Last May, Trusteer launched an optional added security measure for customers of ING Direct in the United States (note 1, see previous post). Although, it's not perfect, users of the Rapport service are less vulnerable to viruses and malware running on the their PCs. We gave the new service an OBR Best of the Web award last fall in our Online Banking Report on Security Innovations.

Although, ING Direct is a great reference account, being endorsed by Royal Bank of Scotland, really puts Trusteer on the map. The security solution is offered for download at both Royal Bank's RBS and NatWest sites (see screenshots below). Anyone visiting the banking sites can download the software, you don't have to be an RBS/NatWest customer. 

Trusteer also lists Huntington Bank as a customer but there is no mention of Rapport on the bank site yet. Other providers include Authentium's SafeCentral (note 2) and Check Point's ZoneAlarm (note 3). 

Bottom line: Security is an issue for many bank customers, now more so than ever. Extra security options deserve consideration to improve customer satisfaction/trust and help reduce fraud losses. 

Rapport download page at NatWest (link, 23 March 2009)

Rapport download page at RBS (link, 23 March 2009)

Notes:
1. Later ING Direct Canada and ING Direct's Sharebuilder added Rapport support.
2. Authentium demo'd SafeCentral at FinovateStartup 2008 (video here). A new version of SafeCentral is in the works. 
3. Check Point demo'd ZoneAlarm at Finovate 2008 (video here).

I never understood the fight against Wal-Mart's limited-purpose banking charter. I say let it "enjoy" all the benefits of being a bank: CRA statements, regulatory audits, compliance committees, and endless questions about trigger terms and the alphabet soup of regulations. Maybe a banking charter would have distracted it from going ahead and providing pretty much the same thing, but as a non-regulated retail partner instead of a bank.   

Take Kroger for example. They are entering the financial services arena through their retail grocery stores with a menu of financial products outsourced from other companies (link here; also see note 1 and screenshot below).

According to a story Monday in the Lexington (KY) Herald-Leader (here), the grocer began quietly rolling out the services to its 2400 stores in February. Most of the  services are sourced through various Royal Bank of Scotland units.

Other than deposits, it's a full-service offering including:

• Credit card issued by RBS National Bank (a unit of Royal Bank)
• Mortgages through a joint venture with CCO Mortgage (a unit of Royal Bank)
• Home equity loans through Charter Bank (a unit of Royal Bank)
• Gift cards issued by Charter Bank
• Pet insurance through PetFirst Healthcare
• Identity theft services through Trilegiant's PrivacyGuard

Analysis
Kroger's product offering seems reasonable and no doubt will have good visibility in the company's stores. But few of these items are impulse buys and much of the success will hinge on whether the Royal Bank phone sales agents can close the deals. The item that has the best chance of earning its keep: pet insurance, a surprisingly popular search term (see Online Banking Report, #95) and one that can be cross-sold effectively with other pet items. 

Will Kroger Personal Finance be be a success? With low fixed costs, it might turn a nice profit, but probably not nearly as much as the rent that bank clients pay for in-store branches (a core Wal-Mart strategy). But will it impact the industry? Highly unlikely.

I'm sure Wal-Mart will be following this rollout closely. If they find it's working at Kroger, you can bet they'll be doing the same thing within a few years, and probably at much lower prices. So, if you think you've dodged the Wal-Mart Bank bullet, think again. 

Note:

1. The homepage of Kroger's personal finance site <krogerpersonalfinance.com>, is dominated by a pitch for its MasterCard rewards card. The only link so far to the broader offering is the "new products" link hidden on the right leading to the following page <krogerpersonalfinance.com/Max/KPFhome.htm>.

Speaking of combined accounts (see Higher One), why isn't anyone in the United States offering a combined mortgage/deposit account, a product that's been quite popular in the UK ever since Virgin pioneered the concept in 1997.

The OneAccount, now wholly owned by The Royal Bank of Scotland, has grown to 160,000 accounts with US$20 billion in loan commitments ($125,000 per account).

Analysis
While a combined mortgage/deposit account probably won't appeal initially to mainstream consumers, it's a potential PR and marketing gold mine. Using deposit totals to offset mortgage principal balance creates significant savings when compounded 30 years.

For example, a $1000 average "deposit" balance used instead to offset the mortgage balance, returns 5-to-1 in interest savings over the life of the loan (using 6% rate), e.g., a $5000 savings. The savings are more if interest rates increase.

Deposits used to offset the mortgage balance provide a rate-of-return equal to the mortgage rate. For example, your customers with 6% mortgages, earn 6% by using their deposit totals to offset the mortgage balance.

The Business Case
At first glance, the combined account seems to have a challenging business case. Every dollar used to offset the mortgage balance is one less dollar earning the spread between deposits and loans.

If you already have the majority of your customer's deposits AND loans, forget about this offering. Enjoy your success!

But if you are looking for ways to increase your home-secured lending business, this product has real potential to bring in new outstandings. 

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

Royal Bank of Scotland

http://www.oneaccount.com/

Royal’s Elegant OneAccount Demo

The animated demo does a great job explaining the innovative account (access the demo under “How the OneAccount works,” then choose “Detailed Guide”).

We’ve looked at hundreds, no make that thousands, of online demos, and Royal Bank of Scotland’s OneAccount demo is one of the best. The OneAccount, which now boasts over 100,000 users, is an award-winning* mortgage product that combines debit (checking, savings) and credit accounts (mortgage, loans, cards) into a single master account that minimizes interest paid by continually paying down the mortgage balance with excess funds. It was launched in 1998 with Virgin, as the VirginOne account. You can still get to the product from Virgin’s UK finance site,  http://www.virginmoney.com/  but the program is now wholly owned by Royal Bank.

The yellow-and-blue online demo shows a faucet filling different “buckets” from water drawn from the outline of a home. The only sound is that of water being poured and the stamp of credit obligations being paid off. The demo is fast and effective and does a great job reinforcing the elegance of the OneAccount solution.

The account used to be known as VirginOne.

*The product was even called a “disruptive technology” by author
Clayton Christensen at a Retail Delivery keynote a few years ago.