Updated Bank Names For 2009

About this time last year, I published a list of updated bank slogans for 2008. This year, I’m moving up to the big time and renaming banks altogether. Here’s a partial list of new bank names we need to see:


Old Name                   New Name

NetBank                      NotABank

WaMu                          VaMoose

PFF Bank                     Poof! Bank 

Integrity Bank             DisIntegrated Bank

Hume Bank                 ExHume Bank

Security Pacific Bank   In The Pacific Bank

IndyMac Bank             InDeGround Bank

Downey S&L               Downed S&L

ANB Financial              A Necrophiliac’s Brothel Financial


By the way, if you wondering what these banks have in common, go here.

And if you need help understanding the name of the last bank, go here.


Banks Are In The Bush League

Who’s got a higher confidence rating, banks or George Bush?

The good news for banks is that the answer is banks. The bad news for banks is that it’s close.

According to the November Rasmussen poll, 35% of the people polled at least somewhat approve of the way the President has handled his job. That’s actually up 2 points from the October survey.

On the other hand, a new study released by market researcher Morpace found that just 38% of consumers are very confident in the banking industry. And that’s down six percentage points from the firm’s September survey

Given the events that unfolded in the past two months, that’s hardly a surprising finding. But what is noteworthy, though, is the decline in consumers’ confidence with their personal banks. According to the article in Marketing Daily:

“Banks have been rolling out messages of reassurance to current and potential customer alike. According to Morpace’s VP of Customer Loyalty Tom Hartley, ‘What the banks [have been] doing is communicating with customer more, through email, ads and other sources, doesn’t seem to be working in restoring their confidence.”

My take: I agree with Tom 100%.

Plenty of smaller institutions — community banks and credit unions in particular — have seen a nice influx of deposits over the past eight or ten weeks. Why? Because of their “safe and sound” messages? No. Because consumers are spreading out their deposits across institutions.

And quite frankly, I don’t think anyone believes any financial institution that touts how secure it is. Not when the CEO of one acquired firm goes on TV talking up his bank’s “bright future.” Or when another bank runs full page ads in major newspapers telling us how safe it is, only for us to find out more recently that is, well, not so financially secure.

So what should banks do?

1) Ignore the industry surveys. The economy is in the tanks, and FIs seem to be failing left and right. Of course the confidence rating of the industry as a whole is going to fall. Big deal. Your bank’s score is what matters — not the industry’s.

2) Stop trying to advertise your way to a higher confidence rating. Banks will build back their confidence ratings as new and existing customers experience a higher level of service. You cannot advertise your way to greatness.

3) Develop (or re-develop) an onboarding program. As new customers come on board, the key to their long term retention will be made or broken in the next 6 to 12 months. It’s critical for banks to recognize the types of relationships these new customers want to have with them. Are they simply spreading their funds across banks for security or are they abandoning old banks and looking for a new primary bank to have a relationship with? Quit wasting money on newspaper and TV ads, and put it into some marketing analytics efforts to figure out how to grow the relationship with the influx of customers who are coming in the door (thanks to no effort on your part).

4) Stay away from TARP money. (Are you listening credit unions?) I don’t know how, and I don’t know when, but at some point taking TARP money is going to create PR problems for the institutions that took those funds. 

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Three Things Banks Need To Do To Improve Their Reputation With Consumers

While there are a lot of things that banks need to do to get back on track profitability-wise, there are three “things” banks need to improve in order to (re-?)gain their credibility with consumers:

  • Transparency. If the CEO of your company goes on TV (say, Jim Cramer’s show) and tells the world the future of your firm looks bright, and then two days later, other banks are picking at you like vultures on roadkill, then your firm is not transparent. Consumers (not to mention investors) are sick and tired of this crap. Come clean about your financial situation. And come clean about your product quality. And your fees. Be transparent. We know the difference.
  • Tangibility. The Financial Brand blog recently highlighted the branding efforts of one bank, who’s running a series of ads showing someone (as Jeffry Pilcher writes) “wrestling — literally — with some aspect of their financial life: a wallet, purse, or checkbook. The only blurb of copy — the headline — says ‘Take control of your finances.” Pardon my french, but what the hell does that mean? Exactly what, Mr. or Ms. Banker, are you proposing to DO to actually help us “take control”? Aspirational messages are nice, but at some point (uh, sooner rather than later), banks need to be a lot more tangible about delivering on this stuff.
  • Competency. Pretty soon, I’m going to get a call from my account manager at my bank, asking me to talk with an adviser from the investment firm that they recently acquired. (This could be any number of banks). My response is going to be “you want me to talk to an adviser from a firm that did such a *great* job managing its own money that it nearly went out of business before you guys scooped them up for 10% of the value they were worth a year earlier?” (This could be any number of investment firms). A bank branch rep I spoke to recently couldn’t even answer basic questions about the changes in FDIC coverage. My point: To improve their reputations, banks (and other FIs) are going to have to re-prove their basic competency regarding financial matters.

The reason I refer to these things as “things” is that I don’t know what else to call them. Measures? Perceptions?

Problem is, I don’t think any bank tracks these “things” today, so how will they really know if they’re improving on them?

Maybe the brand index methodologies out there will tell them. Not likely.

Fixing these “things” isn’t going to come from external measurement. It will happen because the management team will take control of the situation, make fixing their reputation a priority, and do something about it.

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A Guide To The Financial Services Industry

The past few months have been a turbulent time for the financial services industry. With all that’s going on, I thought I’d give the confused, perplexed, and uninitiated a simple way to figure out who’s who in the industry.

Fundamentally, there are four types of firms in the industry. Those that:

1) Were banks, are still banks, but don’t want to be banks.
2) Weren’t banks, but now want to be banks.
3) Weren’t banks, don’t want to be banks, but tell the regulators that they are banks.
4) Aren’t banks, don’t want to be banks, but are told by regulators that they’re banks.

Firms in Category 1 include Bank of America and JP Morgan Chase who were banks (and still are), but through acquisitions of firms like Bear Stearns and Merrill Lynch (not to mention Countrywide) clearly don’t want to be banks.

We used to know Category 2 firms as investment banking, brokerage, and credit card firms. Everybody from Goldman Sachs to American Express is applying to be a bank, so they too, can get in on the deposits gold rush of  ’08.

Category 3 firms are sometimes called credit unions. While they tell consumers that they’re not banks, they tell the regulators that they are, so they can get some of that juicy TARP money.

Firms in the fourth category are sometimes known as P2P lenders. Maybe you’ve heard of Prosper and Lending Club. While they say they’re not banks, the regulators aren’t buying that for a New York second.

Any questions?

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PFM: The New New Year’s Resolution

NetBanker notes that for personal financial management (PFM) sites:

Total September traffic was 1.2 million unique visitors compared to less than 400,000 a year ago. The big three newcomers last year: Mint, Wesabe, and Geezeo saw combined traffic increase by 450,000 users, up nearly three-fold increase from 2007. Geezeo was the star percentage-wise growing more than six-fold. But Mint accounted for three-fourths of the net gain across the existing players with 330,000 more visitors.”

My take: It used to be that come the end of December, we’d make New Year’s resolutions to lose weight, get in shape, stop smoking, etc. The increasing PFM traffic is a reflection of a new resolution to add to the list: Get one’s finances in order (or maybe start budgeting, or something like that).

OK, maybe this isn’t a truly new resolution for some people. But the number of sites that offer PFM functionality is growing, and there’s a confluence of forces coming together to make the firms offering these tools feel like this is their time: 1) the economy sucks; 2) entering account data into the PFM tools is less labor-intensive than in the past; and 3) Gen Yers are coming of age.

The combination of these forces is bringing us the new year a few months early — at least as far as making the PFM resolution is concerned.

Will the online traffic for the PFM continue to see strong growth? Sure. While the number are strong, there are still plenty of people who have yet to make their PFM resolution.

But as I’ve implied in a previous post, raw site traffic is a deceiving measure. The real key to this market is how many people keep to their resolution.

Over time, factor #1 will have a seesaw impact on this market. As the economy improves (which it will, it’s just a matter of when), people will feel less pressure to watch every penny — and be less inclined to use PFM tools.

The impact of factor #2 has a short-term effect. Ease of data entry (through account aggregation) makes it easy for people to start using the tool, but I believe that the gee-whiz impact of graphing and charting everything to death will wear off for many people, leading to diminished use.

Factor #3 is the key to success for the PFM market. Gen Yers display a much stronger desire to manage their finances than Boomers or Seniors did at that age. And research from one of the analyst firms found that a suprisingly high percentage of Gen Yers are already saving for retirement — something a lot few Boomers did at that age.

In the end, the winners in this space will be the ones that help the greatest number of people keep their PFM resolution. Not necessarily the ones with highest site traffic.

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Math By Mint

Someone once said that there are lies, damn lies, and statistics.

Personally, I think that there’s a hierarchy there. Anybody can lie. If you’re good, you can tell a damn lie. But you have to be really good to use statistics. Alas, I don’t think Mint.com makes it to the top tier.

At the Finovate conference in NY, Mint.com presented and shared some numbers that piqued my interest. It claims that it “manages over $12 billion in transactions” and that 50% of its users have changed their spending behavior by using Mint.

Manages transactions? Perhaps “tracks” would be the more accurate word. And how does Mint know that the behavioral changes have come as a result of its tools — and not the general economic conditions?

Then there’s Mint’s boast that it has identified more than $100 million in potential savings for its users. This is ridiculous. Imagine if Capital One claimed that it has provided more that $100 gazillion in consumer financing by adding up the credit lines offered in the marketing offers it has sent to customers and prospects.

And finally, according to its CEO, Mint.com currently has 500,000 users, enjoying a sign up rate that has “more than doubled” in the past 3 weeks.

Sounds pretty impressive. When Aite Group spoke with Mint in April, it had 220,000 users, and (we were told) was signing up 10,000 people each week. In its August 18th press release, it said it had 400,000 users. So in the eight weeks leading up to the Finovate conference, it added 100,000 users. Which, my calculator tells me, is 12,500 users per week, and just 25% more than the weekly rate from April.

I’m not calling Mint.com a liar. I believe that it has doubled its sign up rate. After all, with the economy going the way it has, who isn’t more concerned about managing their finances? It doesn’t surprise me at all that the sign up rate is increasing. The enrollment rate might have dipped during the summer for all I know.

But let’s put Mint.com’s numbers in perspective. It may very well be the largest “online personal finance service.” Online. On Javelin Research’s blog, Mark Schwanhausser implies that there are 9 million Quicken users. If Mint.com grew by 40,000 users per week from here on out, its user base wouldn’t equal the Quicken population until we’re ready to throw the next president out of the White House at the end of October 2012. At 20,000 users per week, the 9 million figure will be attained while you eat your Thanksgiving turkey — in the year 2016.

But this is a silly discussion. Enrollment isn’t the critical statistic — the percent of enrollees that are active users is the critical factor (any online banking exec will tell you that). Intuit will tell you that, too — it has sold a lot of copies of Quicken to people who don’t use it. At least the firm got paid for each copy it sold.

Here’s my request of Mint.com: If you present at the next Finovate, please don’t share BS statistics (that’s not “Bachelor of Science” by the way). Instead, tell us, of the people who have enrolled, how many are active? How many use the site on a daily or weekly basis? How many site features do they use? How many accounts have they aggregated? How does usage change over time? How many of the saving offers that have been presented to users have been accepted? We’d be a lot more interested in finding out how much Mint users have realized in savings from Mint offers — not just those that the site has identified.

The reality of the PFM space is that while money is really really important to us — and getting even more important with the economic uncertainties of the day — the process of managing our money is something that few people want to do, or enjoy doing.

Quicken has succeeded by finding a segment of the population that likes to track, trend, graph, and forecast their financial lives. Mint.com has done a great job of replicating a lot of that functionality, and going beyond Quicken by making it easier to get data in (through aggregation), provide offers for savings, and engage users with its blog.

This segment is small. Mint.com is deluding itself (and trying to delude others) when it says its tools are for the masses, and sites like Wesabe are for the hardcore PFM users.

The key behavioral change that will determine the success of the PFM space is not how many dollars in transactions it “manages.” It’s getting more people to become more disciplined about managing their financial lives. There’s no doubt that tools like those offered by the PFM vendors can help people become more disciplined. But this is not an inconsequential change in behavior. Effecting this behavioral change is as tough as quitting smoking, losing weight, or something like that.

Which PFM site or business model will be the one that is most successful in helping to effect this behavioral change? I have my bet, which I won’t share here. But I will say this — for all of Mint.com’s chest thumping, the PFM game is far from over.

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What Should Banks Be Telling Their Customers?

Opinion  Research Corporation issued a press release highlighting the results of a survey it recently conducted. According to the release:

“Nearly half of those surveyed (46%) said the bank in which they have the most assets was not communicating with them enough. Mutual funds fared slightly better than banks, with 42 percent of respondents that hold the majority of assets there expressing disappointment in the level of communication from their provider.  Brokerage firms appeared to be doing the best job of keeping their customers informed, with sixty-two percent of respondents that hold the majority of assets there indicating that the level of communication has been good.”

My take: Look on the bright side: A majority of those surveyed (54%) did say that their banks was communicating with them enough. And nearly six in ten respondents said their mutual fund provider was doing a good job of communicating.

The problem here is that we have nothing to compare this to. In normal times, how many consumers think that their bank communicates with them enough? And how do we define “communicate” in this regard? Are blatant marketing messages considered “communication”?

Elizabeth Glagowski of 1to1 magazine was right on with her comment on the 1:1 blog:

“At this point, even a simple mass email or direct mail piece to reassure (or prepare) customers would definitely go a long way. am a customer of many financial institutions. Only one has sent me any type of communication explaining its role in the financial landscape. It really made a difference to me as a customer.”

I did a quick check of the largest banks’ Web sites to see if any had posted a message online. The result: Only a few have posted anything. One example: Wells Fargo.

It’s a shame that few banks have established a blog — each day brings new news (is that redundant?) that is great blog fodder for banks to communicate with their customers about.

It’s too late for banks to start a blog now (for the purpose of communicating about the crisis, not in general). But it’s not too late for them to put up a message on their Web sites (especially with nearly of some banks’ customers coming online to check account balances or pay bills on a regular basis).

Not to take WF to task here, but I would suggest writing a letter a little different from what it published. My suggestion would be to publish a letter that talked a little more about the situation itself. Help customers understand how the industry got into this situation in the first place, why other banks are having trouble and — this is the tricky part — how to know whether or not they should pull their money out of the other banks they do business with.

This last part is the one that most banks will struggle with. With some firms running full-page ads touting their newly superior rates, it leaves one consumer (me) with the impression that they’re vultures picking over the newly killed. Banks have got to recognize that few customers put all their eggs in one basket (or bank), and that consumers have a lot of reasons for doing so. It would be nice for my bank to assure me that the piddly amount of money I putin a CD with the bank across the street from them (which was opened because it offered me a better rate for the next 6 months than my primary bank did) is OK to keep there.

The end result of this financial crisis is not going to be the consolidation of accounts with the banks left standing. It’s going to be the opposite — further dispersion of assets across institutions. We Boomers are already of the mindset that we would never have all of our accounts with one bank. This crisis is going to lead a lot Gen Yers and Xers to feel the same way.

So what should banks be telling their customers? The answer is simple: The truth. The truth about what’s going on in the industry, and what customers should do about it (that’s best for the customer, and not necessarily the bank).

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Update: For more on this, go here and here.