Posts by Asaf Buchner (bio)

Asaf Buchner | August 18, 2006, 05:51 PM
Giving Up Broadband is Too Hard

To get even with my broadband provider increasing the monthly fees to $45, I switched back to dial-up at a mere $7 a month. I thought dial-up would not be so bad. Besides, I relied on my neighbors’ benevolence to supply me with cheap (free) and fast WiFi connection. However, as mooching is proving unreliable (and is probably posing me some security risks), I find myself dialing often to my ISP. And to my “astonishment” dialup is really slow… I don’t think I can bear it much longer. I don’t know if we ever asked consumers whether they switched back to dialup but I expect that the numbers will be very low.

Asaf Buchner | August 14, 2006, 12:11 PM
Opening a New Bank Account Online Is No Picnic…

I needed to open a few new bank accounts for research purposes and figured that it would be a good opportunity to test online account opening. Our survey found that while the vast majority of online consumers prefer applying for a new account at the branch, there is a segment that would rather apply online. I tried opening new accounts at five major banks (B of A, Chase, Wachovia, WaMu and Wells Fargo). I discovered that banks still need to work on their online application processes. All five banks allow new customers to open an account online. In fact, Wachovia and WaMu promote the product in the main banner on their homepages. However, opening the account was not so easy. The process was rather smooth with Chase and Wells Fargo. Wachovia asked me to come to a branch and B of A needed to evaluate my application for a few days. WaMu has a great application; it’s lean and straightforward. WaMu rightly claims that it takes less than seven minutes to complete the process. However, WaMu’s application crashed three times before I was able to complete it, so I can’t say it was a great experience.

I’ll write more about it in my upcoming research, so stay tuned.

Asaf Buchner | August 09, 2006, 11:32 AM
Branch Strategy Re-visited

The NYT has an interesting article today about banks’ branch strategy. The article concludes that branch growth will slow down, or not. While the focus of my coverage is online, I am fascinated by the future role of the branch. A recent JupiterResearch consumer survey asked online consumers to identify their channel of choice for different banking activities. It is not surprising that for the opening of new accounts and the acquisition of new products (excluding credit cards), the branch is still the preferred channel. The online channel, however, is the preferred one for conducting market research. Banks should therefore align their channel strategy with the consumer preferences. For example, they should allow consumers to research online, identify an offering that appeals to them and then apply for the very same product at the branch. I will write about this topic later this year but if you are a client and would like more granular data, feel free to contact me.

Asaf Buchner | June 29, 2006, 09:47 AM
Citicard Bets on Google Checkout

With credit card customers holding multiple cards in their wallet, issuers struggle to make their card the “chosen one.” A current Citicard promotion gives their credit card holders a $5-10 monetary incentive (depending on the card) when they register their Citi credit card with Google Checkout and make a first purchase. Their hope is that if (or once) Google Checkout is successful, consumers will continue to use their default payment option, which will be a Citi credit card.

Hypothetically, Citi could have run this promotion without Google’s consent or co-operation. However, since this is not the case, there must be something in it for Google. Citi will probably advertise the service to the card members, increasing awareness and sign-up numbers. In addition, I suspect Citicard gave Google better a deal on the interchange fees...

Asaf Buchner | June 28, 2006, 01:07 PM
Marketing Financial Services in the Secure Section of the Site

In a recent report [clients], I stressed the growing importance of the online channel as a tool for marketing additional products and services. In that respect, the secure section of the site is still underutilized. This is in part because the online marketing group does not manage the secure site (silos) and in part because marketers are still seeking the best way to approach their task-oriented secure visitors. I looked at what some financial institutions are doing:

Citibank (online banking). As customers log into their account they receive a screen promoting paper statement suppression, unless they have already opted-in for the service. There are banners within the secure site and the signing-off confirmation page is also used for the promotion of products/services.

Chase (credit cards). After logging in, a screen comes up with an offer. Customers need to tick a box in order not to see the same advertisement again. I was shown an ad for balance transfer and in a later session one for paper statement suppression (although I already opted-in). There are links and banners in the secure site.

Amex (credit cards). The secure section shows featured offers below the account information (almost like an insert). There are links on the right side of the page for additional services (alerts, statement suppression).

Asaf Buchner | June 09, 2006, 03:57 PM
Alitalia’s New Online Reservation System Mixes English and Italian

Alitalia re-did its website recently, adding some features to the online reservation interface and improving the look and feel of the site. Overall, I like the new site and the added features, which include a “flexible dates” search option. However, the English version of the site throws a word or two in Italian in each screen, which is pretty amusing (if not sad). One (old) feature that I really like is the ability to hold a reservation for 24 hours without buying the ticket. However, this feature is only available for members of their frequent flyer club.

Asaf Buchner | June 08, 2006, 02:12 PM
Driving Consumers to Low Cost Payment Processing

It’s interesting to observe how both Amazon and PayPal attempt to lower costs by driving consumers to a cheaper payment-processing alternative.

I have an Amazon Visa credit card. Every time I shop at Amazon, the first payment choice is that Amazon card on which Amazon pays low (if any) inter-change fees. When I choose another card, at the checkout page Amazon still tries to convert me to Visa Amazon by touting their accelerated rewards program. While I usually resist (I prefer not to receive a bill for that particular card), it is a tempting proposition.

PayPal tries to push the bank transfer alternative by defining it as the default option. If I change it to pay with a credit card, they show me a screen listing the benefits of paying through a bank transfer. PayPal has been doing it for a while now, so it must be working on some consumers. However, I find none of their arguments particularly appealing and I personally choose to pay with a credit card for the rewards and the no-interest credit.

PayPal: No finance charges or bills to pay
The "no-bill" argument is somewhat appealing (Jupiter clients should check out Ed’s report: The Move to Debit from Credit). However, I suspect most consumers already receive a credit card bill and do not pay finance charges. Besides, consumers can still pay with a debit card.

PayPal: You are 100% protected against unauthorized payments sent through your PayPal account
Great, but credit cards offer similar and sometimes better protection than PayPal.

PayPal: We keep your bank account details private
Good to know, but this is a re-assurance rather than an incentive to use a bank transfer.

Asaf Buchner | June 06, 2006, 06:26 PM
What's New in Financial Services Marketing?

I went to an Advertising Club luncheon today carrying that title. It was interesting, but not shocking. For one, there was more focus on the online channel compared to last year’s event. Some interesting comments included:

Laurine Garrit (TD Ameritrade’s CMO) spoke about marketing brokerage services when stocks are falling. In these times investors are insecure and scared and the messaging should focus on the advice that the brokerage can give them to sort out their investments.

Giunero Floro (Ameriprise’s Head of Advertising, Branding and Media) talked about the hot topic of marketing financial planning to baby boomers, a generation that is not very trustful and does not have time to learn about their finances. Ameriprise responds by being personal, focusing on the positive, and developing relationships for the long run.

Nick Utton (E-trade’s CMO) spoke about the importance of holistic measurement and the lack of mechanisms to account for the offline effect on online applicants (and vice versa). This is an area that I will be looking into later this year.

Asaf Buchner | June 01, 2006, 11:33 AM
Web-to-Bank

I was discussing with Haim Oren, our partner in Israel, my upcoming research, when he came up with the term “Web-to-Bank”. Similar to “Web-to-Store” it describes online research activity that leads to an application at the branch.

On a related note, we are working on the Financial Services and Payments consumer survey. I encourage clients that would like to see a draft of the survey or contribute to contact us.

Asaf Buchner | May 31, 2006, 12:46 PM
My Bank Doesn’t Get It?

American Banker [subscription] covers an interesting initiative by HomeStreet Bank. The Seattle thrift created a new website, where horror banking stories can be shared. HomeStreet advertised the site offline, but only exposed its affiliation to the initiative 2 weeks into the campaign. It’s not clear yet if the campaign is successful (the site got 7,000 hits so far) but it’s quite telling to read the stories, assuming that they are genuine. I went over 20 of the 72 stories currently posted on the site. It is not a surprise that half of the complaints are around fees. While everybody hates paying fee, I believe that creating a clear and easy-to-understand fee structure can address some of the consumer resentment. Other complaints revolve around the quality of service or lack of flexibility.

Asaf Buchner | May 24, 2006, 10:14 AM
Contact-less Cards and No Signature Payments

I had a few instances recently where I paid with an American Express credit card and was not required to sign the receipt (my card was just swiped). Other payment networks have similar programs that allow merchants to forgo the signature for purchases below $25. Security aside, it is pretty cool and does save a few seconds of annoying wait. However, it still feels strange and confusing, especially since not all merchants adopted this feature, so I never know what to expect.

On a related note, one of the selling points for contact-less credit cards is that they save time. My colleague who built our contact-less payment forecast [clients] often raises the issue of where the timesaving really comes from. Namely, given that many contact-less purchases will be below $25 and will therefore not require a signature, is there a significant incremental timesaving from the contact-less element?

Asaf Buchner | May 23, 2006, 10:54 AM
Veterans Affairs Loses Personal Records of 26.5M Americans

Talking about online banking security… Maybe it’s better to take a closer look at what is happening offline… The WSJ has an article today [subscription] about the theft of a laptop computer and an external drive containing the personal records of 26.5 million US veterans. This, of course, is yet another episode in a saga of very similar events. And yet, the number is overwhelming. If this information reaches the wrong hands, it can lead to an identity theft disaster. So far, there is no evidence that the computer was stolen for that purpose, but in the criminal circles where this type of information is traded, a database like that is probably worth millions of Dollars. The frustrating aspect in these events is that the consumers are helpless … there is nothing really they can do to prevent it from happening. They can, however, try to minimize the damage after the discovery of the event. The government has set up a website and a help-line (800-333-4636) to support concerned consumers.

Asaf Buchner | May 22, 2006, 10:19 AM
Online Deposit Accounts

With short interest rates at their highest levels since 2001, consumers, banks and the press pay more attention to the yields offered on savings accounts, in particular on new online only accounts. The NYT covered it two weeks ago [TimeSelect] and the Washington Post discussed it yesterday. I wanted to draw our clients’ attention to a report that I published about the topic a few weeks ago. One of the questions that I was trying to answer was whether banks use high rates as a bait to attract new customers. It is probably the case for those institutions offering high-interest accounts. In fact, at the Post’s article Citi’s Catherine Palmieri speaks about cross-selling home-equity loans to these customers. However, I spoke to two top-ten US banks who are not offering high rates or special Internet only acconts. Their approach was that with the current narrow spreads they could not compete on rates. Rather, they compete on their comprehensive offering including their extensive branch network. It will be interesting to see if they would give up this approach. Especially now, that Citi is in the game.

Asaf Buchner | May 11, 2006, 10:49 AM
Mortgage Profit Margins Exposed?

The WSJ has an article today about collaboration between Amerisave and a mortgage education site run by a former finance professor [subscription required]. According to the journal, the “Mortgage Professor” will expose the lender’s profit margins so that consumers can be sure that they are not being “ripped-off”. Not surprisingly, this is a very appealing proposition for consumers [clients should refer to Jupiter’s Mortgage Purchase Funnel report]. However, I am a little bit skeptical.

In an Amerisave micro-site the professor laments about the lack of transparency in the mortgage industry – consumers don’t know how much money the lender is making. However, as the site correctly points out, consumers are also in the dark as to the wholesale prices of automobiles. The Internet definitely created price transparency, but I am not sure lenders (or car dealers) will be quick to share their costs as well.

In addition, the journal reports that the parties did not agree on the compensation the professor will receive for each referral. I’m not doubting this guy’s integrity, but I feel that receiving compensation for referring leads makes this deal more of a lead generation agreement than a service for the consumer. In the name of transparency, I hope these fees will be displayed as well…

Asaf Buchner | May 09, 2006, 03:36 PM
Yossi Vardi Speaking in New York

Yesterday night I went to hear Yossi Vardi speak at an Israeli Business Forum event. For those unfamiliar with the name, Mr. Vardi acquired a reputation of an Internet expert (in Israel and beyond) after in 1998 he led the $400 million sale of Mirabilis (“ICQ”) to AOL. His experiences obviously extend far beyond that. It was interesting to get his perspective on the state of the Internet and how Israel’s culture fits in.

Yossi spoke about the four phases in the Internet’s evolution, from being a university network, to expanding to public use, through a “nuclear winter” to the current revival. Obviously there was a lot going on during that “winter” only that the financial markets were closed. To his approach, the Internet’s structure (scattered and de-centralized) is a perfect fit with the Israeli culture, explaining the abundance of Israeli success stories (ICQ, Checkpoint, or even Cyota and LivePerson, to name a few).

Vardi paralleled the behavior of the Nasdaq in the late 1990s/early 2000s to that of the Dow Jones in the late 1920s/early 1930s. For those fond of predictions, Vardi thinks we are currently 40% on the way to the peak. Jupiter makes forecasts, for instance, about the US online population [Subscribers]. However, we do not forecast the performance of the financial markets, so I won’t comment.

Asaf Buchner | April 28, 2006, 10:44 AM
Tidbits from Net.Finance 2006

The conference concluded two weeks ago, but it took my some time to jot down some impressions.

Internet is Hot, but Getting FS to Dedicate Marketing Dollars Online is Still Challenging. As was the case last year, the conference was very well attended. In fact, according to the organizers, attendance was up 50%! The online channel is happening and banks are getting it, almost. In many cases online marketers still need to fight for budgets. Overall, however, our ad category forecast projects that online advertising of financial services will double in the next 5 years.

The Online Channel Plays a Significant Role. Yet another proof of the significance of the channel is a statistic provided by Wells Fargo. Last year, Wells Fargo processed 65-70 million transactions online – the Internet is the single largest channel at Wells.

Migration is Out Sales are In. Nobody speaks of migration anymore. Rather the focus is on selling financial products to existing and new customers. In fact, many of the vendors this year offer solutions in that space. Be it account opening/funding (eFunds), Chat (LivePerson, Proficient), Click-to-Call (eStara), or calculators (LeadFusion). And I’m sure I missed many others.

Asaf Buchner | April 07, 2006, 02:47 PM
Meet Me at Net.Finance, Phoenix, AZ 4/10-12

I’ll be speaking at a panel discussion dubbed “Social Computing“ on the second day of Net.Finance, 4/12/2006. I’m pretty excited about the conference and this panel. Last year it was not only very informative but also a great opportunity to meet people that I’ve spoken to over the phone throughout the year. The panel I’m speaking at covers a wide variety of issues, from blogs and RSS feeds to chat and click-to-call solutions. I’m sure the Net.Finance audience will make it an interesting discussion.

I’ll be around the entire conference, so please let me know if you would like to meet.

Asaf Buchner | March 23, 2006, 11:49 AM
Banks Beware: ING Direct Expands to [Check-less] Checking

American Banker [Subscription] brings today a Dow Jones interview with Hans Verkoren, the chief executive officer of ING’s global online operation. Verkoren says that they are testing a check-less checking account for the US market. It’s fascinating to watch how ING Direct quickly expanded from Savings accounts to Mortgages, to Investment accounts. Their motivation to add checking capabilities to their leading rates, is probably to attract more deposits. I am about to publish a report about the marketing of deposits. I found that while interest rates top consumers’ wish list when choosing a place to park their liquid funds, a third of online consumers prefer to deposit their money in an institution where they already have an account. This new addition might therefore help ING Direct attract more deposits. The “check-less element” is a huge drawback limiting the appeal of this account to consumers, but it might be a step towards becoming a full-service bank.

Asaf Buchner | March 21, 2006, 09:01 AM
Google Finance: Small Step for Google, Smaller Step for Mankind

Yesterday, when I googled JUPM (Jupitermedia’s ticker symbol) the first result was Yahoo Finance. This morning, Google’s new addition, Google Finance came first, while Yahoo Finance appeared second at the same line. This, to me, is a large part of the story. Annoyed by delivering traffic to a competitor, Google decided to try and keep these consumers on a Google property.

From a consumer perspective, however, it’s not an earth-shattering event. True, Google Finance has a slicker interface. For one, searching a stock is easier than it is with Yahoo as you are not required to specify whether it’s a company name or a stock ticker that you are entering. In addition, you can drag the stock’s graph thereby changing the time-period that you are looking at. However, Google’s offering is currently limited to stock research, whereas Yahoo’s offering is much more extensive and includes rich financial education and advice. In addition, Yahoo offers some original content, which Google doesn’t.

In summary, it will be interesting to see how this service evolves. For now, it’s just another place where consumers can research stocks.

Asaf Buchner | March 08, 2006, 09:48 AM
NY Tech Meetup Growth Proves the Second Coming [of the Internet]

Yesterday I attended another NY Tech Meetup gathering. For those unfamiliar with the group, it provides a platform for NY-based Internet/technology geeks to meet and exchange ideas. In each meeting ~5 entrepreneurs get the stage for 10 minutes to present their venture and field questions. The format of quick and to-the-point presentations followed by a short Q&A session, guarantees an interesting and dynamic evening. What impresses me is how these meetings, which started about just a year ago, grew from 4 to over 150 participants (and the group size to +850 registered members). This, to me, is yet another proof of the second coming.

Asaf Buchner | March 02, 2006, 09:20 PM
[Why] Reports of Bank Branches Demise Have Been Much Exaggerated

A recent briefing with MapInfo, which helps banks decide where to place branches, made me re-think the role of physical branches. For a few years now, nobody talks about the online channel as replacing banks’ physical presence. If anything, US banks have been adding branches. With online banking penetration on the rise, one wonders why. The main reason is that the network of branches and ATMs still plays a crucial role in consumers’ decision where to open an account. In fact, the most popular online banking activities are viewing statements and paying bills. These activities were previously performed by mail and therefore the online channel did not dramatically reduce the workload of the branches. There is also a significant credit card application activity online, but again, it replaces the mail channel more than the branch. In more complex products, such as mortgages, most consumers still prefer the human advice offered at the branch, with only a small percentage applying online. The reduction of workload is therefore still not enough to have a real impact on the design of the branches or their staffing needs. I do expect banks to eventually reduce the number of employees at the branch, but this process will take longer. The branches (and their employees) are here to stay, for now.

Asaf Buchner | February 16, 2006, 10:55 AM
Adventures in P2P lending

It’s probably too early, but I can’t help making first observations on my experiences at Prosper.

Generally

Listings: Following a notable press coverage (@ The NYT, Businessweek, and CNBC), the number of open loan listings has grown from ~20 on Sunday night, to ~80 on Monday, ~110 on Tuesday and ~140 yesterday night (Wednesday). The percentage of listings from borrowers who do not belong to any group has grown to surpass 50%. However, it’s not surprising as these are probably borrowers who learned about the site through the press. The effect of group-initiated marketing [or lack thereof] is yet to be seen.

Money available for immediate funding: These funds are decreasing, indicating that in the American consumption-focused society it might be easier for Prosper to sign up borrowers than it is to recruit lenders. However, as it takes 4 business days [too long!] to transfer money Prosper might have more funds in the pipeline. Edit: It's really too early to tell, as now (Thursday night) the funding available is up.

Experiences as a Lender

Risking my own money: I ventured $1,000 and used the “standing order” feature as an autopilot to define how to lend the money. I limited the funds allocated to each loan to no more than $100. So far, $200 was lent, and the balance is already bidding for 8 different loans.

Reinvestment challenge: The loans are fully amortizing and are repaid over 36 months. If all of my funds are lent at once, I will receive around ~$30-35 every month for the next 3 years. I’m not sure how I will deal with this strange stream of cash flows. In addition, the money is not all lent at once which makes it even more awkward. I wonder why they didn’t limit the dates / times in which “auctions” close, at least now when there aren’t many loans.

Community: I received a message from one atlanta1129 asking me to bid on his loan listing [=to lend him money]. It did feel a bit strange. Anyway, I had to pass as I am out of funds right now. Nothing personal, mate!

P.S. – As Zopa did not launch in the US yet, I cannot try it out. However, I do enjoy reading Dave Nicholson’s blog.

Asaf Buchner | February 13, 2006, 08:37 AM
P2P Lending Evolution: Prosper.com Launches

The launch of Prosper (formerly CircleOne) last week is an interesting development in the nascent P2P lending space. Prosper creates an e-bay-like loan marketplace, where borrowers post listings for loans of up to $25,000, and lenders bid on the interest rate for which they will fund these loans. It’s interesting to compare Prosper with Zopa, a similar UK site, especially since Zopa is expected launch in the US in Q2/2006. These are my initial observations:

Risk-grade and Diversification: Zopa takes a more protective approach with respect to lenders by only accepting borrowers with high credit quality and by forcing lenders to diversify their loans across at least 50 borrowers (Correction: this is the default setting, lenders can override that setting and lend as much or as little as they want to individual borrowers). Prosper’s approach is more of an open market. Prosper allows anyone to request a loan letting the market fix the rate. In addition, lenders can diversify, but are not forced to do so. With respect to the risk-grade, I find the Prosper model more appealing because I suspect there are interesting opportunities with high-risk borrowing market, which seems more inefficient. Prosper should, however, consider forcing some diversification to avoid horror stories of lenders losing significant sums of money.

Groups: Prosper created the concept of groups of borrowers, which can be based on affiliation to an institution, shared interest, or mere social ties. It is important to note that group members are each responsible to his/her loans and there is no mutual liability of any sort. These groups are created and moderated by community members, which become the group leaders. This concept is interesting for different reasons, including the effect of the group reputation on rates and confidence in the borrowers. However, I particularly like it because there is a built-in incentive mechanism, which rewards group leaders for each loan originated and each loan re-payment made by their group members. It can work as a powerful marketing tool: if Prosper is able to recruit highly connected and motivated individuals as group leaders, the task of signing up borrowers will be much easier. Zopa does not have a similar feature.

Overall, it will be interesting to watch this market evolve. I would be interested to receive your comments at abuchner, an at sign, jupiterkagan, a dot, com.

Asaf Buchner | February 09, 2006, 01:04 AM
Zillow.com as an Advertising Opportunity for Mortgage Originators

A bit past the peak of the housing boom, there seems to be some commotion around real-estate websites. Walt Mossberg covered yesterday at the WSJ [subscribers] Zillow.com, which allows consumers to check prices of real estate properties in a zip code of their choice. My Financial Services focus must have really narrowed my view of the world, as I couldn’t help thinking how my clients, some of which are mortgage originators could benefit from advertising at a site like that. My recent mortgage report [clients] found that one in six online consumers researched a mortgage online. A site like Zillow can be a great way to reach consumers in the market for a mortgage, possibly targeting them with an offer for pre-approval, potentially, tailored to the property they are looking at.