Twice in the past few weeks, I've written blog posts that had one or more criticisms about specific experiences with a bank's product. My complaints weren't Huff Post calls to arms or anything particularly serious, just small things that had gone wrong (previous posts here and here). And our blog, while well-read in the banking industry, is just a rounding error in terms of mainstream readership.  

But in both these examples, the bank reached out to me almost immediately, offering to help solve the problem. In one case, I received a phone call (several actually) from the bank's PR department and the other bank left a message on our home phone (note 1) from the "executive office." 

My take: I am shocked to have heard not once, but twice in the same month from mega-banks looking to solve small, albeit public, customer-service issues. In 15 years of covering the industry, including three with a public blog, I have never had a single "official" call from a bank about a problem I've written about (note 2).

Businesses have long debated how to handle negative conversations in social media (see note 3). Do you stay on the sidelines, anonymously participate in the conversation, or reach out with offers to help?

Clearly, offering to help is the way to go. However, you must choose your words carefully because everything you say can and will be used against you by a blogger bent on revenge or ridicule.

But I can tell you now from experience that it's powerful to be contacted by the business you've written about. My reaction goes something like this:

• "Uh oh, now I've offended a reader; I'd better think twice about posting negative comments again." At the very least, I'll certainly make sure my coverage is extremely balanced in the future. No potshots, that's for sure.
• "Wow, this bank really cares about its customers and reputation." That makes me feel much better about them.
• "Seriously, a big bank that calls its customers when it hears about a problem; impressive as hell!"

So going forward:

• I'm more likely to look for something good to say about the bank to make up for the negative item. 
• I may post an update to the original entry, or even an entire post like this, complimenting the bank on reaching out to resolve the problem.
• I'll probably tell my friends the story, either privately, or more publicly via Twitter, Facebook, etc.

These are pretty good results from a relatively low-cost phone call. Sure, my problems were fairly simple and easily resolved, and it may be harder to appease a blogger whose home was recently foreclosed. But why not try? As long as you stay calm and try to keep things constructive, there's very little downside and a lot of upside.

So congratulations Citibank and Capital One, your performance has been truly remarkable. (Are we good now?) 

Note:
1. The bank must have looked at our actual account info to get the home phone number.
2. I have received the occasional email from a subscriber, but no proactive effort to provide help.
3. For a wonderful overview of the ins and outs of responding to bloggers, read the two-part post (here and here) from Vancity's MVP and third-ranked innovator on the planet, William Azaroff. 

ING Direct wasn't the only one with a Black Friday promotion (yesterday's post).

Portsmouth, NH-based Service Credit Union also took advantage of the U.S. vacation day to promote a special 10% APY 3-month CD ($1,000 max deposit) and 1% off loan rates (promo page). But unlike ING Direct, the CU's special offers were redeemable only in its branches, which opened at 5 AM to mimic giant retailer early-morning specials.

The offer was promoted in a rotating banner on the homepage (see inset and screenshot below). And it had its own landing page (see screenshot below).

I like the creativity, so I'll give them an A for effort. But seriously, opening at 5 AM? Maybe they were hoping for PR exposure, but it's just not right (note 1). I understand (sort of), heading to Best Buy in the middle of the night to save a couple hundred on a TV. But who would go to their bank at 5 AM to make an extra $20 on a CD (note 2) or apply for a car loan (note 3)?

But there was one offer in the fine print that was more valuable for a typical Black Friday shopper, fee-free gift cards until noon. Although, I'm not sure why they limited the number to five per customer. 

Hat tip: Bank Deals blog

Service Credit Union Black Friday promo page (link, 27 Nov. 2009, 9 AM Pacific)

Service Credit Union homepage

Notes:
1. Now if you have in-store branches, it's another matter. Desert Schools FCU opened its 24 WalMart branches at 5 AM along with the retailer.
2. Extra interest on a $1000 CD for 3 months is about $7 per month, or $20 total. And that's before tax.
3. The almost unreadable type on the bottom of the small banner mention great prizes and giveaways, but the landing page makes no mentions of prizes. Now, free stuff would make it worth a trip to the branch, so I wonder why the CU didn't mention that on the promo page? Maybe they didn't want people to show up only for the prizes? 

Bank of America's latest online effort is a personal finance educational site at <learn.bankofamerica.com> that includes consumer polls, money savings tips, videos and articles. Bank products are sprinkled throughout but the marketing is relatively restrained.

It's a solid effort. Good, concise copy married to an attractive graphical layout. And for a bank the size of Bank of America, it makes perfect business sense. The site moves a little product, builds the brand, shows off the bank's consumer-friendly side, provides material for PR campaigns, and gains some CRA credit (note 1). 

But I'm not sure how much usage it will get other than the curious driven to it from banners within online banking. That's how ended up there today after paying my BofA credit card bill online (see second screenshot below).

Given Bank of America's 30 million online banking customers, they must not be driving much traffic to the site yet. According to Compete, traffic surpassed 100,000 for the first time in October. July was the first month that traffic was registered at the site.

Unique monthly visitors to BofA's personal finance tips site (July through October, 2009)

Source: Compete

Other than enabling an RSS feed for article updates, the site has no Web 2.0 or social media features. No blog. No forum. It's just a very pretty face on personal finance 101 material. It will be interesting to see where they take it.

Learn.BankofAmerica.com homepage (link, 13 Nov. 2009)
Note: I completed the poll on the middle of the page, so the results are shown rather than the poll question.

Logoff screen (13 Nov 2009, 3 PM Pacific)

Note:
1. CRA = Community Reinvestment Act which requires banks to help meet the financial and credit needs of low- to-moderate-income consumers.

I recently opted in to the Umpqua Bank email list. And even though I'm not a customer, I received an upbeat message this morning from bank president Ray Davis (screenshot below).

This email appears to be geared towards businesses (see the closing line below). And that makes sense because I'd recently been looking into its business social network (note 1). But the message is on-target for consumers as well.

The well-written 185-word letter covers three main topics:

• A cautiously optimistic message about the overall economy
• Some tangible evidence (new banking division, new lending teams, new capital, and 20,000 hours of community service) that the bank is a forward-moving survivor
• Reassurances to customers that they were well-capitalized and moving closer to repaying TARP money

The tone was completely soft sell. There is a link to its online switch kit at the bottom and links to its LocalSpace business social network and Twitter feed (note 2) on the right. It's more "we're in this together" than sales pitch and closes with this wonderful line:

As we wrap up 2009 and look ahead, I encourage you to commit to the spirit of recovery and take action that positions you for the future.

We recommend that every other well-capitalized bank and credit union send a similar message before the holidays. We are about to move into the annual "year in review" exercise in the media, and this year's 100+ U.S. bank failures will be high on the list. Remind your customers, members, employees that you are still a vital member of the community. And that for every financial institution that went under, there were a 100 like yourself that did not. 

Notes:
1. For more info on the small-business market, see our latest Online Banking Report: Small Business Online & Mobile Banking.
2. Umpqua dreamed up one of the most compelling reasons we've seen to follow a bank, or any company for that matter, on Twitter (with the possible exception of the tweeting bakery): updates on its truck handing out free ice cream (Umpqua Twitter page).

In 2006, we predicted that every major bank and credit union would someday have a blog (note 1). That prediction was looking downright awful until Twitter came along. The popular, and much-hyped service, is part blog, part social network, and part text-messaging.

Financial institutions have embraced Twitter much faster than blogging because it's low cost, drop-dead simple to implement, and relatively cost-effective to staff and manage. Our good friend, Christophe Langlois, who has been tracking social media implementations at Visible-Banking for several years, has identified 120 financial institution blogs worldwide. In comparison, Christophe is tracking more than 700 Twitter accounts. Similarly, Jeffry Pilcher's exhaustive Twitter directory at The Financial Brand lists about 600 Twitter accounts in use by financial institutions.

Vantage CU takes the Twitter plunge
Although Twitter can successfully be used as a simple one-way broadcast medium (i.e., microblog), it's also a powerful two-way and group communication service (note 2). Wesabe, in 2008, and Xpenser, earlier this year, were the first online PFMs to leverage Twitter for posting transaction info to user accounts. But St. Louis, Missouri-based Vantage Credit Union took that one step further by allowing users not only to query their accounts, but also to move money between them.

At the core, Vantage CU's Twitter service is little different than hundreds of SMS/text-message mobile-banking services already in use around the world. But for Twitter users, it allows account queries from anywhere a Twitter client is loaded: smartphone, laptop, or desktop (note 3).   

How it works
Vantage CU posted videos showing how it works. But if you are a Twitter user, you can skip the tutorial. You'll understand right away: After signing up for the service at Vantage (inset), simply follow the CU on Twitter (@myvcu) and send them a direct message whenever you want to see your balance, recent transactions, or to initiate a funds transfer.

While the process is relatively intuitive for Twitter users, the command-code language limits the usefulness. The results look like a throwback to the DOS command line circa 1985 (see first screenshot below). It would be much simpler if the CU offered plain English commands and account nicknames, e.g., "transfer $500 from wifechecking to mychecking" instead of "#trans f9 t0". Ideally, the CU would support short codes for its power users and plain English commands for everyone else.

That said, it's pretty simple to remember how to make a checking account balance inquiry, "#bal 9" (9 is the code for checking), which is the primary way the service will be used.

Website implementation
Few members will actually use Twitter banking, at least initially. The main reason to embrace Twitter is for the publicity and brand value, especially when you are first.  Vantage takes full advantage of its first-mover position, placing a headline on its homepage, along with a Twitter feed directly below.

Other things Vantage CU does right:

• Posted four how-to videos (although, the CU needs to choose a faster host for the videos because the Screencast-based videos run way too slow)
• Posted FAQs, instructions, and screenshots
• Wrote a blog post about the new service
• Proactively reached out to bloggers resulting in great initial coverage (Financial Brand, Everything CU, and Currency Marketing) which can help bring mainstream press coverage later
• Allows users to subscribe to the Twitter feed via RSS (directly from the CU's homepage)

Analysis
The PR value alone should more than justify the expense of Vantage CU's Twitter service. And if Twitter continues to work its way into the fabric of consumers' daily lives, the service could attract a decent following.

In keeping with our 10-year tradition of recognizing new online "firsts," we are awarding Vantage a 2009 Best of the Web award (note 4) for being the first in the world with full-service Twitter banking.

Vantage Credit Union homepage featuring new Twitter service (5 Oct 2009)

Notes:
1. See our Online Banking Report: Bank 2.0 (Nov. 2006).
2. For more info, see our Online Banking Report: Leveraging Twitter (May 2009)
3. However, text-messaging users would likely prefer to make balance inquiries directly from their phone's SMS function, rather than taking the time to open the Twitter app or website. The most likely user is someone already using Twitter who decides to do a quick banking inquiry while Tweeting. 
4. OBR Best of the Web awards are given periodically to companies that pioneer new online and mobile banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important development. Vantage Credit Union is the 75th recipient since we began awarding it in 1997.

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

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

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

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

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

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

The New York Times ran a positive piece on USAA's mobile efforts today, leading with the bank's innovative mobile remote check deposit service. A feature the bank announced in June and is rolling out this week.

USAA is the first major financial institution to use the iPhone's camera to allow customers to upload paper checks for automatic deposit. However, it was beaten to market by tiny WV United FCU, which launched a cruder version two weeks ago (previous post).

The San Antonio-based bank with 7.2 million customers, now has one million mobile users, a 14% penetration rate, up from 11% in May. It's the second U.S. financial institution (after Bank of America with more than 3 million; see note 1) to officially hit the million mark, though Chase/WaMu and Wells/Wachovia are believed to have passed that milestone last year.

Financial institution lesson: Mobile banking, and the iPhone specifically, still make a great story for the press (and customers). If you're first in your market with an iPhone app, or some other mobile milestone, let the media know.

Live demo of USAA's Deposit@Home iPhone app
Starts at 1-minute mark

Note:
1. 43% of BofA's mobile customers access via iPhone or iPod Touch. The bank does not yet support text-banking, so it's user base is skewed towards smartphone users.
2. For more info, see our Online Banking Report on iPhone Mobile Banking. 

Yesterday, Rudder suffered an embarrassing email glitch that affected 732 customers. In the pre-Internet days, no one other than those few hundred customers, and a few of their friends, would have heard about it. Even in the days before blogs became common, pre-2007, it's unlikely the story would have made it to the mainstream press.

And even last year, before Twitter, the story might have died without ever crossing over to the mass media. But when it comes to breaking news and company gaffes, it's a whole new ball game. Everyone wants 15 minutes of fame as an investigative reporter, and Twitter is the dream platform.

I'm going to recap the problem, and how the news broke, in excruciating detail, because it illustrates the power of Twitter- and blog-fueled grassroots reporting. If you are a financial services company, think about how you could use social media to help with damage control should something similar happen to you.  

What happened at Rudder
According to the detailed description first published in TechCrunch and then later published by the company on a new blog created specifically for this issue, an email upgrade the night of May 18 caused 732 users to receive dozens of email updates containing balance and transaction information of other users. Only Rudder users with email addresses that begin with "a" or "b" received the erroneous emails because the company stopped the email job at that point after realizing the "upgrade" had gone terribly wrong.

Besides seeing the info in the email updates, the bigger security/privacy problem was that unauthorized users were able to click through email links to access the full aggregated account at Rudder.com (see screenshot in the TechCrunch article). However, at no time could anyone actually log in to anyone's bank account or move money in any way.

Luckily, Rudder, like all account-aggregation companies, does not include account numbers or personal details in the updates. However, the email addresses of each user was displayed, so any of the 732 customers using an email address at Rudder that can be traced back to their real name, had their financial details exposed to hundreds of users. 

How the news broke
At 5:36 AM yesterday (19 May), Twitter user @adambassador tweeted this:

And @adambassador didn't stop at that. He took the time to search and communicate warnings directly to several other users who'd recently mentioned "Rudder.com" on Twitter. Adambassador would go on to tweet 21 times yesterday about the Rudder problem.

One of the people who heard from @adambassador was financial services consultant and blogger, Mike Linskey (@mikelinskey) who'd just Tweeted about several of the PFM companies he'd seen at our FinovateStartup conference, including Rudder.com. Mike then posted the problem to his Fincision blog at 8:04 AM, and at Mike's request, adambassador posted screenshots of the emails to document the problem, which were then published in Mike's blog entry.

At 10:05 AM, using Twitter, Mike alerted the blog Mashable about the Rudder problem. A half-hour later, Mashable, the fifth largest blog in the country (see note 1), posted the story citing adambassador's tweets and Mike's blog entry. From the Mashable blog entry (below), the problem was retweeted 115 times (see the retweet button below on left).

Then at noon, the second largest blog, TechCrunch, with more than 2 million subscribers, posted the story. And because of high comment activity, it stayed on the top of TechCrunch most of the day (see screenshot below), generating 58 comments.

How Rudder handled it
By almost any standard, Rudder did a good job responding. Although their reply took more than 10 hours since the error was first reported on Twitter, Rudder's CEO posted a detailed comment on the TechCrunch (scroll down to his comment at 4:38 PM here) and Mashable posts, apologizing for the error and explaining in great detail what had happened. 

In addition, Rudder created a special "Rudder Update" blog (see screenshot below) apologizing, explaining the mishap and exactly what info was mistakenly displayed, and detailing the steps they were taking to fix the problem and help affected customers:

• Turned off the email system entirely
• Contacted each affected user individually and offered them a complimentary subscription to an identity theft service
• Engaged an independent security auditor to survey its system and look for weaknesses
• Published a URL for users to go in and delete their accounts if desired

Analysis
Rudder did a good job considering the situation. It was smart to comment on TechCrunch and Mashable, and the new damage-control blog site was a savvy move. And the company did an exceptionally good job with the tone and wording of its mea culpa.

That said, the company could have used social media better. The company's Twitter page (@userudder) and that of its CEO (@nikhilroy) were silent all day. A short Twitter posting, even "we've stopped all emails and are working on it" would have reassured users and potentially made the Mashable post less alarming. Also, the company didn't have a blog, so there was no place where they could post periodic updates during the day. It was complete silence for 11 hours, other than the interview with TechCrunch's Erick Schonfeld mid-day.

Impact on third-party PFM credibility
While this was embarrassing and violated the privacy of several hundred users, there will likely be no financial loss to anyone. There was no data breach or stolen account numbers. Even a single bank account statement stolen from a mailbox could cause more potential financial damage.

And even though third-party PFM providers have had a relatively spotless record for security/privacy, this mistake, now well-documented in two of the largest online publications in the world, will be cited in the media for years, to cast doubt on the security of online personal finance.

It might cost the industry a point or two in short-term market share, but it would take something much worse to materially slow growth. Even Rudder should be fine. By addressing the issue in a highly professional way on the same day, most customers will be reassured, at least those that weren't directly impacted.

The bigger lesson here is the need for damage-control procedures that take into account the power and speed of new media (note 3). The entire episode could have--prior to Twitter and the blogosphere--been known to just a few hundred customers of a very small company, but instead traveled from a lone tweet to a large splash across the homepage of a major publication, all within a 6-hour period.     

TechCrunch featured the Rudder post on its main page most of the afternoon (19 May 2009)

Special damage control blog created by Rudder yesterday
(19 May 2009; link)

Note:
1. Ranking by Technorati authority (here)
2. Thanks to Mike Linskey for the tip yesterday morning.
3. Also, account aggregation users should use an email address that is not directly associated with their name.

Target is running a clever Facebook promotion that allows Facebook users to allocate the retailer's $3 million weekly corporate donation among eight pre-selected charities. I heard about it in an email from the Red Cross encouraging its supporters to go to Facebook and vote more of cash its way (see screenshots below).     

How it works: When Facebook users vote, they are given the opportunity to automatically publicize their activity with their friends (see second Target screenshot). Finally, after a vote, Target shows the running totals for each charity. As of today, nearly 70,000 votes had been tallied.

Analysis: This is a good way to leverage social networking. Not only is Target reinforcing its brand, and its commitment to donate 5% of its income to charity, it's created a non-intrusive viral campaign with both Facebook users and the charitable organizations motivated to spread the word. Nicely done.

Opportunity: This approach would also work great for a financial institution.

From Target website (link)

Target's voting page on Facebook (14 May 2009)

Voters are given the opportunity to spread the word to their Facebook friends (14 May 2009)

After each vote, Target displays a running total (14 May 2009)

When researching yesterday's post on BofA's iPhone app, I searched Google for "Bank of America mobile banking" and ended up at the bank's mobile banking news blog (see screenshot below).

This is the second blog the bank has launched in recent months. The first supports its MIT Center for Future Banking (post here).   

While purists may claim this latest effort is not really a blog because there are no community features such as comments, it's updated infrequently (5 posts in 3 months, see note 1) and appears purely promotional in nature. The bank doesn't even refer to it as a blog. The official title is: Mobile Banking Media Center for Bank of America.

But it's laid out like a blog. The content is arranged in reverse chronological postings, with categories/tagging/permalinks. The variety of content includes YouTube videos, and you can subscribe via RSS feeds.

That's a blog to me, and a very good one at that. While the core audience consists of press and analysts, it's a great resource for anyone interested in the bank's mobile offerings. And as my search yesterday proved, Google has rewarded it with a high organic result, the first position on my search. That can potentially save the bank hundreds of thousands of dollars in search-engine advertising.

Bottom line: Call it what you will, but BofA demonstrates one of the most effective uses of the blog-like format: supporting PR and educational efforts for a new strategic effort (mobile banking) in an easy-to-follow and easy-to-administer format (see note 2).

Notes:
1. There are five posts on the homepage, but if you drill into the top categories, you'll find some older press releases.

2. For more ideas, see our Online Banking Report on Bank 2.0 Techniques. 

3. BofA's new Blackberry app is shown at the top of this post.

According to the Wall Street Journal, scooter sales in the U.S. are up 25% compared to last year (article here). While still relatively rare in U.S. cities, I have a feeling that 10 years from now, after a steady diet of $5/gal gas, American cities will look more like their European counterparts, with scooters zipping about everywhere.

For banks or credit unions, this might be the ideal time to jump on the scooter bandwagon by helping customers buy the energy-efficient vehicles. It would be a great way to grab a little PR boost during the slow summer-news cycle, and with some models selling for $4,000 or more, you could boost vehicle loan outstandings by a measurable amount.

A brief Google search located two financial institutions pushing scooter loans, both appropriately with "green" in their name: South Burlington, VT-based Green Mountain Credit Union and Neenah, WI-based Evergreen Credit Union (see screenshots below).

Evergreen is promoting a special one-day, 3.99% scooter loan on its homepage (see screenshot below and note 1). The Saturday morning event, conducted in partnership with a local scooter dealer, included test rides, free hot dogs, and prize drawings. The CU also gave away a scooter earlier this month as part of its 50th anniversary special.

Benefits/Opportunities

• Incremental loan originations: If you are a good relationship lender, the $4,000 scooter loan today could lead to many $25,000 car loans in the future. 
• Search-engine marketing: Currently, there are no direct ads running on the keywords "scooter loans," although you will compete with several advertisers displaying against the generic "loan" in the search term. There are also few organic results for the term, so there's a good chance an SEO-optimized landing page would rate highly in Google results.
• Leverage branch parking: One of the problems with urban scooter use is lack of available parking. Branches with parking could turn over one or more spaces for customers with scooters, creating good will, as well as the occasional picture on the 5 PM news.
• Public relations: Anything that saves gas makes for a good story this summer and beyond. It can also be pitched as a "green banking" story, although it's not a pure environmental win. The gas savings are easy to see, but scooter emissions can be significantly higher than those of the automobiles they replace.
• Starter loan/credit: If you can convince your underwriting staff to accept applicants with limited or no credit history, the scooter loan could be a great way for young adults to build a credit file and improve their credit score (thanks, Andrea, for the idea)
• Customer acquisition: Scooter loans could be a great way to introduce younger consumers to your financial institution.
• Trendy icon: At least for urban customers, the scooter, especially the classic Vespa look, makes for an attractive graphical image, conjuring up memories of trips to Italy, or at least movies shot there on location. Your scooter program could make for good website content, eye-catching outdoor feel (great bus ad!), and or a nice flourish for other media efforts.
• Strike a deal with Scooter Financial: The number one result at Google for "scooter loans" is Scooter Financial, which does exactly what you'd expect, make loans to buy scooters. Given their name and Google pagerank, they could be an ideal company to partner with.

Cons and potential problems

• It's an asset easily hidden from the repossession agent, so it's harder to use the repo-threat to enforce outstanding debt. 
• The accidental death rate for scooter owners is about 65% higher than that for cars; so you might want to be careful how much you push it as an "automobile alternative." But the news isn't all bad: Scooter owners are much less likely to perish than motorcycle owners. 
• Most gas-powered scooters release significantly more pollutants than most automobiles.
• The smaller loan sizes may lead to little, if any, profits.
• Not a big market overall.
  

Evergreen Credit Union homepage promotes Saturday "scooter loan" special (21 May 2008)

Green Mountain Credit Union homepage promotes 6.49% scooter loans
(21 May 2008)

Note:

1. Unfortunately, the Evergreen special was this PAST Saturday.

Instead of giving yet another gift card, how about making a difference for someone 5,000 miles away?  The biggest online microfinance lender, Kiva, with $12 million loaned to date, offers gift certificates (here) as does Danish microfinance startup, MyC4, that just launched its public beta in September and offers microloan gift certificates (here).

The recipient of the gift certificate logs in and chooses an entrepreneur to assist. For example, the inset is from a listing for a Cambodian village looking to Kiva for $600 to purchase a second cow and a motorbike trailer.

For your kids, it's a great lesson in business, demonstrating how a small amount of capital can make a huge difference in someone's life. And it's a gift that keeps on giving. As the loan is repaid, it can be lent back out to someone else.

Kiva Gift Certificate

MyC4 Gift Certificate

Prosper is one of the few (only???) national retail financial services companies that holds a users conference. The second annual Prosper Days is scheduled for Feb. 25/26 in San Francisco (more info here) and costs $55 in advance or $75 after Jan. 31. This year, they've added a famous keynoter, Freakonomics co-author Stephen Dubner. I will also be on stage later as part of a panel discussion of bloggers covering the space.

The conference is an excellent idea, creating a buzz around the company and providing a platform for its most loyal customers to share success stories and network. It's a model eBay has used successfully for years. The addition of Dubner should increase press coverage and attendance.  

I'm also impressed at how Prosper reuses the content created for the conference. The sessions are recorded and posted to its website to help educate borrowers and lenders. A total of ten videos are available here (see screenshot below).

You know you are losing the PR battle when headlines like this begin to appear:

The point of Tuesday's column from MSNBC's Bob Sullivan, is that consumers fear overdraft fees more than fraud. Hmmm....would that have anything to do with the fact that customers PAY for overdraft fees while the bank picks up the tab for most fraud?

But even overlooking that minor piece of common sense, how does annoyance at overdraft fees equate to being "scarier than criminals?" The headline does a disservice to Sullivan's well-researched and thoughtful column.  

What Banks Should Do
While the headlines will hopefully be a bit more objective, expect more of the same in the coming year. Overdraft fees are becoming a big story. And as the 2008 election cycle kicks in to full gear, expect more grandstanding from politicians on both sides of the aisle. No one wants to be on record as being "for" overdraft fees, or any bank fee for that matter.

Banks need to do two things to head off a PR disaster and avoid pricing caps and/or more regulation from Congress:

1. Look hard at overdraft fee policies including both size and timing of the charges. And if you do find a way to cap/lower or lower overdraft fees, wrap that news in a big bow and deliver it to your customers for the holidays. And if you have a lower fee than the big banks in your market, by all means, let your customers know.  

2. Proactively sell overdraft protection options and balance-awareness services such as online/mobile banking and low-balance alerts via email and text message.

And one more thing:

In press interviews and marketing messages, eliminate all references to "courtesy" and "a service for our customers" in describing overdraft fees. Stay on the message that the onus is on the customer to track their balances. Here's a great response, ABA congressional testimony quoted in the MSNBC article:

The bottom line is that customers are in the best position to know what their actual balance is -- only they know what checks they have written, automatic payments they have authorized and debit card transactions they have approved," Nessa Feddis, a spokeswoman for the American Bankers Association, said during congressional hearings earlier this year. "Simply put, consumers are in control of their finances and can avoid overdraft fees.

My teenage son has just starting "Facebooking," and he loves it. It's his first foray into social networking, and I can tell he'll be a user for the rest of his life, or at least until something better comes along.

Those of us who are merely parents of social network users often find it difficult to understand its power. In my son's circle, Facebook IS the Internet. It's where every online session begins and ends and where important social connections are made and nurtured. That's why strategic investors such as Microsoft, Google and others are said to be giving Facebook as much as a $10 billion valuation (see previous coverage here).  

All this has enormous implication for every retailer and service company on the planet. It amplifies word of mouth exponentially. Remember the old adage that every disappointed customer tells 10 people about their problem. With the instant broadcasting capabilities, an unhappy customer can now share his/her thoughts with 100+ Facebook friends with a single click (note 1).  

And it's not something that is 15, 10 or even 5 years away. It's happening today. Case in point: this summer HSBC (UK) was forced to reverse a policy change that would have ended a common perk for U.K. student banking accounts, a multi-year grace period for overdraft credit lines with limits up to US$3,000 (see HSBC student page here).

Local students were so taken aback by this change in account terms, they formed a Facebook group called, "Stop the Great HSBC Graduate Rip-Off" (here or see screenshot below). Apparently the group was planning to rally its 5,000 members into a little civil disobedience. The group was hoping to cause customer service headaches by flooding the bank's branches, and overloading teller lines, with student customers asking for detailed explanations of the new fees.

According to news reports (here and here), the bank quickly backed off the rate change and reverted to the liberal interest-free borrowing guidelines.

Implications
You should be using, tracking, analyzing, and brainstorming about how to tap social networks for sales, marketing, service, and recruitment.  

Note:

1. And the simple click-and-complain activity can be broadcast to every friend before the disgruntled customer has a chance to cool down (and/or sober up) and think through the issue in a more rational way.

If you were in the office yesterday, you probably heard about Bank of America's announcement of SafePass, an optional out-of-band authorization technique for high-risk online banking transactions. It was all over the news, including the trades, blogs, and a few mainstream press articles. Here's the press release.

The system, common in many countries, but available only at Citibank in the United States (previous coverage here), sends users a 6-digit code via text message. The code is then entered at BofA's website to authorize larger transfers, new bill-pay merchants, new accounts for funds transfer, or to login from a new computer, not previously "registered" for online banking. VeriSign developed the technology.

The service will roll out across the BofA empire this year, with many customers having it as soon as next week. Next year, a wallet-card token "SafePass card" will be offered for customers who don't have text-messaging capabilities on their phones.

Analysis
SafePass is a solid enhancement to security, at least perceived security, since it probably won't do much to cut down on actual fraud losses. It's already pretty difficult to get through BofA's security gates and pull money out of someone's online account. The bank did the right thing in making it optional. Only the paranoiacs, road warriors, or those with unusually high transaction amounts will want to undergo the extra steps.   

So while it may be ho-hum in terms of fraud reductions, SafePass is brilliant marketing (note 1). It's a tangible and easily understood copy-point as to why one should choose BofA over the other 15,000 U.S. financial institutions. Think of the bragging rights they now have (all firsts are U.S. only):

• First to integrate mobile messaging into the authentication process
• First to offer optional extra security
• First to safeguard the process of adding a new bill payment payee
• Potentially first to offer choice of token or mobile text message for out-of-channel authorization
• Only bank able to put "SafePass" on their website—a very good name
• Able to say, "no one has more security options than us"
• Able to say they are a "pioneer in security enhancements"
• Able to they "put the customer in charge of their own extra security"
• And so on ...

Congratulations to Bank of America for once again raising the bar in online security.

Rant
While I like what the bank has done, once again I find it astonishing that even 48 hours after releasing the news in a press release here, THERE IS NOTHING ON THE BofA WEBSITE ABOUT IT. A site search for "SafePass" pretending to be from North Carolina, New York, or California results yields just a single obscure business insurance product. Bank of America's search doesn't even return the press release announcing the service!

SafePass is also not mentioned in the bank's security, online banking, or mobile banking sections. I've worked in a Fortune 50 company, so I understand all too well how hard it is to sync advertising, PR, sales, and so on at a huge company. But with 22 million active online banking users, you'd think BofA would be a leader in syncing its website to its marketing plan. 

Am I being overly critical?  It's certainly worth writing about. 

Note:

1. For more information on the synergy between security and marketing efforts, see our full report on the subject at Online Banking Report.

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 launch—honestly, 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.

If you live in the U.S. hurricane zone, the memories of the summer of 2005 are still all too fresh. That's why it's great to see Gulfport, Mississippi-based Hancock Bank take a proactive approach to storm season with its "storm readiness" plan released in a June 1 press release (here).* 

While normally, your disaster planning efforts rate no more than a deep link on your website, Gulf Coast residents need more prominent reassurances. Hancock does a great job reassuring customers in its press release covering these four areas of storm preparation: 

• Designated certain branches "lighthouse branches -- beacons to safety." These branches stay open as long as possible and re-open as soon as possible. Emergency procedures for employee communications, food, shelter, back-up power, and fuel are detailed.
• Offsite backup for its website and online banking so there will be "virtually no downtime." 
• Data center precautions, including safeguards at its main center, dubbed "the fortress," plus plans for emergency off-site backup.
• ATM system procedures and priorities in the event of a prolonged emergency.

Analysis
Overall, this is a good press release and sound plan, especially the concept of "lighthouse branches" which play off the company's logo and branding. It should receive good play in the local media.

However, I couldn't find this info anywhere on the bank's website, other than the press release buried in Investor Relations. This time of year there should be a prominent link to the bank's plan on the homepage or at least in the personal banking section. If you were looking for a new bank in the Gulf area, this would help your decision.

And financial institutions should do even more by making online banking and electronic communications prominent in the disaster plan. Here are eight additional ideas. While, some would require product development, they are relatively minor projects. Financial institution benefits are in italics.  

1. Create a "customer communication plan" that send emails or text messages to customers to keep them informed of developments with branch, ATM, and online banking outages. 
       Helps bump up online banking and email registrations. 
   
2. Remind customers how important it is to have up-to-date email addresses and cell phone numbers on file. 
       Helps improve your delivery rate on marketing and
       service messages.
   
3. Since customers may not have power, they may need to rely on mobile phones for information. And since waiting on hold uses up precious phone charge time, create a call-back plan for emergencies. Customers would call or text the bank requesting a call back on their mobile.  
        Helps differentiate you from the competition.
   
4. Create an "open branch & ATM" query. Customers could send a text message requesting a list (with address, phone number) of all open branches and ATMs.  
        Again, differentiates you from the competition.
        And if ever needed, will help create lifetime customers.
   
5. Let customers use designated branches to charge phones or laptops in the event of widespread power outage.
        More differentiation and customer advocacy.
   
6. Develop a blog that can be used to keep customers apprised of any changes to banking services. Several employees should be prepared to update the blog through mobile phones if power was out. And at least one person should have access to a satellite phone so they can remotely post updates to the blog (perhaps working with someone outside the disaster zone, who can do the actual typing/posting).
        Another great relationship builder.
   
7. The Web-based branch finder should include a search for "lighthouse branches." 
        Expose your impressive disaster preparations to
        prospective new customers.
   
8. Refer customers to disaster preparation website resources for so they can put together household stockpiles and family communication plans.
        More customer advocacy, not to mention the "right" thing to do. 

*Full disclosure: We have done some website evaluation work in the past for Hancock Bank.   

A few days after our recent post on pro-environment banking programs (here), we were greeted with this headline in yesterday's Seattle P-I:

The tide has definitely turned in media perceptions of online banking. Here's a short history of the mass media view of online banking:

1994 to 1997: Sounds good, but what is it?

1998 to 1999: All things online are great

2000 to 2002: All things online are over-hyped

2003 to 2006: Is it really secure?

2007 to ???: Protecting the earth and yourself 

Naturally, I think online banking is great, but I never expected to see it elevated to motherhood-and-apple-pie status. The PI article (here) uses recent NACHA and Javelin numbers to recommend online banking both for its paper-saving and identity-theft prevention benefits. Time Magazine (April 9 issue) also listed "paying your bills online" as one of 51 things consumers can do now to help the environment (here).

However, Time might need to beef up the math skills on its fact-checking team. The article says paying all bills online would save 1.6 billion tons of paper. That would be more than 2,000 pounds every month for every U.S. household, even I don't get that much junk mail. I'm guessing they meant 1.6 billion pounds not tons, which would be about 15 pounds of bills per year per household.  

Much virtual ink has been spilled over ING Direct's Electric Orange account, and the new checking account isn't even available to the general public. From its Internet cafes to subway sponsorships, this is a bank that knows how to generate buzz, which really isn't all that easy with checking and savings accounts (see here for previous coverage of ING Direct).

Searching for <"Electric Orange" + review> on Google, we found six full-scale reviews of the product among the first 100 organic listings (10 pages of results using the default settings). All were blog postings. Most were moderately positive, and only one took shots at the bank calling the rates "too good to be true" (see Watch Your Wallet below).

It illustrates an interesting new phenomena, the power of the personal finance blogosphere. Most top-ranked search results belong not to mainstream press accounts, but to bloggers writing from various levels of knowledge about banking and finance. Most of the top-ranked blog reviews were thorough, factual, and relatively unbiased. But a few bits of misinformation creep in now and again, such as the rumor that the account stops paying interest on the sixth transaction in a statement period (false, by the way). Financial institutions should monitor these postings and jump in with a comment and/or email to the author to correct any factual errors.

Here's a list of what the personal finance bloggers are saying about Electric Orange:

1. Highest-ranked review on Google (#2 overall)

Getting-Green.blogspot.com

Date: 13 Feb. 2007

Verdict: Positive

URL: http://getting-green.blogspot.com/2007/02/banking-reviews-ings-electric-orange.html

2. Second-highest ranked blog review (#4 overall)

MyMoneyBlog.com

Date: 2 Dec. 2006

Verdict: Positive

URL: http://www.mymoneyblog.com/archives/2006/12/ing-direct-electric-orange-checking-account-feature-review.html

3. Third-highest blog review (#5 overall)

TheSunsFinancialDiary.com

Date: 30 Nov. 2006 (#7 overall)

Verdict: Positive

URL: http://www.thesunsfinancialdiary.com/2006/11/30/electric-orange-ings-paperless-checking-account/

4. Fourth-highest blog review (#33 overall)

BankDeals.Blogspot.com

Date: 29 Nov. 2006

Verdict: Neutral

URL: http://bankdeals.blogspot.com/2006/11/ing-directs-new-checking-account-now.html

5. Fifth-highest blog review (#46 overall)

NextCU.com (Callahan)

Date: 4 Dec. 2006

Verdict: Neutral

URL: http://www.nextcu.com/2006/12/electric_orange_covering_the_b_1.html

6. Sixth-highest blog review (#65 overall)

WatchYourWallet.blogspot.com

Date: 28 Dec. 2006

Verdict: Somewhat negative

URL: http://watchyourwallet.blogspot.com/2006/12/ing-directs-new-electric-orange.html

When's the last time you saw a new Web app that:

1. Was good for your brand
2. Was useful for your customers/members
3. Gave your employees a voice 
4. Helped your community
5. Had zero IT support cost
6. Allowed you to begin blogging with virtually none of the risks of a typical blog
7. Caused non-customers to bookmark your site and/or subscribe to its feed
8. Prompted the local press to write glowing reviews
9. Put your name in front of community organizations, and their well-connected board members
10. And was affordable?

Take a look at the Web-based volunteer clearinghouse originally conceived by CU thinktank Filene Research Institute. The application is being commercialized as Give With Us by Trabian, a Dallas-based design firm that built Filene's prototype called My Community Connection (see note 1). 

You can see the original Filene version in production at SELCO Community Credit Union <selco.cugive.com>, where 77 volunteer opportunities have been posted since its launch less than six months ago (see note 2). The revamped, and much more Web 2.0-looking, version from Trabian will be housed at the cleverly named <www.givewith.us>. The online product tour is not yet available, but we have the world premier exclusive screenshot below, courtesy of Trey Reeme of Trabian.

How it works
The application is basically a blog where anyone can post volunteer opportunities. Readers can take action by clicking a button to either:

• Sign up
• Email a friend
• Leave a comment

Unlike other community websites that are bookmarked once then forgotten, users can sign up for a feed so that new opportunities continue to flow to their feedreader or browser. Hopefully, they'll add an email subscription option for the majority of users who are not yet using feeds.

Cost
The cost is $2,500 upfront plus $1,000 annually for the license. I don't need to tell you what a bargain that is. You get state-of-the-art blog design and functionality for the price of a Yellow Pages' ad.

You will need to assign a staff member to moderate the blog, clearing postings and comments for final publication. Assuming two posts and a couple comments each week, it shouldn't take more than a few minutes a day. But it needs constant attention, you can't have the moderator on vacation for a week with no substitute.

Analysis
The biggest problem will be attention, or rather lack of it. How do you get overworked volunteers and nonprofit staffers to take time to post volunteer opportunities? Even harder, how do you get the community to remember to look at your blog when they are in a volunteering mood?

SELCO has a link on its homepage <selco.org>, but how do you reach out to the larger community to make this relevant? The SELCO website has 77 volunteer postings, but only 3 comments in the past 6 months. That suggests it's relatively lightly used by those donating their time. 

But any new offering takes time to get rolling. It's not unrealistic that you could end up being THE place in your market where volunteer opportunities are publicized. But that will take more effort than just posting it on your homepage.

For example, searching for "volunteers in Eugene," SELCO's home market, doesn't bring up the CU's site until result number 160, far too low for anyone to notice (see note 2). Selco should consider using Google AdSense to get its program listed in search results. With no other bidders, it'll only take a dime or so to get the number-one listing.

Another way to receive more attention would be integrating the volunteer opportunities with fund-raising services. For example, a financial institution could create a "donate here" button for the organization's website that instantly deposits donated funds into the nonprofit's checking account. 

Notes:

1. Trabian is a specialist in Web 2.0 design and so-called "social media." The company also built Filene's website along with several interesting credit union sites; refer to its website for a client listing. Trabian also runs the OpenSourceCU blog tracking, which tracks blogs and other social media in the credit union market.   
2. Click on the screenshot at right to see the front page of SELCO's My Community Connection site.
3. The number-one result is a competing site, VolunteerMatch.org
   which lists 98 opportunities in a tabular format.

Update (Nov. 12, 10 AM PST): Twenty-two hours later, the Verity website has been taken offline, but the blog is still running. However, there are no new posts since the original, although Verity's Shari Storm has responded to several member comments. From information in the comments, it sounds like Verity's log-in page was redirected for up to four hours on Saturday morning beginning about 6:00 AM. At least one member said they answered "screening questions" including mother's maiden name.

Seattle-based Verity Credit Union is in the midst of a major website spoof that began earlier today. The credit union is reporting that the log-in function to online banking, located on its homepage (upper-right below), has been redirected by a hacker.

Apparently, only the log-in function was hijacked. The credit union has control of its homepage and plastered a large warning over the front. The link after the warning, "more information," linked to the Verity blog for updates (see below).

It appears the log-in process is back under the credit union's control, although the warning is still there. When attempting to log in at 3:15 PM with a test name (I do not have a Verity account), I was redirected to an error message at <https://secure-veritycu.com/Common/SignOn/SignOnError.asp>, which appears to be a legitimate Verity secure page. There was no follow-up question asking for my credit card number as mentioned in the blog post (see below).

The incident was first posted to their blog at 12:02 PM today (see post below).

The silver lining
As bad as this is, Verity should be applauded for the rapid response, using both its website and blog to get the word out. Presumably, they also emailed customers, but those messages may or may not be believed in this day of rampant phishing.

You can follow the ongoing drama at the Verity blog, where customers have been redirected for the latest news. We'll keep you posted.

Although our readers won't find much new information in today's Wall Street Journal article, Online Banking Strives for the Human Touch, it's significant for two reasons:

• Another example of a leading personal finance writer looking for "the next big thing" in online banking (see also NetBanker June 28); expect a wave of these stories through year-end
• The article included a full-text screenshot of a banking chat session with SunTrust. You might circulate this among your reps so they understand that what they write in a chat session potentially becomes part of the "public record" (by the way, the SunTrust rep, and/or the marketing guru who scripted the canned responses, deserve a raise for their sales technique).

If you make it to the end, you'll find a couple interesting online lending factoids:

• Bank of America claims an 8-fold increase in online-mortgage sales in Q1 2006 compared to the year earlier quarter, with live-chat part of the reason; it also said home-equity loan volume doubled
• Citbank says 90% of its live-chat users complete a home-equity application, presumably at its <myhomeequity.com> site mentioned earlier in the story (see screenshot above); the bank also said it expects to originate $2 billion in home equity loans online in 2006, double that in 2005

--JB

Earlier in the year, we lamented the lack of creativity by banks in leveraging Super Bowl mania at their websites (see NetBanker Feb. 3). Not so with the other "football."

National Australia Bank promotes its World Cup entrant, the Socceroos, with a clever, make-your-own ad microsite (see screenshots below). A small graphic on its homepage (click on inset for closeup) leads users to the interactive ad-building site. Users create custom video shorts by dragging-and-dropping video clips into a storyboard. User then adds own text and chooses from several soundtracks to complete the creation. Ads are posted online and can be viewed either by looking at "the latest," "the most popular," or celebrity ads. There are 320 posted as of today.

Analysis
This is smart in so many ways:

1. The novelty of the website creates positive publicity in the media, on and off-line.
2. The bank creates a positive association with its brand by leveraging the national pride generated by a World Cup entrant.
3. The "cool factor" of interactive content positions the bank as "with it."
4. As users upload their ads to video-sharing services such as YouTube, the bank will get a viral marketing boost. The bank wisely plasters its name at the beginning and end of the content, positioning itself on an equal footing with the end-user author (see inset). 

This is another clever example of user-generated content, something we'll see more of as mainstream businesses ride the wave of blogging's popularity: MySpace, YouTube, and 10,000 Web startups. (Click on the link below for additional screenshots). --JB

First page of the ad making microsite:

Listing of favorite ads:

Listing of celeb ads:

Talk about thinking outside the box: Instead of serving coffee in its branches, Union National Community Bank <uncb.com> is serving checking accounts in a cafe. The $400 million bank, headquartered in Mt. Joy, Penn., is using a strategy similar to ING Direct, except UNCB has gone as far as to remove its brand from the name, calling the financial store "Gold Cafe" (see picture right).

The cafe features a full retail coffee operation with coffee, lattes, tea, smoothies and so on priced at $1.45 to $4.45 and pastries and desserts from $1.75 to $2.25. The coffee service is run by Lancaster County Coffee Roasters.

The branding has also been extended to its website, GoldCafes.com, where the concept is supported with an emphasis on the lengthy hours, 6:30 am to 7:00 pm, Monday through Saturday, and noon to 5:00 pm on Sundays, 82 hours in total. The website also features information on an iPod giveaway during its May 11-13 grand opening. The only banking product mentioned is free checking in the lower-right corner (see screenshot).

The branch, er cafe, located near a major community college in Lancaster, Penn., includes a coffee bar, couches, an outdoor patio, fireplace, free Wi-Fi, and the ubiquitous plasma screen monitors. The bank has also created Sip, a "cultural newszine" available only in the cafe. A second cafe is set to open later this year in Centerville.

Analysis
We can't predict whether this concept ultimately works. Although we like the new-age branch concept popularized by Umpqua and others, this might be over the top. One of the biggest reasons to build branches is for their advertising value, placing the bank's brand in front of thousands of commuters and errand-runners each day. By calling it the Gold Cafe, the UNCB loses the normal branding value, but the highly unusual strategy will generate a large amount of publicity, overcoming the initial customer confusion of using a bank named "Gold Cafe." However, this is a unique situation that wouldn't readily work for other financial institutions.

The initial website is just a single page (see above) and badly needs an upgrade to cash in on all the publicity. At a minimum, prospective customers should be able to get a virtual tour of the cafe and open an account online. The site will be heavily visited by banking analysts and reporters and should do a better job supporting the publicity it's bound to attract, although the parent's home page does include a series of photos of the new concept along with a Gold Cafe link in the main navigation (see screenshot right).

If anyone has a chance to visit the branch, let me know what you think of it.

--JB

If you've got it, flaunt it. Or so the saying goes.

In an online financial services first, newly launched person-to-person loan marketplace Prosper (Netbanker Archives) includes an "In the Blogs" section in its online Media Room. The link, positioned between the traditional "In the News" and "Press Releases" sections, allows users to easily read about the company in pre-selected online blogs (click on inset for a closeup).

This provides much more material to view than the three news articles and single press release the 3-week-old company has posted. The company has control over the content; so don't expect to see links to any ProsperSucks blogs down the road. 

For Prosper, the blog links provide several benefits:

• Several are authored by Prosper group leaders, so they contain ongoing encouragement for the lending exchange
• The newness of their business model provides good fodder for inclusion in wide variety of blogs
• They are too new to have much negative talk in the blogs

Action items
Most financial institutions receive little press play, there just isn't that much newsworthy in the daily battle to sell and service deposit and loan accounts. However, if you are well received in your community, you may be receiving good feedback from local bloggers. Linking to these posts could be a valuable addition to your "About Us" section.

--JB

Wow. It's not often a press release rates an article in BOTH The Wall Street Journal and The New York Times. But that's exactly what happened today when E*Trade made the relatively innocuous announcement that it wouldn't hold its brokerage customers responsible when their accounts were defrauded.

Consistent with previous innovations, the online brokerage and banking powerhouse wrapped its new message with impressive graphics and copy (see inset above-left for graphic displayed on its homepage today). Clicking on Learn More leads to an impressive security area where E*Trade touts four main protective measures (click on inset above-right for a closeup)*:

1. Security tokens
2. Electronic statements with paper turnoff
3. Email alerts
4. Antiviral and firewall software, which can be purchased through a link to Norton (60-day free trial offer); users can also run a real-time scan to check for vulnerabilities

Analysis
It just goes to show you how skittish the public has become about online security. I'd wager that most brokerage customers are sophisticated enough to realize they will eventually get their money back if it's stolen from their account. So this is a non-event from a financial standpoint. E*Trade even admits that online fraud cost it only $2 million last year, less than the cost of one of their famous Super Bowl ads. The brokerage also said there were "fewer than 50 incidents," implying a fraud loss of approximately $40,000 per incident.

Evidently E*Trade's marketing department prevailed over its legal counsel and actually put the company's fraud-protection policies in writing. It's amazing that makes headlines in 2006 and may say more about the growing need to cover your behind to fend off the class-action bar even if it means scaring off customers.

We hope this prompts other financial institutions to take similar action. One of the main functions of financial institutions is safeguarding assets. Customers, online or otherwise, shouldn't have to guess whether certain types of fraud are covered. As any good lawyer would say, "Put it in writing."

--JB

*The screenshot displayed here is only the top portion of the security area, to download a screenshot of the entire page, click here.

Podcast was voted the 2005 Word of the Year by New Oxford American Dictionary. That alone is enough to make it an interesting marketing technique, even though it's more associated with music than banking.

So far, two U.S. financial institutions have jumped on the podcasting bandwagon:

• The first financial podcaster was Stockton, CA-based Financial Center Credit Union <fccuburt.org>. Its rambling, 56-minute first effort, Personal Finance Tips, from CEO Michael Duffy, was posted on Apple's iTunes on August 30. The program is more philosophical than factual and sounds almost unscripted, as if the CEO just sat down and talked about whatever came to mind for an hour. It's hard to imagine anyone other than his mother or marketing manager listening to the whole thing. Since then, they've published two more installments of the series: a 31-minute Personal Finance Tips, posted Oct 17, and a nine-minute discussion of phishing and pharming on Dec. 14. The latter program, which did NOT feature the CEO, was a more appropriate length and dealt with facts and actionable information.
  -
  While the content is of questionable value, the website design is good, positioning the CU as hip and with it. The podcast series is entitled, Talkin' About the Benjamins, and features a clever visual of Ben Franklin with the signature Apple earphones on his head (see inset above left). The credit union has a link on its homepage to a dedicated podcast page (click on inset above for closeup) that explains how to subscribe to the series via Apple's iTunes site or to download directly from the CU site in MP3 format.
  -
• The first bank to post a podcast was UMB Bank <umb.com> out of Kansas City. The first of the three planned recordings was posted Dec. 5, The Ins and Outs of 401(k) Retirement Plans. The bank also makes its podcast available for free downloading at the iTunes store or directly at the bank's website. The recording is a question-and-answer session with UMB Portfolio Manager Casey Matthews. The UMB program is also relatively amateurish, with the participants nervously chuckling at their own jokes. At more than 24 minutes, it's too long, but for a listener with little knowledge of retirement plans, it's not a bad educational program.
  
  In contrast to the marquee placement of FCCU's podcasts, UMB bank buries the program in the middle of a long list of content within the News and Information part of the website (click on inset above for a closeup). This considerably diminishes the marketing value.

Analysis
The question isn't really whether to podcast or not, but rather whether audio/visual content should be added to your website. The answer to the second question is a resounding YES. It's time to leverage the high-speed Internet connections enjoyed by the majority of your customers with professional audio and video content. There are numerous programming tools that can be used; the most common is Macromedia FLASH, to develop good audio and video programming.

There isn't really a pressing need to provide the information in the proprietary iPod format. The number of users who will want to download your sales pitch and listen to it on the train ride home can be counted on one hand. However, given the hype surrounding everything iPod, it's not a bad idea to post your work as an iPod recording.

If you do end up with a podcast, keep these tips in mind:

• Keep it short and to the point: Strive for a tight, overall length of no more than 5 to 10 minutes. If the subject matter needs more time, break the broadcast into multiple parts.
• Make it professional: Listeners expect a degree of professionalism from their bank that they don't expect from other podcasters. If you can't afford to hire a pro to develop the program, try tapping into the eager broadcasting majors at a local university or community college. At the very least, develop a script and practice before broadcasting.
• Use a Q&A format: We like UMB's format, pairing an interviewer with a bank expert. Had they kept to the 10-minute limit, it would have been worth listening to.
• Lose the humor: Banking is serious. It's OK to use some humor in advertising and promotion, but a broadcast from the bank should not include any attempts at humor, and NO laughing at your own jokes.
• Post it at iTunes: Easily explain how to find it, so that users can quickly subscribe to future broadcasts.
• Most important, marry the audio broadcast with visual aids: UMB's 24-minute podcast on retirement savings would be much more effective with supporting visuals, especially as they run through several examples of after-tax returns of various investment options. A standard webcast using PowerPoint and an audio presentation would be far more effective, although less likely to land you a write-up in the local newspaper.

--JB

Remember the old saying (usually attributed to Mark Twain), "Never pick a fight with someone who buys his ink by the barrel." An unnamed "national bank" has created an enemy of LA Times reporter Steve Lopez, who so far, has not publicly identified the bank that refused to reimburse him for the $2000 drained out of his account after an ATM-card-skimming incident. But given his location, and the hints in the article, it's probably Wells Fargo, BofA, or WAMU. Given our personal experience with the relatively strict Wells Fargo credit card authorization guidelines, combined with the relatively small WAMU checking account base, our money is on BofA as the culprit.

In this particular case, the bank did the right thing initially, crediting the reporter's account for the $2000. However, it reversed the amount four weeks later, sending a form letter with no explanation. In a followup call, the bank service rep told Mr. Lopez that he had not returned phone messages from bank investigators, so they concluded the disputed ATM withdrawals were "authorized and posted correctly."

Action Items
This type of bad publicity is entirely avoidable:

1. Prevention: Your ATM system should not allow four $500 withdrawals in three days, unless the customer has a history of large cash withdrawals.
2. Notification: All large ATM withdrawals should trigger alerts, first by email, then by phone if the withdrawals continue.
3. Communications: Make sure you communicate the results of your ongoing investigation clearly to the customer. Customers should receive a stream of emails, letters, and phone calls keeping them apprised. If possible, all emails should be posted to the customer's online banking account to create a paper trail.
   
   

   Most of the above steps are relatively expensive to implement if not supported by your current systems. So you might want to consider a fourth item:

4. Flag reporter accounts: Treat reporters like VIPs, making sure their accounts are flagged, and that you bend over backwards to give them the benefit of the doubt when disputes arise.

--JB

When natural disasters strike, such as the Southeast Asia tsunamis or Monday's Hurricane Katrina destruction in New Orleans and the Gulf Coast, banks should use their considerable web reach to help their customers make safe and secure donations to sanctioned relief agencies such as the Red Cross.

With all the concern about online phishing and fraud, consumers need a trusted conduit to make donations. And the sooner the link is posted, the better. As bad as it is, for much of the country, it will no longer be top-of-mind in a few days or weeks.

Major banks fail to respond thus far
Granted its only been three days, but we were surprised to find that of the largest 50 U.S financial institutions only three, Chase (Chase.com and BankOne.com), Wachovia (Wachovia.com and Suntrust.com), and Washington Mutual (wamu.com), have posted links to the Red Cross to make online donations (see Wachovia banner above).

Seven others had hurricane-related information, but no links for donations:
- Regions, AmSouth, Navy FCU, Compass Bank, and of course New Orleans-based Hibernia all had information on branch closings
- USAA posted tips for dealing with the aftermath of a hurricane
- Commerce Bank (NJ) ran a headline ticker on the top of the homepage offering to match donations up to a total of $50,000 (which strikes us as bit stingy if you are going to blast it across your homepage)

Action Items
The best response, from a customer service and PR perspective, is to announce a corporate contribution and provide secure links to the Red Cross and other relief agencies. Contributions should also be accepted via mail or in-branch.

Wachovia does it right, with a small, but highly visible homepage link explaining its efforts and providing the important message, You Can Too (see inset above). Clicking on the link leads users to a landing page that explains Wachovia's $250,000 corporate commitment along with two important links (click on inset for a closeup look):
1. Donate Now link to a Red Cross store established on Yahoo handle Katrina donations
2. Email this page to spread the word

Even if your bank is not prepared to make a corporate contribution, it can still support fund-raising efforts with a link to the official donation site.

--JB

During the past year, NBC Nightly News, more than any other national show, has publicized fraud concerns in the online channel. They played a large role in publicizing the $90,000 apparent key-logging loss by a Bank of America small business customer in Florida. They also covered, rather sloppily, last summer's flawed Gartner study about multi-billion dollar losses in identity theft.

The most recent story, which appeared on television last night, covered demand draft fraud initiated at Qchex.com among other locations. The NBC Nightly News story appears to have been based primarily on a May 24 article by MSNBC's Bob Sullivan in his closely watched online column on ecommerce. Sullivan was also the primary source for the Gartner story.

Analysis
When NBC goes on the air pointing fingers at the banking industry's security practices, you better be ready with a response. Your branches and customer support personnel should be briefed on the subject and be prepared to answer customer concerns. You should also prepare a response in your online service HELP/FAQ area that addresses the issue.

In the future, you might want to pay attention to Bob Sullivan's columns. If he's writing about it, and if it's a new twist on an Internet scam, there's a good chance the Nightly News will pick it up. Had you been reading his column yesterday morning at 8:15 am, you'd have had a day to prepare damage control.

As far as solving the demand draft problem, that's something we'll leave to the regulators. But requiring Internet originators like Qchex.com to verify account ownership before processing a debit, would be a good first start.

--JB

...and Drive them to the Competition!

1.       Let us entertain you: Post large graphics or Flash animations on your home page. On banking home pages, we firmly believe less is more. The eye candy might be acceptable if you were providing entertainment, but you are not, it’s banking. Prospective users want to see that you are serious about their money and aren’t wasting their time with a lot of fluff. (Note: This doesn’t mean you can’t use lighthearted copy, an approach we recommend because it speaks directly to the Web user on their terms.)

2.       Gotcha! Take a new account application and neglect to confirm its receipt. Since it costs virtually nothing to send an email, why are many banks so stingy with outbound messaging? If a prospective customer takes the time to fill out a form to buy something, you must thank them via email and provide an estimated time to fulfill their request.

3.       We’ll get back to you on that: Answer customer email questions when it’s most convenient for your, not when the customer is ready to buy. Sure it’s efficient to have CSRs answer emails during off-hours, but is that what your customers expect or deserve? You’ve invested millions to handle telephone calls and branch inquiries within minutes, if not seconds. So why does it still take 24 hours or more to answer email questions?

4.       What was that account number again? When customers call, make them key in their account number and last four digits of their social security number, then as soon as a human rep gets on the line, make your customer repeat everything, plus their home phone number for good measure.  And do it even for the most routine question. This drives us batty on the phone, and the same happens online, although to a lesser extent.

5.       Don’t call us, we’ll call you: Hide your customer service phone numbers many clicks away from where customers look at their account information.

6.       Jump through that hoop one more time: Force long-time customers to reenter all their personal information every time they complete an online product application.

7.       You naughty boy you: Send collection and dunning letters to good customers when they are late on a $20 payment even though you know they have thousands on deposit.

8.       How about a Ginzu knife with that CD? Post non-financial advertising on your Web site (also applies to those cheesy inserts usually found in credit card statements).

9.       Play hard to get: Post interest rates and other prices in hard-to-find places.

10.    Let’s see if you are our type: Make customers feel like they must grovel for your products. Why should customers have to complete an “application” even when they are sending you money? Instead, make prospects feel welcome; that you’d be honored to provide financial services. We know there are thousands of people looking to defraud or otherwise take your bank for a ride. But don’t penalize the 99% of genuine law-abiding prospects with onerous language and procedures.

11.    You still use that old thing! Require users to upgrade their browser before doing business with you. This is ridiculous. We doubt a dollar has been lost because users logged in with 40-bit encryption; but countless users have been turned away by banks requiring a new browser installation. Browser encryption is not your weakest link.