Who'd have guessed banks would become a popular source of holiday gifts, other than good old-fashioned greenbacks of course?

Now that niche audiences can be targeted with online promotions during the holidays, many financial institutions are marketing financial products packaged as gifts. Prepaid Visa/MasterCards are the hottest item, but there's also potential in other areas. 

Gift cards
The second most popular gift item this year, after apparel, is expected to be prepaid cash cards. While the majority of the $20+ billion purchased will be direct from retailers, hundreds of banks and credit unions, such as Boeing Employees Credit Union (BECU) have joined the fray (see email below). If marketed right, financial institutions could gain a significant share of total sales. See our previous post here about integrating gift cards into online banking for more information.

Credit reports
Equifax is taking advantage of the giving season to market credit reports and/or FICO score gift certificates. The cost is $20 for a three-bureau credit report, $15 for the FICO score and explanation, or $30 for both (see email below). An even better gift would be a year of credit monitoring.

Investment accounts
For years, ShareBuilder has marketed "the gift of stock" during the holidays. This year, many of its partners, such as National City Bank, are offering a $50 gift card as a bonus for new accounts (see screenshot below). That way grandma and grandpa can give junior something that's good for him, an investment account for the future AND something he'll actually like, $50 to spend at the mall.

Piggy bank 2.0
For the younger set, ING Direct has for a year been selling The Savings Machine, a toy bank/calculator/ATM machine. And judging from the note on its website,* it's proving to be a popular Deal of the Month with a lower $17.95 price tag which includes free shipping (see inset). Several years ago, ING Direct reported nearly a million dollars in sales from its online merchandise store <shop.ingdirect.com>, an inexpensive way to get its name on the street.

*Note by the "Savings Machine" product page today: All orders placed from 4 Dec to 11 Dec will be shipped out the week of 11 Dec due to the large amount of backorders.

One thing about operating in competitive markets, when one player hits on a good idea, it's not long before others follow suit.

It looks like National City <nationalcity.com> wins the honor of first-to-copy-Citi-Thankyou-Points. The Cleveland-based bank today unveiled its comprehensive Points program <nationalcity.com/points> with a multi-media barrage including television, print, billboard, and transit ads. Its website includes a large, animated points-gathering graphic in the upper right (see the series below).

With rewards ranging from a $5 Starbucks card (2000 points) to cruises (420,000 points), there is something for everyone. The standard domestic round-trip air ticket runs 100,000 points. The program covers both personal and business accounts allowing, according to the company, a typical business owner to amass 140,000 points per year across both personal and business accounts.

The program revolves around spending, paying two points per $1 spent on a National City credit, signature debit card, or line of credit. Card customers can also earn five points per dollar once they surpass $5000 in annual spending, enough to earn round-trip airfare with every $20,000 spent.

Checking account customers also earn 25 points per bill payment, PIN-debit purchase, paper check, or direct debit (ACH) transaction. The 25-point transactions are capped at 500 points per month, the equivalent of $250 in credit card spending. There are also 5000-point bonuses for new accounts including online bill payment (click on the table for details). 

Analysis
While the program is primarily a card-based rewards program, it's good to see online bill payment included, even at minimal points levels. A typical household paying eight bills online per month would earn enough for a grande mocha at Starbucks, about once every 10 or 11 months. It's not a lot, but we believe it's enough to matter, especially combined with the other reward opportunities.

However, we believe the bank erred in including paper checks in the program. Clearly, the points are about rewarding the use of electronic payments and transactions, especially those that lead to credit balances. In throwing a bone to traditional check writers, the bank eliminates much of the incentive to migrate transactions to electronic channels, since the 500-point monthly cap means that once someone writes 20 paper checks (at 25 points each), there are essentially no points for electronic transactions.

Users can sign up for a monthly email update on their points balance. The bank makes it easy with a one-line entry form on the main "Points" page (click on inset for a closeup). After inputting their email address, users are sent to a short form to add their full name and card number.

For more information on rewards programs, click here for previous NetBanker articles.

These days most major online retailers and consumer sites dress up their websites for the holidays.

Unless, they are bank sites.

Each year we surf major banks looking for holiday happenings. We were surprised again this year to find little creativity on bank home pages. On Dec. 21, none of the largest 30 banks in the U.S. had a major holiday theme running.

Two banks, National City (#11) and LaSalle (#15) were running prepaid gift card banners. And two others were running small holiday-themed promotions running, AmSouth Bank (#27) and PNC (#20).

PNC is running a tongue-in-cheek look at the cost of purchasing the items in the popular holiday song, The Twelve Days of Christmas. This year the total cost was $17,300, up 2.4% since last year. The bank has been tracking the cost for 20 years and provides a long-term look at the price increases. It's very clever, providing valuable publicity and a positive impression of the bank.

AmSouth Bank has an interesting holiday promotion, one that ties directly to online banking a bill payment. Website users can personalize a holiday greeting card and send it to anyone with an email address. Users are encouraged, but NOT required, to use the cards as a notification of a check being sent through AmSouth's bill payment system. The default "personal" message even says:

A monetary gift is being sent through AmSouth Bank, please look for it in your mail in the next 7 days.

Greeting card users do NOT have to be bank customers. AmSouth doesn't say whether it is capturing email addresses. We would have to assume not.

Action Items

Add a holiday promotion for your 2005 marketing plan. It's a great way to jazz up your website for the holidays and you can include a sales promotion at the same time, especially for prepaid cards or gift checks.

-- JB

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If you'd like to learn more about the financial interactive marketing efforts, check out the Interactive Financial Marketing Database from our sister publication, the Online Banking Report.

The Newest Member of the 1-million Club:
National City Unleashes a Superb Website

Looking to redesign your website? National City Bank (Cleveland, OH; $118 billion) has one of the best in the business. Despite all the info packed onto its recently revamped home page, it’s still very readable with plenty of white space. On the screenshot above, note the following numbered items:

1.       Detailed product/segment menus on top

2.       Choose to Learn or Apply for each product

3.       Current loan rates

4.       Online Access box with login/learn/enroll

5.       Zero liability pledge

The bank, which finished tenth in the latest Gomez ranking, also unveiled a number of new online banking features including:

• Account nicknames

• Real-time fund balance after transfer

• Payment of multiple bills at once

• Last login shown

• New customer service area

While you are visiting, make sure you check out:

• The Loan Zone (screenshot right)

National City’s “Loan Zone.”

• Entrust logo on new account applications

• My Accounts account aggregation service open to customers and non-customers alike

The Company

With $118 billion of assets and $65 billion in deposits, National City is the 10th largest U.S. bank. The bank also became the tenth to surpass 1 million registered online banking users, 25% of its total retail customer base of 4 million.

Checking Account Signup

From Checking, choose Learn and get this handy table. Note the emphasis on “free” online banking.

Or choose apply and go to this helpful screen.

E*Trade
www.etrade.com

E*Trade has the Web figured out with a fast loading, nice looking, and relatively uncluttered front page.

E*Trade (Palo Alto, CA; $5.5 billion managed; 182,000 active accounts) will become the first brokerage to offer in-bound online funds transfer from any checking account in the United States. The discount brokerage will use National Processing Company’s (NPC) VirtualPAY system for info on NPC’s first implementation with Mobil Oil). The online transfers initiated from E*Trade’s Web will be free; so not only will they be more convenient for users, they will be cheaper than mailing a personal check or transferring funds by wire. NPC, a publicly traded affiliate of National City Bank, is the second largest processor of credit and debit card transactions handling 2.5 billion transactions annually.
Contacts: Judy Balint is SVP at E*TRADE, 415.842.8600. Carl Sammons is SVP Electronic Commerce at NPC Corporate Services, 502.364.2000.