In November 2007, ING Direct acquired personal investment site Sharebuilder. While the acquisition was said to be strategic in that ING Direct would now be able to offer investment options to its current customers, the question is whether this acquisition has achieved that goal. Specifically, did the acquisition increase demand amongst ING Direct’s current customers for Sharebuilder products?

Read the farthest point to the right as: ~7% of ING Directs customers who logged in that month also began a Sharebuilder application, and, of that 7%, 5% completed it

The chart above shows the percentage of ING Direct’s active account managers (customers) who began a Sharebuilder application in the same month (represented by the yellow line) compared to the percentage of ING Direct customers who began and completed a Sharebuilder application (represented by the orange diamond). So what we can note from the chart above is that the yellow line is not trending upward, but instead looks relatively stable from the month prior to ING Direct’s acquisition of Sharebuilder in November to 3 months post-acquisition. This indicates that demand for Sharebuilder accounts by ING Direct customers has not increased post-acquisition as we’d expect.

When looking at the orange diamonds, however, notice that they are actually trending upward post-acquisition, significantly. This shows us that after the acquisition, ING Direct customers who started to open an account at Sharebuilder were more likely to essentially finish an account at Sharebuilder*. In fact, in February 2008, ING Direct customers were 5x more likely to complete a Sharebuilder application once started than in October or November.

The finding here is that while the acquisition of Sharebuilder did not exactly increase more demand from ING Direct’s customers in the short term, it did increase the likelihood for an ING Direct customer to complete the application. So what are the implications of this finding? The story the data may tell us here is that demand for investment options do not necessarily change, that a certain percentage of a group of people will always be in market looking at different investment vehicles. However, while a certain percentage of people are in market, these people are more likely to complete an application with a company where they already have an existing trusting relationship, and in this case, five times more likely. So, by acquiring Sharebuilder, ING Direct is in fact increasing its penetration into existing accounts. This increased account penetration will ultimately create more loyal consumers and thus could be the first indication that this acquisition will prove successful in the long run.

*For this study, we considered a person to complete a Sharebuilder account when they completed an account and selected a pricing plan

In November 2007, Prashant Bhatia, a Citi Investment Research Analyst, wrote that E*Trade had a 15% chance of bankruptcy due to the effects of the decline in the subprime market. E*Trade’s shareholders clearly took this statement to heart as the company’s share price declined 59% in one day. Just as interesting however, is the question of whether E*Trade’s online depositors shared those fears.

While not as well known as its brokerage business, E*Trade also has a significant deposits business with nearly $30 billion in consumer deposits. At Compete, we utilized our panel of two million users to investigate what impact, if any, this analyst report had on the behavior of E*Trade’s online high-yield savings (HYSA) shoppers. If E*Trade’s online consumers reacted in a similar manner as its shareholders, we would expect to see a comparable drop in new submitted online account applications after the report was released.

Approximately one month before the Citi analyst report was released, E*Trade reduced its rate on high-yield savings from 5.05% to 4.70% APY. However, shortly after the report E*Trade increased its rate back at 5.05% APY. This rate increase may have been an attempt by E-Trade to stem consumers’ fears about its financial condition. Did this rate increase successfully offset the negative news about E*Trade from the Citi analyst report?

*Competitive set includes high yield savings products of E*Trade, HSBC Direct, ING Direct, Emigrant Direct, CapitalOne, & Countrywide

The chart above illustrates E*Trade’s weekly share of submitted online high-yield savings applications among its key competitors. The vertical dashed lines correspond to the specific events mentioned above: the decreasing of E*Trade’s high-yield rate, the publishing of the analyst report, and E*Trade moving its rate back up again. When E*Trade lowered its rate on October 12th, it experienced an immediate drop in account openings and a loss of 6 share points from 19% to 13%. E*Trade’s share of applications remained flat at 12% for the next four weeks. On the week of November 11th, when the analyst report about bankruptcy was published, E*Trade’s share of online submitted high-yield savings applications instantly dropped another 4 points. Shortly thereafter, E*Trade raised its interest rate back to competitive levels and within a week, its share of online high-yield savings applications increased 10 points!!

Decreasing its high-yield interest rate as well as the release of the analyst report were both followed by losses in E*Trade’s application share. However, once E*Trade returned its rate to a level in line with key competitors, its share of applications went higher than ever, despite any fears of bankruptcy! This just goes to show that, like investors, consumers will take a risk for the right return. And apparently that there is still plenty of faith in the FDIC to bail us out if things go wrong.

In February, Citibank announced a partnership with Obopay to pilot the company’s eponymous peer-to-peer mobile phone payment service. The two companies launched a pilot in Boston and Chicago this summer with some fanfare (free ice cream sandwiches!) We thought it would be interesting to see how well the partnership is performing in terms of driving new checking and savings account openings for Citi.

The Citi website gets a lot of traffic, but the majority of that volume is from existing customers who are managing their accounts online. We wanted to look exclusively at those who did not log in – visitors to Citi who represented new checking and saving account opportunities. We segmented these Citi prospects into two mutually exclusive groups; the first group consisted of those prospects who visited only Citi and the second group was composed of prospects who visited both Obopay and Citi. The chart below shows the “engagement rate” for each segment, that is, what percent of prospects in each segment start an online checking or savings account application at Citi.

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