Weekly Term Accounts APY Spread and Premium Index-October 29

by tom 29. October 2012 16:04

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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APY | Banking Trends | National Pricing Indicator | Market Rates Insight

From BAI: Product Bundling Pays Off for Banks

by tom 24. October 2012 09:14

This week, Dan Geller, Market Rates Insight’s executive vice president and head of the research group, published an article on BAI Banking Strategies on how product bundles are creating new revenue streams for banks.

Dan Geller Ph.D.Product bundling is a successful and profitable concept in some industries, such as cable television. But can it be utilized in the banking industry? Our view is that it can, based on a recent conference presentation and our own analysis of nationwide data. 

In a session entitled “Generating New Revenue Opportunities” at the recent BAI Retail Delivery 2012, speaker David Crumpler, vice president and director of marketing for East Carolina Bank, a nearly $1 billion-asset bank based in Engelhard, N.C., described various product bundling initiatives at his institution, such as “My Security Bundle,” which combines checking accounts with identity theft alerts, credit score reports, and other cyber-protection services.

The attractiveness of bundling identity theft alerts and credit score reports with a checking account is supported by a recent national consumer study by Market Rates Insight showing that 82.5% of current customers desire identity theft alerts and 73.7% want credit score report services.

Since the services were introduced by the bank on March 1, bundled account sales at East Carolina have increased about 60% with very limited advertising. Clearly, the concept of bundled services worked well in this case by increasing fee income, adding new customers and enhancing the customer experience.

This example prompted us to look at data on a national level to determine if this success was an isolated phenomenon. Two research questions were used in the national analysis: 1) Are customers, who are likely to use one service, also likely to use other services as well? 2) Are customers, who are willing to pay for one service, likely to pay for other services as well? Data from our consumer study used for this analysis included responses from 1,500 banking customers.

We looked at relations among the seven services included in that study: credit score reporting, identity theft alerts, personalized couponing, prepaid reloadable cards, overdraft transfer services, person-to-person payments and mobile remote deposit capture. Correlation analysis was used to check the strength and significance of the relations among these services.

On the first question, likelihood of use, the average correlation coefficient was strong (.385) and very significant (.000), which indicates that banking customers who are likely to use one product are also likely to use other products as well. On the second question, willingness to pay, the average correlation coefficient was very strong (.635) and very significant (.000), which indicates that banking customers who are willing to pay for one product are likely to pay for other products as well. Our analysis, therefore, supports Mr. Crumpler’s view that product bundling is indeed a viable option for fee-revenue enhancement and customer retention and acquisition.

Mobile Deposits Give Credit Unions a Boost

by tom 23. October 2012 09:06

We recently posted a blog entry about how mobile banking is adding to the coffers of financial institutions in unexpected ways. Credit unions in particular seem to be benefitting from mobile remote deposit capture (RDC), where customers take a photo of a check and make the deposit using their smartphone. A recent article on American Banker states:

“While larger banks offered the service initially, credit unions and community banks are alsohome_MobileDeposit quickly adopting mobile RDC, a move that can boost overall use of electronic channels. While almost all financial institutions want to boost mobile and web banking, it's vital for smaller institutions to do so to reduce service costs and accommodate the lack of a geographic footprint.”

Mobile RDC is one of those areas that we identified in our recent Lifestyle Financial Services study that consumers not only want but are willing to pay for. Our research shows that about 63% of consumers want RDC, and nearly 67% of credit union members are willing to pay for mobile RDC. According to market reports, once credit unions embrace RDC, other benefits will follow.

The American Banker article notes that RDC draws attention to other mobile banking services. It also highlights other service benefits, such as support for a geographically diversified member base:

"We have a large portion of our members from the University of Texas …mobile RDC helps parents make deposits for their children more easily," says Corina Watts, a senior manager for University Federal Credit Union, an 132,000-member Austin-based credit union that has about $1 billion in assets and lists 17 branches on its website, mostly located in southern Texas.

RDC also is an inexpensive technology to deploy, but it can deliver big returns. There are service organizations that make it easier for smaller financial institutions to offer mobile RDC. Using a software-as-a-service (SaaS) approach, credit unions can offer RDC on a pay-as-you-go basis, either per transaction or on a subscription basis, and the value to members and the light RDC sheds on other credit union services will more than make up for any vendor service fees.

Weekly Term Accounts APY Spread and Premium Index-October 22

by tom 22. October 2012 17:49

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation.  It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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National Pricing Indicator | Fees | CD Balances

Mobile Banking Can Add Revenue In Multiple Ways

by tom 18. October 2012 11:45

There’s real revenue in mobile banking beyond simple convenience and transaction fees. Our most recent survey of Lifestyle Financial Services revealed that almost 65% of consumers are willing to pay for monthly access to mobile deposit services, but that’s only the tip of the iceberg. There are many sources of additional revenue being driven by mobile banking.

I saw a blog post earlier this week in which Jim Marous reported on a mobile banking session at last week’s BAI Retail Delivery Conference. According to presenter Matt Wilcox, senior vice president of eBusiness strategy for Zions Bancorporation, they have found that mobile channel engagement increases customer value. Customers want to have multiple channels to access banking services beyond deposit, and the more channels you can offer, the deeper the engagement.

According to Wilcox, annual profit per customer was substantially higher, and customer attrition substantially lower, since Zion’s provides both mobile and online banking services (see the figure). Customers with both mobile and online banking generate 30% more revenue, and demonstrate a 60% lower attrition rate.

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Quoting Wilcox, "I believe services such as expedited payments take a proven model and revenue stream and make it more convenient on the mobile banking app. In addition, many of the other revenue streams place a value on customer convenience and integrate products that the customer already purchases through other channels such as gift cards, insurance, etc. I think we have only scratched the surface here."

Preliminary estimates are that an additional $100 per customer can be added to bank revenue through enhanced mobile banking services. Here’s the estimated breakdown:

      • Bill Pay: $20
      • Online Account Opening: $15
      • Merchant-Funder Rewards/Offers: $15
      • Enhanced P2P: $6
      • Credit Scoring: $8
      • Gift Card Issuance: $12
      • Insurance quotes/Referral Revenue: $15
      • Cross-Selling: $7

Mobile banking is just one new revenue channel that most banks and credit unions are just now starting to mine to its full potential. There are countless other services that today’s consumers demand and are willing to pay for in various ways, and they will look to their bank to provide many of these services. It’s up to the banks and credit unions to recognize what consumers really want from their banking experience, and then identifying new ways to capitalize on those services and build customer loyalty at the same time.

Weekly Term Accounts APY Spread and Premium Index-October 15

by tom 16. October 2012 08:58

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation.  It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index  
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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Weekly Term Accounts APY Spread and Premium Index-October 8

by tom 8. October 2012 19:54

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.  

APY Spread Index
The APY spread is a simplified form of a standard deviation.  It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index  
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

image

Weekly Term Accounts APY Spread and Premium Index-October 1

by tom 1. October 2012 21:58

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

image

Weekly Term Accounts APY Spread and Premium Index-September 24

by tom 24. September 2012 21:34

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

image

Tags: , , ,

APY | Banking Trends | Blog | National Pricing Indicator | CD Balances

Weekly Term Accounts APY Spread and Premium Index-September 10

by tom 12. September 2012 11:06

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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