ABA Banking Journal - October 2008 - (Page 18)
Community Banking Pass the Aspirin: This month’s topic, deposit generation, appears exclusively on www.passtheaspirinplus.com Hot, Web, and Green Online deposits draw bankers and savers of different stripes. Three web-based services use different approaches to attracting deposits n a recent survey, community bankers said their top competitive challenge, by far, was raising deposits. One out of three respondents cited it. Several options exist to remedy the problem, most of them well known. They include simply raising rates, increased marketing, premiums, and, on a longer horizon, adding or acquiring branches. To attract large deposits, especially now when such depositors may be more nervous, there are services such as CDARS, which can significantly expand FDIC coverage under a single bank. (CDARS— Certificate of Deposit Account Registry Service, offered by Promontory Interfinancial Network, LLC, is an ABAMoneyAisle’s campaign dashboard screen lets the user readily tell how well the bank’s current bids are endorsed program.) But one avenue that relatively few com- doing. This can highlight the need to revamp pricing tolerances. munity banks have explored raising is funds through the internet. Some smaller institutions have estab- MoneyAisle: Where banks bid for deposits lished “internet branches,” some with their own identity. But the Many banks post their current deposit rates on their websites, reach of such efforts is limited by the bank’s ability to generate and some bank sites permit depositors to open accounts online, enough internet buzz to show up on search engines, or its will- and possibly even to fund them online. It’s the stock-in-trade of ingness to pay for preferred placement in search engines, which ING Direct, HSBC Direct and other internet-only institutions. This is the equivalent of “no-haggle” pricing at those car dealbigger players routinely do. It’s a classic web challenge—you may build it, but if folks don’t know it’s there, they won’t come. erships that offer nonnegotiable price tags. The bank posts what But there are alternatives that can put your institution on the it wants, and if the depositor is willing, a deposit results. If the internet deposit shopper’s map. We looked at three such alter- depositor thinks they can do better, they move on to someone natives, and at efforts of banks that use them. One alternative, else’s site. MoneyAisle, launched in June 2008 with approximately 100 MoneyAisle, debuted in the middle of the year, and the others, Bankrate.com and Bauer Financial, Inc.’s product family, have depository institutions now participating, represents a very different approach to online deposit gathering. Prospective deposibeen available for some time. One caveat: The internet doesn’t appear to be a path to core tors enter the rate, term, and other details, including their locadeposits. Bankers’ descriptions of the success they have had with tion, into the software at www.moneyaisle.com. And then, instiinternet funds gathering indicate that this is “hot” money, tutions looking for the type of deposit indicated bid for that money with a rate-savvy saver behind it, who will likely not prospective depositor’s funds. Right on screen, the prospect can see each round of what know your bank as anything beyond a good rate, FDIC coveramounts to an online auction, and how many institutions are age, and a web page, with some exceptions. participating in each round. Finally, a winner is announced onWhat follows is a description of these three options. screen, including both name and logo. Links to the winning By Steve Cocheo, executive editor institution’s website and other helpful data are provided, includ- I 18 OCTOBER 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com
If you would like to try to load the digital publication without using Flash Player detection, please click here.