$10

1.3%

misc.

$0.1

$1

0.1%

Total

$27

$270

35%

Checking account interest

 

 

interest spread consumer checking

$27

$270

35%

interest spread com’l checking

$24

$240

31%

Total

$51

$510

65%

Grand Total

$78

$780

100%

 

Source: BAI/PSI Global, 3/98

1Does not include credit card fees and interest which we consider to be part of the business case for consumer lending
2Assumes 100 million U.S. households and that fees charged to businesses are directly passed on to U.S. consumers

 
Comments

Gomez Scorecard and Internet Bank Ratings

By Jim Bruene on May 9, 2000 8:54 PM | Comments

Gomez Scorecard

Despite some conflict-of-interest grumbling in the brokerage community (top-ranked broker, E*Trade chalked-up nearly a half-million dollars in consulting fees with Gomez in 1999), Gomez Advisors  www.gomezadvisors.com  has achieved near-adjective status in the financial services community, e.g.,“We are working on increasing our Gomez.” The company’s quarterly rankings of Internet stockbrokers, banks, mortgage lenders, and credit card issuers, are widely sited in the press and touted on the home pages of the winners. Even a high score in a single category can be leveraged into PR. USABancshares, despite finishing 20th overall, and 3rd in cost, rotates this message on its home page, “Twice Ranked #1 for overall cost by Gomez.com.”
 

00-may-gmoex2.jpg

News flash on the home page of USABancshares.

To be included in the Gomez Scorecard, banks must provide Web-based account access and bill payment. Gomez calculates an overall score based on ratings of five attributes: ease of use, customer confidence, on-site resources, relationship services, and overall cost. The company assigns a score through direct observation of the bank’s Web site, results from a questionnaire sent to the bank, and interviews with bank customer service reps. Table 18 on the next page shows the rankings for fourth quarter 1999 (Note: the Spring 2000 Scorecard is now available at gomez.com). Table 20 summarizes bank scores by Web platform vendor.

Table 1

The Internet Bank Ratings

overall score on the Gomez Advisors scorecard

Bank

Overall Score1

Web Platform2

1.        SFNB3

7.47

S1

2.        WingspanBank.com

7.10

other

3.        Wells Fargo

6.81

other

4.        First Internet Bank (IN)

6.74

Virtual Financial

5.        CompuBank

6.68

Edify

6.        Ohio Savings Bank

6.58

First Data

7.        Net Bank

6.46

Edify

8.        Citibank

6.39

other

9.        Bank of America

6.37

other

10.     everbank.com

6.32

other

11.     Bank One

6.29

other

12.     Directbanking.com

6.28

S1

13.     American Express

6.27

S1

14.     Huntington

6.23

S1

15.     Fleet Boston

6.18

other

16.     Citi f/i

6.17

S1

17.     Chase Manhattan Bank

6.09

Edify

18.     USABancShares

6.06

EDS

19.     BankDirect

6.02

other

20.     Key Bank

5.96

other

21.     Mellon Bank

5.92

Integrion

22.     First Union

5.84

other

23.     USAccess Bank

5.81

Edify

24.     TD Waterhouse Bank

5.67

ina

25.     Harris Bank

5.60

Edify

26.     Wachovia

5.56

S1

27.     Telebank

5.55

S1

28.     Hibernia National Bank

5.52

Corillian

29.     First Natl Bank of Omaha

5.48

other

30.     M & T Bank

5.41

Corillian

31.     First Tennessee Bank

5.37

other

32.     Fifth Third Bank

5.35

other

33.     Bank Caroline

5.30

other

34.     Commerce Bank (NJ)

5.29

CFI

35.     Intrust Bank

5.28

eCommLink

36.     LaSalle

5.26

other

37.     American Bank

5.23

other

38.     Summit Bank (NJ)

5.20

other

 

39.     Union Bank of California

5.20

in house

40.     nBank

5.19

nFront

41.     National City Bank

5.16

in house

42.     Bank United (TX)

5.12

ina

43.     Flagstar Bank

5.10

nFront

44.     Dollar Bank

4.99

Edify

45.     AmSouth Bank

4.94

Corillian

46.     SunTrust Bank

4.93

Corillian

47.     HSBC Bank USA

4.85

EverSystems

48.     Firstar

4.79

EDS

49.     BB&T

4.74

in house

50.     Commerce Bank (MO)

4.66

in house

 

Bank

Overall Score1

Web Platform2

51.     People’s Bank (CT)

4.64

other

52.     First Citizens B & T 4.64 other
53.     Union Planters Bank

4.62

Funds Express

54.     M&I Bank

4.62

other

55.     Regions Bank

4.56

S1

56.     Washington Mutual

4.56

other

57.     Citizens Bank (RI)

4.43

other

58.     PNC Bank

4.22

Integrion

59.     California Federal Bank

4.09

Online Resources

60.     Guaranty Fed’l Bank (TX)

4.07

Jack Henry

Average

5.44

 

Sources: Score -- Gomez Advisors, 1/00, <gomez.com>;
Web platform vendors – Online Banking Report, 4/00
1Overall score from Gomez; see its Web for scores across all five attributes as well as scorecards designed for specific customer segments, Contact: John Robb, jrobb@gomez.com  (978) 287-0095;

2Web platform = vendor for the transaction area of the Web; many of the “in houses” are in-house systems

3Security First Network Bank, <sfnb.com>, is an Atlanta-based subsidiary of Royal Bank of Canada

Cross-referencing Gomez ratings with our database of Net-banking platform vendors, we generated Table 19 showing the average Gomez score for each vendor. However, the sample size is so small for most vendors, it’s difficult to draw many conclusions. It is evident that banks using S1 or S1-owned Edify score consistently higher than average. But we don’t really know the cause and effect, e.g., does the S1 platform cause Gomez scores to rise, or do banks that would normally score high on Gomez choose S1 for other price/performance reasons.

Perhaps a better indicator of platform performance is the ratings assembled by the consulting firm Celent (Table 4). In its interviews with banking execs, Celent found a strong preference for Corillian among large and medium banks and Digital Insight. among community banks. But there are so many variables in vendor selection that you must take these popularity contests with a grain of salt.

Table 2

Largest Public Net Banking Vendors*

dollars in millions

Company

Symbol

Q1 2000
Revenues

Market Cap
(6/5/00)

S1

SONE

$50.4 million

$2.1 billion

Digital Insight

DGIN

$10.4 million

$976 million

Corillian

CORI

$3.3 million

$546 million

Online Resources

ORCC

$3.1 million

$71 million

NetZee

NETZ

$2.9 million

$148 million

Intelidata

INTD

$2.6 mil lion

$316 million

*The majority of their revenues derived from Net banking software


 

Table 3

Internet Bank Service Providers

overall score on the Gomez Advisors scorecard

 

Web Platform Vendor

Number of  Clients in Gomez Winter ’99 Scorecard

Average Gomez Score

Range

Virtual Financial

1

6.74

n/a

HomeCom

1

6.58

n/a

S11

8

6.01

4.56 – 7.47

Edify2

6

5.94

4.99 – 6.68

In-house/other3

28

5.50

4.43 – 7.10

EDS

2

5.43

4.79 – 6.06

Concentrex (CFI)

1

5.29

n/a

eCommLink

1

5.28

n/a

Corillian

4

5.20

4.93 – 5.52

nFront4

2

5.15

5.10 – 5.19

Integrion

2

5.07

4.22 – 5.92

EverSystem

1

4.85

n/a

FundsXpress

1

4.62

n/a

Online Resources

1

4.09

n/a

Jack Henry

1

4.07

n/a

Total

60

5.52

4.07 to 7.47

 

Source: Gomez Advisors, 1/00; OBR, 1/00 (see table 11 footnotes)

1Provides the platform for the top site; 2Merged with S1; 3Category includes banks that use 100% proprietary systems, those that have a blend of vendor/custom software, and those that have not publicly identified the software used; 4Merged with Digital Insight

Table 4

Platform Rankings According to Celent

overall score on the Celent scorecard

 

Rank

Large Banks

Medium Banks

Small Banks

1 Corillian Corillian Digital Insight
2 Sybase/HFN Sybase/HFN Concentrex
  S1-Retail S1-Retail ORCC
3 S1-Consumer Digital Insight S1/Q-Up
 

Source: Celent Communications, 2/00, <celent.com>

Note on Web Traffic Methodology

Web traffic data is less precise than it may appear. PC Data derives Web traffic numbers from a sample of 100,000 primarily home-based users whose actual surfing habits are tracked by PC Data software. A Web site must have more than 100 visitors across the panel before being ranked. Sites below the threshold show as blank in our charts, even though actual traffic could be as much as 100,000 users or more. Another difficulty interpreting the trends is that PC Data has altered its methodology and panel make-up over time, so results in the current month aren’t directly com-parable to previous month’s data. Readers must be careful in reading too much into a given data point. For the complete methodology, see  www.pcdataonline.com/methodology

Comments

Other Product Usage and Small Business Usage Metrics

By Jim Bruene on May 8, 2000 8:51 PM | Comments

 

Other Product Usage

Online banking users are far more likely to have used other online financial services compared to the online population as a whole. For example, 25% of online bankers have traded stocks online, almost four times the 7% rate of all online users.

Table 1
Other Activities of Online Banking Users
percent of total

Activity

Usage by Online Bankers

Usage by All Online Users

Ratio of Online Banker Usage to All Usage*

Manage investments

62%

31%

2x*

Insurance info/services

33%

12%

2.7x

Trade securities

25%

7%

3.6x

Mortgage info/services

24%

11%

2.2x

Applied for credit card

16%

6%

2.7x

Applied for a loan

6%

2%

3x

Average

28%

12%

2.7x

Source: Cyber Dialogue, 3/00

*For example, online banking users are twice as likely to manage investments online compared to the online population as a whole.


 

 

Small Business Usage

Small business usage of online banking outpaces consumer usage, but not by as much as one would expect. In Oct. 1999, PSI found that 14% of small businesses used online banking. This is nearly double the level of n

on-business-owning consumer usage which we estimate was approximately 7% to 8% in Oct. 1999.

Table 2
Small Business Usage
percent of total

Activity

Oct. 1999

Oct.
1998

Growth

Use PC banking

14%

8%

75%

Use business banking services

7%

5%

40%

Invest online at home

9%

ina

 

Invest online for business

3%

ina

 

Have a PC at home

73%

ina

 

Have a Web site

20%

ina

 

Home-based business

50%

ina

 

Average time in business

10 yrs

ina

 

Source: PSI Global, Oct. ’99 telephone and mail interviews with 1,000 business owners of companies with sales between $50k and $500k

ina=information not available


 

There continues to be a significant gap between interest and actual usage of online banking. Only 12% of PC owners report using their PCs for banking transactions. In contrast, 41% of PC owners have used their PCs for finances, and 52% of PC owners are either very or somewhat interested in banking online (see Table 16). This ratio of four interested non-users for every user has remained relatively constant for the past several years. The ratio is also constant across most demographic slices except in the highest and lowest income categories. Within the next five years, we expect the majority of the 20% of PC owners who are very interested will join the 12% who are already users, equaling a 32% penetration of PC.


 

Table 3
PC, Online, and Online Banking Use by Age and Income
estimated online user base

Source: American Banker/Gallup 1999 Consumer Survey.  This survey covers only households with at least one type of financial account and excludes the unbanked that are believed to comprise 8% to 12% of the roughly 102 million U.S. households.
1To buy or sell, or to request information to be mailed; percentages are of people who said they have ever used the Internet (n=69%).
2To keep track of checking accounts, credit cards, or other financial matters.

Comments

Web Banking Usage from Gomez (U.S.)

By Jim Bruene on May 7, 2000 8:48 PM | Comments

Table 1

estimated online user base1

Source: Derived from Gomez Advisors study, Identifying and Capturing the Active Web Banker, 1999 survey of 16,500 U. S. adult online users, 4/00

1Does not include an estimated 2 to 3 million HHs exclusively using dial-up online banking services through Microsoft Money, Quicken, MYM, etc.

Comments

NetBank Numbers and Metrics

By Jim Bruene on May 6, 2000 8:37 PM | Comments

NetBank is one of the most interesting companies to follow. As the only publicly traded pure Net-only bank, it provides a rare glimpse of what’s really happening. However, since the company does not report the number of customers, only the number of accounts, it’s difficult to calculate a true customer acquisition cost. For instance, how may of the 16,000 accounts added in Q1 were from net new customers or were from existing customers adding an additional CD account?

Table 1

NetBank Metrics

millions of dollars and thousands of accounts

Metric

1998

1999

2000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Accounts

8.4

12

15

17

25

39

50

66

82

Deposits

$129

187

241

283

333

415

486

653

725

Net int. income

$0.9

1.5

2.1

2.2

3.0

4.7

7.4

8.2

8.9

Web traffic

ina

ina

ina

ina

ina

ina

262

710

515

Growth
Accounts

n/a

3.5

2.8

2.8

7.2

14.4

11.0

16.0

16.0

Deposits

n/a

$58

54

42

50

82

71

167

72

Net int. income

n/a

$0.6

0.5

0.1

0.8

1.7

2.7

0.8

0.7

Web traffic

ina

ina

ina

ina

ina

ina

ina

448

(195)

Growth %
Accounts

n/a

40%

24%

19%

42%

58%

28%

32%

24%

Deposits

n/a

45%

29%

17%

18%

25%

17%

34%

11%

Net int. income

n/a

70%

34%

5%

39%

56%

58%

11%

9%

Web traffic

ina

ina

ina

ina

ina

ina

ina

71%

(28%)

Source: Company reports compiled by Ian Leff,  www.kickassbanks.com/8qg.htm  Web traffic from PC Data Online
Web traffic is the average number of unique monthly users during the quarter

Table 2

NetBank Deposit Growth by Type

millions of dollars

Type 1998

1999

Q4

Q1

Q2

Q3

Q4

% Tot

% Chg vs. ‘98

Checking

$15

$20

$23

$30

$42

6% 180%
    non-interest1

9

10

7

4

4

0% (56%)
    interest

6

9

15

26

39

6% 550%
Money market

65

98

153

198

220

34% 240%
CD <$ 100k

197

199

216

233

351

54% 78%
CD >$100k

6

16

24

25

41

6% 580%
Total

$284

$333

$415

$486

$654

100% 130%

Source: Ian Leff,   www.kickassbanks.com/8qg.htm              1Discontinued


 

Comments

Web Traffic at Top Banking Companies Growing Fast

By Jim Bruene on May 5, 2000 8:35 PM | Comments

In recent months, Web traffic at top banking companies has been growing at a faster rate than the Web as a whole. For example, at the ten busiest sites in April (see Table 1), traffic is up five-fold from a year ago. One-third of the total gain is from one company, X.com that has experienced explosive growth with its PayPal email payments system
For the most part, Web traffic correlates strongly with the size of the company’s existing customer base and/or the amount of advertising expended. After X.com, the most trafficked sites are those with the biggest checking account bases: BankAmerica, Wells Fargo, and so on. The smaller banks on the list, NetBank and SFNB, for instance, have been driving traffic with multi-million dollar advertising campaigns, although those will likely be scaled back now that investors have suddenly taken a critical view of large-scale branding expenses.


 

Table 1

Top 10 Banks in North America as Measured by Web Traffic (U.S.)

unique monthly visitors in thousands (‘000s)



 

Table 2

Banks #11 to #48 in North America as Measured by Web Traffic (U.S.)

unique monthly visitors in thousands (‘000s)

Source: PC Data Online www.pcdataonline.com ; blanks indicate traffic below min. threshold; Gomez Advisors for Spring 2000 Online Banking Scorecard, rank among 57 banks www.Gomez.com

1Rollups are straight additions of the Websites shown, overlap in users has NOT been factored out; 2 Autonomous unit of Ameritrade, not a chartered bank but provides statement aggregation services and financial info.


 

Each of the three companies tracking Web traffic have different methodologies and unique user panels, so estimates of Web traffic can differ dramatically. Below (Table 3) are the Feb. figures for home usage from Nielsen/NetRatings. The shaded Web sites are financial services offerings. The non-shaded sites are more focused on financial news and stock quotes. 

Table 3

Top 50 Financials from Nielsen/NetRatings

unique monthly visitors in thousands

00-may-topten3.jpg

Comments

A Baker’s Dozen Quick Hits to Increase Web Traffic in 1999

By Jim Bruene on August 7, 1999 9:24 AM | Comments

Build Web traffic before your competitors implement their 2000 plan

Many of the ideas in this issue require executive approval, capital budgeting, I/S negotiations, and so on. If you are looking for ways to boost traffic in 1999, within your existing budgets, here are some low-cost ideas we’ve dubbed “50/50 projects,” ones that can be completed within 50 days for less than $50,000.

 

Project

Comments

Who Can Build It

Supports

OBR

1. Community calendar/database This can range from a simple calendar listing of major events in town to a detailed and searchable database. any Web programmer PR, Web traffic Feb. 98
2. Do a deal Find a promising Web site that appeals to your user base and develop a joint promotional campaign complete with the usual PR barrage. your partner brand various
3. Periodic emailed information alerts Create a useful email list that customers and non-customers can sign up for to receive SHORT periodic alerts. any Web developer; in-house brand; traffic building various
4. Financial datebook with bill pay reminders User enters billing due dates to trigger reminders; generates Web traffic and positions you well for bill presentment. calendar.com, when.com, etc. bill payment, traffic building July 98

 
5. Instant credit approval If your systems can’t support this short-term, consider outsourcing temporarily; you don’t want to be left behind in the critical area of selling loans online. Anytime Access, Lending Solutions, Servus Financial loans, profits Dec 97

Nov. 98

6. Local merchant directory List all local merchants, especially those sending billing statements; include customer service telephone numbers, hours, email addresses, Web links, and payment options; it’s excellent positioning for electronic bill presentment. intern or contractor;
Q-UP clients should inquire about its new ecom program
(6/99 )
bill payment, small business banking Jul 98

 
7. Personal ebankers for your best online customers Assign e-reps to your best customers; equip the reps with email, after-hours capability from home, personal Web pages, and so on. in-house retention, cross sales Sep/Oct 1999
8. Rate comparisons If you pay rates higher than national averages, let users see how much they can earn/save with your products by showing how they compare with national averages. Bank Rate Monitor; BanxQuote deposit products Jul 98

 
9. Rate updates via email Send users periodic emails informing them of latest mortgage rates. in-house mortgage sales May 98

 
10. Relocation database Build a database for newcomers to your area with school listings, rental agencies, Realtors, etc.; make sure your meta-tags are recognized in searches of “yourtown” plus “moving.” intern or contractor new business development March 98

 
11. Scan-and-pay bill presentment Users change billing addresses to yourbank (or vendor); you scan them into a Web site and pay the bills according to standing user instructions. Cyberbills, PayTrust, PayMyBills.com checking accounts; new households June 99

 
12. Time and weather Easy to build, useful, and cheap. (Need we say more?) weather.com
intellicast.com
traffic building Feb 98,
13. Usage-based sweepstakes Enter users into a sweeps each time they conduct specific transactions: pay a bill, check rates, transfer funds, refer a friend, and so on. in-house; sweepstakes vendors any target product various
Source: Online Banking Report, 8/98

Comments

Web Activities of Frequent Users

By Jim Bruene on March 31, 1999 5:20 PM | Comments

The latest consumer research from Forrester lists the most common activities on the Web among users that had been online at least three times during the past three months. We are always humbled by how low financial sites rate in the scheme of things. For example, weather info beats financial info by a margin of almost four to one.

Web Activities of Frequent Users

Visit financial sites = 100

1999-Activity.jpg

Source: Forrester www.forrester.com survey of 100,000 North American households that had been online at least three times in the previous 3 months, cited in The Wall Street Journal, 3/22/99.

Comments

For Your Business Case -- Branch Totals: 1986 to 1996

By Jim Bruene on January 17, 1998 10:30 AM | Comments

The number of bank and thrifts decreased by 500 last year. The slight uptick in new bank charters, 146 were granted, was far overshadowed by the 559 banks that disappeared in mergers. But the branch remains popular, increasing for the 17th time in the past 20 years (exceptions: ‘82, ‘91 and ‘92). Americans are now served by 71,002 bank/thrift branches, one for every 1,400 households. And that doesn’t even include credit unions.

Number of Bank and Thrifts Operating at Year-End (U.S.)

Comments

Web Users and Banking Sites by Country

By Jim Bruene on January 12, 1998 9:58 AM | Comments


 


 

Country

Webs

YE 97

New in 97

Webs
YE 96

Num Users

Total Worldwide

3,670

1,669

2,001

100 MM

United States

2,706

1,363

1,343

56 MM

- banks & thrifts

1,547

807

740

n/a

- credit unions

1,159

556

603

n/a

Andorra

1

0

1

ina

Antigua

3

0

3

ina

Argentina

19

8

11

170,000

Armenia

1

1

0

ina

Australia1

28

6

22

1.2 MM

Austria

26

0

26

500,000

Azerbaijan

1

1

0

ina

Bahamas

1

0

1

ina

Bahrain

5

3

2

50,000

Bangladesh

2

2

0

ina

Barbados

4

1

3

ina

Belarus

1

1

0

ina

Belgium

13

0

13

200,000

Bermuda

1

1

0

ina

Bolivia

4

2

2

10,000

Brazil

34

20

14

1.0 MM

British Virgin Islands

1

1

0

ina

Brunei

1

1

0

ina

Canada2

51

19

32

8.0 MM

Channel Islands

9

0

9

ina

Chile

7

0

6

200,000

China (see Hong Kong)

4

1

3

500,000

Colombia

5

0

5

120,000

Costa Rica

7

5

2

50,000

Croatia

6

3

3

ina

Cuba

1

0

1

ina

Cyprus

8

6

2

ina

Czech Republic

3

1

2

200,000

Denmark

8

1

7

600,000

Dominican Republic

3

1

2

ina

Ecuador

6

2

4

5,000

Egypt

5

1

4

60,000

El Salvador

1

1

0

ina

Estonia

8

1

7

110,000

Falkland Islands

1

1

0

ina

Fiji

1

1

0

ina

Finland

5

0

5

1.0 MM

France

27

1

26

400,000

Germany

102

40

62

4.0 MM

Greece

6

0

6

100,000

Grenada

1

0

1

ina

Guatemala

1

1

0

ina

Honduras

4

1

3

ina

Hong Kong

15

10

5

500,000

Hungary

0

 

0

100,000

Iceland

1

1

0

ina

India

14

9

5

1.5 MM

Indonesia

19

11

8

ina

Ireland

16

8

8

100,000

Israel

6

0

6

200,000

Italy

58

2

56

400,000

Jamaica

2

2

0

ina

 

Source: US Webs: RJE www.bankweb.com ; NCUA www.ncua.com ,

 


 

Country

Webs

YE 97

New in 97

Webs
YE 96

Num Users

Japan

15

0

15

8.6 MM

Jersey

2

2

0

ina

Jordan

6

4

2

20,000

Kazakhstan

1

1

0

ina

Kenya

1

0

1

ina

Kuwait

6

2

4

40,000

Latvia

10

2

8

ina

Lebanon

6

5

1

40,000

Libya

1

0

1

ina

Liechtenstein

2

1

1

ina

Lithuania

4

3

1

ina

Luxembourg

8

0

8

ina

Malaysia

19

15

4

30,000

Malta

1

0

1

ina

Mexico

22

5

17

370,000

Micronesia

1

1

0

ina

Moldova

1

1

0

ina

Mongolia

2

2

0

ina

Morocco

1

0

1

ina

Netherlands

10

1

9

1.0 MM

New Zealand

8

4

4

560,000

Nicaragua

7

0

7

ina

Nigeria

2

2

0

ina

Norway

26

0

26

1.4 MM

Oman

0

 

0

20,000

Pakistan

4

3

1

ina

Panama

2

1

1

ina

Peru

6

4

2

60,000

Philippines

5

2

3

100,000

Poland

10

7

3

700,000

Portugal

7

5

2

200,000

Puerto Rico

3

2

1

ina

Quatar

0

 

0

20,000

Romania

1

1

0

ina

Russia

18

2

16

600,000

Singapore

7

0

7

500,000

Slovakia

5

4

1

ina

Slovenia

6

0

6

ina

South Africa

18

2

16

700,000

South Korea

21

10

11

700,000

Spain

21

1

20

1.3 MM

Sri Lanka

7

5

2

ina

Sweden

13

4

9

1.9 MM

Switzerland

23

3

20

ina

Taiwan

7

3

4

1.3 MM

Thailand

10

4

6

ina

Trinidad & Tobago

1

0

1

ina

Tunisia

2

1

1

ina

Turkey

1

0

1

ina

UAE

3

0

3

90,000

UK

35

9

26

6.0 MM

Ukraine

2

2

0

ina

Uruguay

3

0

3

10,000

Venezuela

3

2

1

35,000

Western Samoa

1

0

1

ina

 

Source: Int’l Webs: Online Banking Report; Users: NUA, www.nua.com

(1) Includes 10 credit unions (2) Includes 28 credit unions
ina=info not available; MM=millions; n/a=not applicable; YE=year-end

Comments