Consumers getting financial advice for themselves and from friends and family [The Bankwatch] [The Banktastic FI Feed]

Fascinating research and conclusions picked up by Paul at Finextra. The implication is the shift towards greater self service by people for financial services that previously would have required advisors or brokers.

Winners are price comparison sites, and advice from friends and family.

Finextra

But if consumers aren’t turning to their bank for financial advice, where are they going? Online price comparison Websites are one obvious source of information. The other is friends and family. This change in consumer attitudes helps explain the success of a new generation of non-bank social platforms such as those operated by Zopa and Prosper, and Finance 2.0 upstarts like Wesabe and Mint.

Do your people and your robots give exceptional service? [Currency Marketing] [The Banktastic Credit Union Feed]

By Tim McAlpine

Most credit unions claim exceptional member service. Phrases like, "our people are our difference" and "we're nicer" are common refrains from credit union folks.

Fair enough, but how are your automated services doing?

Last night, I was once again reminded of how automated services shape my perception of overall customer service when I realized I was down to my last pill of a daily prescription.

Because my pharmacy offers an easy refill service, I didn't miss a beat. You can either refill your order online or by phone. I chose phone, entered my seven-digit prescription number, my birth year and I had my pills ready for pick-up on my way to work this morning. The pharmacist and I exchanged pleasant "morning's" and I was in and out in less than 90 seconds.

That's exceptional service. Humans and robots seamlessly working together. How does your credit union compare?

ING Direct's $60,000 Sweeps for Automatic Savings Plans [NetBanker] [The Banktastic IT & Security Feed]

ING Direct, renowned for its many contests that have created strong brand-buzz, is offering customers the chance to win one of five monthly $1,000 prizes. Any user with a new or existing automatic monthly deposit of at least $100 is entered into the sweepstakes. In addition to the monthly prizes, one grand prize winner will take home $30,000. The contest runs for six months, so the total payout is $60,000.

Low-cost incentives to encourage automated savings are a win-win (see note 1). The bank gets a stable flow of deposits to its savings products, and customers end up "paying themselves first" and developing a savings habit. We recently covered WaMu and Wachovia's efforts in this area (here). 

ING Direct Transfer Money area within online banking (logged in)

Same area showing second part of animated banner 

Note:

1. Unfortunately, the sweeps ended up costing me $700, although it went to a good cause. Since I'm a sucker for a contest, and I didn't have an eligible auto-debit, I went to the bank's Transfer Money page to set up a new one. In the process, I noticed that the auto debit for our son's allowance had ceased working in mid-2005 (note 2). We owed him 31 months of allowance plus interest. Ouch. After taxes, the $1k in prize money will just about get me to breakeven.  

2. The allowance transfer originates from another ING Direct account, which was likely out of funds in July 2005, so the transfer was canceled. It's up to the customer to reinstate the transfer, which evidently I never did. 

ING Direct's $60,000 Sweeps for Automatic Savings Plans [NetBanker] [The Banktastic FI Feed]

ING Direct, renowned for its many contests that have created strong brand-buzz, is offering customers the chance to win one of five monthly $1,000 prizes. Any user with a new or existing automatic monthly deposit of at least $100 is entered into the sweepstakes. In addition to the monthly prizes, one grand prize winner will take home $30,000. The contest runs for six months, so the total payout is $60,000.

Low-cost incentives to encourage automated savings are a win-win (see note 1). The bank gets a stable flow of deposits to its savings products, and customers end up "paying themselves first" and developing a savings habit. We recently covered WaMu and Wachovia's efforts in this area (here). 

ING Direct Transfer Money area within online banking (logged in)

Same area showing second part of animated banner 

Note:

1. Unfortunately, the sweeps ended up costing me $700, although it went to a good cause. Since I'm a sucker for a contest, and I didn't have an eligible auto-debit, I went to the bank's Transfer Money page to set up a new one. In the process, I noticed that the auto debit for our son's allowance had ceased working in mid-2005 (note 2). We owed him 31 months of allowance plus interest. Ouch. After taxes, the $1k in prize money will just about get me to breakeven.  

2. The allowance transfer originates from another ING Direct account, which was likely out of funds in July 2005, so the transfer was canceled. It's up to the customer to reinstate the transfer, which evidently I never did. 

Internet Banking goes 'mainstream' [The Bank Channel] [The Banktastic FI Feed]

From Finextra:

"Online banking is now a mainstream access method for retail customers on both sides of the Atlantic, but this has not led to a decline in the use of branch-based services and has actually resulted in higher take-up of other channels such as ATMs, according to a study by analyst house Gartner.

A survey of over 2000 adults found that 33% of US customers - the equivalent of 71 million people - regularly use Web banking services. The UK numbers are not as high, but the survey shows that 26% of customers - around 14 million adults - now bank online.

"The current usage levels in both countries show that adoption is now taking place within the mainstream of consumers, among people who use new channels and services if, and only if, they see intrinsic value from the new technology," says David Schehr, research director for Gartner's financial services research team. "Online banking has clearly made this transition in consumer minds."

Article continues...

A political education for business [The Bank Channel] [The Banktastic FI Feed]

From McKinsey Quarterly:

"A political education for business: An interview with the head of the Council on Foreign Relations

Government, many executives are quick to assert, would benefit if it were run more like a business. But can business learn anything from the way government manages a wide variety of stakeholders in a globalizing world? A great deal, thinks Richard Haass, the president of the Council on Foreign Relations. Today, as global companies joust on the international playing field, Haass sees increasing similarities between the management challenges facing business and government.

Business now constantly finds itself addressing new social and political demands. Social activists and nongovernmental organizations (NGOs) are taking a place, alongside governments, as de facto regulators of business. The savviest executives, says Haass, are those who understand the nuances of government and how to balance the concerns of broad, highly varied political and social constituencies.

A veteran foreign-policy expert, Haass, 56, is no stranger to the business world. To discuss some of the global issues and ideas Haass considers "ripe," he recently met in the council's New York headquarters with Drew Erdmann, a consultant in McKinsey's Chicago office; Roger Kline, a director in New York; and Lenny Mendonca, a director in San Francisco."

Article continues...

Social lending takes 10% share [BankerVision] [The Banktastic IT & Security Feed]

Over at Technology and Finance, Tom Groenfeldt reports that Gartner is forecasting that in two years, ten percent of all retail lending and financial advice services will go to social banking applications.

Now, if that's true, its rather a bother for banks everywhere. 10%? That's real money no matter how you slice it.

We've been looking at social applications in financial services for a while now, and the killer problem is that they cannibalise share from the core businesses that banks are in. That makes it rather hard for bankers to structure the right business case to take social applications forward. What we need now is a new way of creating business value in social. We need to find a way for banks and customers to be equal partners in the overall social value equation.

In the meantime, however, this is somewhere we've been before. Who ever thought, just a few years ago, that PayPal would be so important? Now, they're so big (and with a banking licence!) that competitive responses are somewhat limited.

Personally, I think the Gartner forecast is aggressive. That doesn't change the fact that social applications in financial services are important, and will be getting more so with time. So we'll need to be certain that our natural tendency to be cautious is balanced with ensuring that we have the right experiences for customers in time.

It does seem to me, though, that banks are becoming less slow in their adoption of new things. Perhaps thats a reflection of being involved in bank innovation, but it's a good thing, because it is pretty obvious that emergence rate of the new is speeding up.

Online banking popular with Kiwis [The Bank Channel] [The Banktastic FI Feed]

From OneNews:

"Survey results show that over two thirds of Kiwis who use the internet use online banking.

The latest Nielsen Online Consumer Finance Monitor says 68% of internet users have accessed banking websites last month, while 57% used it at least once a week.

Eighty-four percent of people over 15 within New Zealand have access to the internet.

The most frequently used banking sites included ASB, Westpac and National Bank with all three sites having over half a million unique browsers per month."

...

""Once they use the Internet, people of all ages adopt online banking with enthusiasm. For younger people with internet access, online banking is the norm - 80% of those under 40 used online banking in the last month. For older people, online banking is becoming common practice - 62% of people over 55 visited an online banking site in the last month," says Sheppard."

Article continues...

Free "Ad-Supported" Credit Scores from Credit.com, Credit Karma, and Quicken Loans [NetBanker] [The Banktastic FI Feed]

In August 1997, QSpace (now owned by Experian) was first to bring credit report data to the Web. The cost was $12 per report (see note 1), a price that has changed little over the ensuing 10 years.

Three years later, in October 2000, WorthKnowing.com introduced the concept of ad-supported (i.e., free) credit scores (see Online Banking Report, #66, article reprinted here). But the company failed to make it through the dot-com crash and ceased operations (note 2). Both QSpace and WorthKnowing earned OBR Best of the Web awards for their innovations.

It took seven years for the concept to reemerge, but now two Bay Area rivals are offering free credit bureau info in exchange for permission to present credit and other product offers. And just as I was about to finish this post yesterday, Quicken Loans introduced Quizzle, a personal finance/credit portal that also offers free credit bureau info (yesterday's post here).

Here are the players:

•  Credit Karma: This San Francisco-based startup, with backing from Prosper's Chris Larsen, is delivering an actual credit score computed by TransUnion, one of the three major U.S. credit bureaus. It does not precisely match the commonly used FICO score from Fair Isaac. And the scale is different, with a top score of 900 instead of 850. The credit score service is still in closed beta, but we'll see if we can get some invites from the company. Credit Karma will be presenting at our FINOVATE Startup conference April 29 in San Francisco, if you want to meet the team behind this new service.
•  Credit.com: Another San Francisco company, but one that dates back to 1995, recently launched a similar system, called the Credit Report Card. Credit.com CEO, Adam Levine, presented his other company, Identity Theft 911, at our inaugural FINOVATE conference last fall in NYC (video here). Credit.com provides a full evaluation of your actual TransUnion credit report and assigns letter grades to five different components of the overall score (see third screenshot below). The score is shown on a chart at the top that appears to top out at 850. The report is extremely well done. Like Credit Karma, the company earns fees from targeted offers. In our case, we were given a choice of applying for two Citibank cards.   
• Quizzle powered by Quicken Loans: Quizzle's business model is completely different because it's run by a financial institution instead of a lead generation site. The idea here is to get customers and prospective customers to use Quizzle frequently so that when the time comes for a new mortgage, the user remembers to apply at Quicken Loans. See yesterday's post for a complete overview.

Credit Karma homepage (15 Feb. 2008)

Credit.com Credit Report Card homepage (15 Feb 2008)

Credit.com Credit Report Card (top portion, detailed analysis of each section not shown)

 

Note:

1. QSpace charged $12 for the first credit report, then $5 each to reorder. Data was from Experian (see Online Banking Report #28).

2. TransUnion now owns the WorthKnowing domain name.

Free "Ad-Supported" Credit Scores from Credit.com, Credit Karma, and Quicken Loans [NetBanker] [The Banktastic IT & Security Feed]

In August 1997, QSpace (now owned by Experian) was first to bring credit report data to the Web. The cost was $12 per report (see note 1), a price that has changed little over the ensuing 10 years.

Three years later, in October 2000, WorthKnowing.com introduced the concept of ad-supported (i.e., free) credit scores (see Online Banking Report, #66, article reprinted here). But the company failed to make it through the dot-com crash and ceased operations (note 2). Both QSpace and WorthKnowing earned OBR Best of the Web awards for their innovations.

It took seven years for the concept to reemerge, but now two Bay Area rivals are offering free credit bureau info in exchange for permission to present credit and other product offers. And just as I was about to finish this post yesterday, Quicken Loans introduced Quizzle, a personal finance/credit portal that also offers free credit bureau info (yesterday's post here).

Here are the players:

•  Credit Karma: This San Francisco-based startup, with backing from Prosper's Chris Larsen, is delivering an actual credit score computed by TransUnion, one of the three major U.S. credit bureaus. It does not precisely match the commonly used FICO score from Fair Isaac. And the scale is different, with a top score of 900 instead of 850. The credit score service is still in closed beta, but we'll see if we can get some invites from the company. Credit Karma will be presenting at our FINOVATE Startup conference April 29 in San Francisco, if you want to meet the team behind this new service.
•  Credit.com: Another San Francisco company, but one that dates back to 1995, recently launched a similar system, called the Credit Report Card. Credit.com CEO, Adam Levine, presented his other company, Identity Theft 911, at our inaugural FINOVATE conference last fall in NYC (video here). Credit.com provides a full evaluation of your actual TransUnion credit report and assigns letter grades to five different components of the overall score (see third screenshot below). The score is shown on a chart at the top that appears to top out at 850. The report is extremely well done. Like Credit Karma, the company earns fees from targeted offers. In our case, we were given a choice of applying for two Citibank cards.   
• Quizzle powered by Quicken Loans: Quizzle's business model is completely different because it's run by a financial institution instead of a lead generation site. The idea here is to get customers and prospective customers to use Quizzle frequently so that when the time comes for a new mortgage, the user remembers to apply at Quicken Loans. See yesterday's post for a complete overview.

Credit Karma homepage (15 Feb. 2008)

Credit.com Credit Report Card homepage (15 Feb 2008)

Credit.com Credit Report Card (top portion, detailed analysis of each section not shown)

 

Note:

1. QSpace charged $12 for the first credit report, then $5 each to reorder. Data was from Experian (see Online Banking Report #28).

2. TransUnion now owns the WorthKnowing domain name.

Feedback is Dead; Long Live Feedback [Open Source CU - Home] [The Banktastic Credit Union Feed]

I have a plan to make every February 13 a national half-holiday (holi-half-day?). Beginning at 1 p.m. on February 13, the nation is required to take the day off in order to get its collective romantic sh*t together. This half-holiday could also work for February 14, but before noon. I’m flexible on the days. Write your senators.

That said, there was an announcement on February 13 this year changing one of the pillars of the Social Media industry (movement?, community?). I missed that news because marital bliss takes priority. So if this is a late analysis, so be it.

eBay is changing the way feedback is handled. Essentially, sellers will no longer be able to leave feedback for buyers.

What impact does this have for credit unions? Honestly, it probably has little immediate impact. Most CU’s aren’t involved in social media and can sit on the sidelines and watch. But eBay’s feedback system was a transparent way for buyers and sellers to police themselves. The wisdom and knowledge of the community ruled.

It didn’t always work that way. Feedback was a weapon as much as tool. Sellers lorded it over the buyers: “leave me bad feedback, will ya...well...we’ll just see about that...” Which brought to light the notion of etiquette. As buyers and sellers redistributed the bric-a-brac of the world, feedback became its own currency. And eBay has stepped in to referee. Even democracy needs oversight. Is this a surprise?

Combine this with Google’s knol project and it appears there are steps being made to reign in the sometimes mob rule that can be Social Media. Both speak to the need for authority in a land affected by anonymity.

The Financial Times has declared self-rule on the Internet dead. Indeed, this is probably the biggest impact the decision will have: critics can pounce as Web 2.0 corrects its bugs and moves along to Web 2.1, Web 2.1.5, Web. 2.2 and beyond. But dead? Hardly. The “experiment” lives on in the form of customer reviews, voting (a la Newsvine), Power Ratings...for better or worse, it’s a Jedi.

Speaking of correcting bugs...back to my original point: Valentines 2.0. Anyone with me?

another Jeanine & Lucy story [True Story - Home] [The Banktastic Credit Union Feed]

One of the things that I love about keeping this blog going is that I get to meet new people through this channel. The most recent new friend is Peggy Day, CEO of Marshall Community Credit Union. She sent me one of her favorite newspaper articles from The Virginian Pilot dated April 30, 2005 and written by Jacey Eckhart. The article is entitled, "Give Mom Credit: she loves her work" and it speaks for itself so here it is.

Give Mom credit: she loves her work By JACEY ECKHART, The Virginian-Pilot © April 30, 2005 Last updated: 9:56 PM MY MOTHER has chosen the date of her retirement with all the care of Nostradamus. Come Thursday – 5/5/05 – at 5:05 p.m., she will walk away from the little credit union where she has worked since 1979. I don't know what has taken her so long. I have been hoping she would quit for the last 10 years. I've been dying for my parents to be free to visit more often – every day, even. I'd love to have them sitting around my kitchen table in their robes, drinking coffee and witnessing the nine minutes a year my kids are actually cute. The combined allure of coffee, grandchildren and golf in winter hasn't been enough to pry Mom away from the credit union, though. We kids can't figure it out. It isn't like our parents are desperate for the money. It isn't like Mom is a workaholic. When we complain to Dad, he says she must be getting something out of it. Yeah? What? I've watched my mother with the same puzzlement George Bailey watched his dad run Bedford Falls' penny-ante building and loan in "It's a Wonderful Life." Mom's credit union isn't building skyscrapers. It isn't financing ocean liners. It cashes Burger King paychecks for teenagers and processes car loans. This is enough to win my mother's loyalty. I've known the woman to bustle in early to get her paperwork done so that she would be more prepared for the members on Friday, a busy credit union day. I've known her to meet members on weekends to close a loan because they couldn't get off work during regular hours. I've known her to take phone calls at home.

Only one conclusion makes sense: Mom loves her work. In a country where 41 percent of adults in a Gallup poll reported that they were only "somewhat happy" at work, my mother is one of those individuals who truly loves what she does and does it with excellence. Which is weird to me. I thought you had to be an actress or an artist or an executive to love your work. I thought you had to be rolling in moolah. I thought you had to be Katie Couric . Evidently not. In her book "Be Happy at Work: 100 Women Who Love Their Jobs and Why," Joanne Gordon says that women who love their work have the same things in common. No matter what the job is, they take great pleasure from the work itself. They feel good about the reason they do their work. They like and respect their co-workers . "Process. Purpose. People," Gordon writes. "These three surprisingly simple concepts can mean all the difference between loving and liking your job." Mom had all these things. She could lose herself in the joy of making the accounts balance. She thought the little credit union could swing things for people that big credit unions could not. She always listened to people's vacation plans, and how their teenager managed to put $867 worth of damage on the truck in the driveway, and how grandma wouldn't be living in her own house anymore. It all mattered to her. The credit union board is hosting a dinner in Mom's honor, but otherwise her retirement will be pretty quiet. Her picture won't be in the paper, and Sunday news pundits won't wonder whether her excuse that she needs to spend more time with her elderly mother and grandchildren is real. No one will cry. But greatness is passing from that little credit union: a woman who loved her work.

e-cash applications need better design for consumers to accept [The Bankwatch] [The Banktastic FI Feed]

Interesting review of the customer view while trying to use the Barclaycard OnePulse card.  Dave makes the point that the merchant benefits are clear, but the benefit to the consumer at the point of purchase is confusing, and in this case slower than cash.

Digital Money Forum: Slow penetration

When I waved my card at the reader, nothing happened. The woman serving me asked if I really wanted to use the “terminal”. I said yes. She said: “It will be an extra five pence”.

Whether it’s the lack of suitable terminals for the kinds of merchants,
miscommunication between acquirers and merchants about benefits, simple
unfamiliarity or whatever, I hope someone on the business side has a
handle on this.

Second Life ends for ING [The Better Banking Blog] [The Banktastic IT & Security Feed]

The founding arm of Dutch Retail Bank ING has announced that it will end its Second Life entity, Our Virtual Holland (OVH) on March 1. OVH started only one year ago with the aim of developing an online community for entrepreneurs.

The ING merger with Postbank is given as the reason for ceasing the Second Life experiment, with the company needing to focus on integration the new business into their operations.

Existing OVH partners will continue their virtual entities. The entrepreneurial community built by OVH will in turn take over the daily running of the community, ensuring its survival but without the backing of ING. ING Asia Pacific will continue their Second Life presence with Cha Lounge on ING Island.

Fellow Dutch bank ABN Amro is also rumoured to be departing Second Life as it is unhappy with the response they received to their interactive financial advice centre. These banks join Wells Fargo as former players in this online world. Wells Fargo moved StageCoach Island to a rival provider, Active Worlds in 2006.

Controversy over the number of residents in Second Life continues, with its creators, Linden Labs claiming the number is 6.1 million with 1.6 million logged in during the last 60 days. With so few regularly online, interaction with financial services providers probably is not high on residents' lists of things to do.

The majority of residents are European (61%) Only 20% of residents originate from Asia Pacific, Latin America and the Middle East and Africa combined.

As a result, in 2007 a swag of European financial services institutions joined Second Life, seeking to extend their services in the much vaunted online community. This includes:
· France – ABN Amro, BNP Paribas, Crédit Agricole, Confidis
· Germany – Wirecard Bank, Deutsche Bank AG
· Denmark – Saxo
· Switzerland - Banque Cantonale Vaudoise
· Norway – DNB Bank
· Japan – Suruga Bank
· Brazil - Banco Itau

On 22 January 2008 Linden Labs banned all unregistered and unregulated banks. The collapse of in-world bank, Ginko Financial in August of 2007 brought a tirade of complaints. Ginko owes its customer more than US$750,000 in real money.

In late 2007 Westpac revealed it had experimented with Second Life as a platform to provide in-house training. Widely promoted as a success for allowing staff from disperse branch locations attend the same induction sessions, Westpac will shortly decide whether there is a long term application for Second Life for internal training.

Does Second Life have a meaningful application for financial services organisations?