According to the 2007 Online Banking Report, approximately one in three US adult consumers monitors or checks their credit score in some form or another. A search on Google shows a competitive landscape with dozens of affiliates offering virtually the same product. Each site has “FREE” in bold letters, but upon closer inspection the score is usually only free if you enroll in a credit monitoring service. In this margin-rich industry with more and more competitors, it’s not surprising to see the big players lose market share.

FreeCreditReport.com and TrueCredit.com, the consumer direct sites of Experian and TransUnion, respectively, all show monthly declines. (Equifax, the third major credit bureau, doesn’t run a separate site.)

(Combined: Down 24% Y/Y; Down 9% M/M)

That’s were a little known start-up, Credit Karma steps in. Unlike the big players, Creditkarma.com provides free credit scores based on advertising rather than a subscription model. They generate revenues from advertisers who can target users based on their credit profile. So far the model looks like it’s working to drive traffic. Compete numbers show month over month growth in the 30-40% range.

In addition to the free credit score and monitoring, the site is loaded with statistics and content to help consumers understand and manage their credit. Credit Karma also boasts many web2.0 elements like user comments and voting. Many of the features and tools are interesting if you want to get under the hood of how credit scores work.

At this point, it’s too early to judge whether Credit Karma will succeed, or whether the advertising revenue will be there to support them. But today in a tightening credit market where consumer credit is closely scrutinized, firms like this may be well-positioned for growth.

Now that the dust has begun to settle on the acquisitions of Washington Mutual by Chase and Wachovia by Wells Fargo, the question now is whether WaMu and Wachovia customers will remain customers of their current bank or transfer their assets to another bank. Some WaMu and Wachovia customers may perceive transferring their assets to another bank as a perceived flight to safety to banks not as entwined in the current economic upheaval.

We first looked at loyalty rates among top banks to get a better understanding of whether certain online banking customers are prone to shop the competition or stick with their current bank when shopping for a similar financial product. Below, you can see that 51% of WaMu online banking customers in market* for a checking account considered opening a checking account online at WaMu. Likewise, 46% of Wachovia’s customers considered opening a checking account online at Wachovia. According to our data, both WaMu and Wachovia have above average loyalty rates with the average among this competitive set being 33%. Bank of America ranks the highest among this competitive set with a 53% loyalty rate.

*In market is defined as online bankers that visit shopping checking product pages

Second, we looked specifically at the online behavior of WaMu and Wachovia customers to understand which banks may be getting new business from WaMu and Wachovia customers in the near future. The competitor most likely to receive business from both WaMu and Wachovia customers is Bank of America - 37% of WaMu online bankers and 45% of Wachovia online bankers researched Bank of America’s checking products online between January and June 2008.

It should be interesting to see how WaMu and Wachovia customers react in the coming months. But, in both cases, with almost half of their customers prone to shop on other competitors’ sites, there is a real opportunity for other banks, especially Bank of America, to capture additional market share.

Financial services marketers certainly spend a lot of time and effort in understanding why people choose to bank with them or decide to bank with a competitor. Compete recently fielded a survey to more than 1,600 online bankers to understand the factors that led them to choose their primary bank. Factors included a mix of both online and offline activities.

The offline channel is by far the most popular factor that led online bankers to chose their bank. Among respondents, more than half selected “Convenient Location or ATM” as a primary reason for selecting their bank. The least likely factor to influence where they bank was “Saw/heard advertisement on Internet,TV.” Even so, Washington Mutual led this category with 19.4% of its online bankers responding that this was a primary factor in selecting Washington Mutual.

Taking a closer look at respondents who selected “Convenient location or ATM” as their top choice, it looks like both Wachovia’s and Bank of America’s online bankers appreciate convenient locations or ATMs above all other online bankers included in the survey. This make sense as both banks have a significant branch network. For obvious reasons, ING DIRECT online bankers did not rate this factor as a primary reason — its six cafes are the closest it comes to branches.

As online banking becomes even more popular among consumers, it should be interesting to see how whether the convenience of banks or ATMs continues to be a significant factor in people choosing their banks or if online channel factors become more important to consumers in the future.

As a Washington Mutual account holder, my greatest concern about WaMu’s viability became a reality last Friday. WaMu, known for its breezy “WhooHoo!” advertising and bright colors, was no more, and now I am officially an account holder at JP Morgan Chase. I immediately logged onto wamu.com to see what information Chase was providing for potentially nervous WaMu customers (this would have been prior to reading the Q&A guide posted on the FDIC’s website) and I noticed a bit of a quick fix update of the homepage.

I totally get that Chase probably didn’t have a ton of time to work on the homepage redesign so this is not meant to be a criticism. After all, the message is loud and clear although some WaMu customers may feel a little like their financial future is a bit blurry like the little boy in the graphic.
Then a second even more surprising blow hit this Friday with the acquisition of Wachovia by Wells Fargo. This made me think that with all the acquisitions happening, maybe Bank of America would have to give up its #1 spot online to either Chase or Wells Fargo? And, from an online perspective, is this acquisition a good move for Chase and Wells Fargo?
Below was the online landscape among these competitors just 10 days ago. Prior to the acquisition, in terms of the number of active online account managers*, the rankings among top competitors in August were:

1. Bank of America with approximately 18.5M active online account managers
2. Chase with approximately 15.9M active online account managers
3. Citi with approximately 11M active online account managers
4. Wells Fargo with approximately 9.7 active online account managers

In August, Bank of America had the largest share at 25%, followed by Chase with 21%, Citi with 14%, and Wells Fargo with 13% among the top 10 competitors. Both WaMu and Wachovia had a much smaller share of 7% each.

Post-acquisition, Chase now takes the top spot with 28% share of active online account managers outpacing Bank of America by 3% points.

However, looking closer at both Chase and WaMu’s online account manager base, there may be less opportunity due to overlapping customers. For example, a customer who may hold two accounts, one at WaMu and one at Chase may consolidate their finances with Chase. In August, about 4% of WaMu’s online account managers were already a Chase customer, which means that although Chase is still #1 it is by a slimmer margin if you take into account these overlapping customers. There is a 1%overlap for Wachovia customers who bank with Wells Fargo.

It should be interesting to see if WaMu and Wachovia customers, especially those who have never been a Chase or Wells Fargo customers previously, flee to a competitor. One thing is for sure that both Chase and Wells Fargo need to engage with its newly acquired customer base early on and often if they want to retain their business.

We recently had the pleasure of interviewing Bryan Stapp, former CMO of Quicken Loans and currently Chief Marketer of his firm Loud Amplifier Marketing. In our interview, Bryan discusses the key challenges online financial services marketers are currently facing, how to leverage online and offline marketing, and even what playing in his band has taught him about marketing.

In your opinion, what are some of the key challenges for today’s online marketers within the Financial Services industry?

Establishing trust is the biggest challenge right now. Banks are failing, home values are plummeting, stocks are down, and the average consumer thinks the whole game is rigged against them. Consumers I talk to say they don’t know who to trust. Folks who never took out a sub-prime mortgage are impacted by tightening credit and may even have their home equity lines of credit reduced due to falling home values. It doesn’t make sense to folks who have always paid their bills on time and played by the rules.

Big brands can really win here by becoming the rock of stability, and reassuring their customers about the trust they have already placed in them. The big brands have the opportunity to leverage the brand equity they have established over the years by reaching out and guiding their customers thru this storm. Smaller or less established brands will really need to step up the quality of their advertising online (no more dancing presidents!), and to add broadcast advertising to the extent they can afford it in this environment. Online, this is the time to leverage good will and trust established with your customers thru testimonials, PR, social network commentary and good old-fashioned email communications.

It’s interesting to note that over the past year, web visits to the largest online mortgage lenders have dropped as much as 71%. Ditech has increased their visits, something I would attribute to their sustained TV campaign. Curiously, the Mortgage Lender Implode-O-Meter has more visits than the big lenders, and their traffic is up 161% from last year – what does that tell you about trust?

Are FS marketers doing enough to leverage online and offline efforts together?

This is a real challenge for so many industries – especially companies which grew up in the offline media world. So few CEO’s, and even CMO’s, have a real appreciation for how the two work together and complement each other.

In the example above, Ditech continues to drive traffic to their site because they continue to advertise on TV while their competitors have pulled back. I work with experts in radio advertising and the correlation between radio spending and online traffic is clear as day. Yet the messages the clients put out in each medium are very different, so the common thread becomes the brand name. With consistency and forethought, the two can be combined to really create a powerful response mechanism. People want to go online before calling – they want to check you out and don’t want to commit to a phone call right off the bat. Create a consistent, united front and you will have a powerful combination.

As an online marketer, what are some of your favorite tools that you use to hone your craft?

Google has so many great tools that I use every day – analytics, insight for search, trends. I also love the Compete Toolbar – especially with Firefox because it gives me a visit trend snapshot in the bottom of the browser window.

In terms of ad serving and optimization, Adchemy in Redwood City has developed some amazing technology and methodology for serving ads with literally hundreds of dynamic variables instantaneously. It is a direct response marketers dream. These are some smart guys.

Which Financial companies do you think are doing a great job of marketing online to their customers? Why?

Do any financial services companies REALLY do a great job in marketing to their customers? I have had accounts with some of the same firms for more than 20 years and have never received any communication that said they really cared about my business. How about a simple birthday card? Given the enormous amounts of information that financial services possess about their customers, it is shameful how little of it is used in a way to strengthen the relationship and expand the share-of-customer the firms have.

Having said that, Chase and Citi are doing a nice job with email marketing. The emails I see from them always add value, they make their offers relevant and succinct. But they are generic, and not necessarily tailored to me as an individual. Chase in particular seems to have created great integration between their local branches and their online communications with customers.

Connecting with Gen Y is a goal of most FS marketers right now – is it possible to get their attention, if so, how?

Connecting with Gen Y is not about having a presence on Facebook and YouTube. These are really savvy consumers, and they will look for evidence of your claims at every turn. They respect authenticity, which comes back to our earlier discussion around trust. I think connecting with Gen Y happens when you create great products and services. This generation is less accepting of the status quo and is more willing to ask “Why can’t it be the way I want it to be?” Look at the huge success of Apple with this market. Why on earth would I try to cobble together a Vista-based PC with a Blackberry and an iPod when I can buy everything from Apple and it works together seamlessly and elegantly? Financial Services marketers need to take that same approach to their products and find ways to make them “insanely great.”

What has playing in your band taught you about marketing?

Playing in a rock and roll band teaches teamwork, cooperation, compromise, and fun. It’s funny how certain simple songs will connect with an audience and get them to move closer to the stage and get into the music, while other songs that require greater musical skills send folks back to their tables. Advertising and Marketing are kind of the same way – the beautiful rich-media ad that wins awards but generates few sales gets trumped by a straightforward text link ad. So just like being in the band, you need to give the people what they want and be honest about who you are. Audiences and consumers know when you are faking it.

Who should we interview next?

Asheesh Advani, CEO of Virgin Money. He created Friend-and-family lending way before peer-to-peer became cool, and then got the attention of Richard Branson. He is a brilliant guy, and really knows his stuff.

About Bryan Stapp

Bryan Stapp is the Chief Marketer for his firm Loud Amplifier Marketing, providing marketing consulting to CEO’s and CMO’s in multiple industries. He is a frequent presenter at industry conferences on the subject of internet marketing, consumer relationships, and brand building. Prior to starting Loud Amplifier Marketing, Bryan spent six and one half years as the Chief Marketing Officer for Quicken Loans – the number one online mortgage lender in the United States. Read Bryan’s blog posts at www.loudamplifiermarketing.com.

One of the fiercest areas of competition within financial services is in high-yield savings products. Since together E*TRADE and ING DIRECT accounted for almost 50% of high yield savings applications started online during May and June 2008, we decided to compare the performance of campaigns from these industry leaders. Both E*TRADE and ING DIRECT produced effective and engaging campaigns (according to the IAB post-click through engagement varies from 5-85%) but in our example one landing page performed measurably better.

We did a head-to-head comparison of post-click through advertising results for E*TRADE’s Max-Rate Savings versus ING DIRECT’s Orange Savings Account using Compete’s Landing Page Effectiveness product. Below are examples of those landing pages from the week of May 12th.

First, we looked at Engagement, which is the percentage of visitors to the ING DIRECT and E*TRADE landing pages whose next click is on the bank’s domain. This metric, which is the inverse of Bounce Rate, provides a good understanding of which creatives and promotional messages were more compelling to consumers who came to these landing pages. While both landing pages have a high Engagement rate, E*TRADE clearly has a relative advantage over ING DIRECT on a percentage basis. The answer to E*TRADE’s higher rate of engagement here is most likely because there are more opportunities to interact with the landing page across multiple E*TRADE products.

Next, we looked at Application Start Rates, which is the percentage of visitors to each of the landing pages who started an online application (see below). Almost twice as many of the visitors to the E*TRADE landing page started an application. For ING DIRECT, matching E*TRADE’s comparable landing page post-click performance could have generated more than 21,000 incremental applications.

Certainly, E*TRADE’s higher interest rate offer drove many of the visitors to this campaign to start an application. But E*TRADE’s landing page also has a few tricks that ING DIRECT would be wise to at least consider testing on their own future campaigns:

• Different language on the action buttons: While both landing pages have clear and prominent calls to action, ING DIRECT should consider testing the wording of its “Open Now” button to see if different messaging would be more compelling to consumers.
• Comparison Messaging: ING DIRECT compares the yields on its account to Money Market Funds. E*TRADE compares its performance to a national average. ING could adopt comparison language that is more succinct and direct.
• Limit Consumer Options: E*TRADE only allows consumers one path from the main body of the ad, that is to “Start Saving Now.” ING Direct could eliminate its buttons allowing people to learn more or visit the homepage of the site.

Overall, both E*TRADE and ING DIRECT are doing a great job of building effective landing page experiences. However, with some minor changes, opportunities still exist to get even more return on their advertising dollar.