Fear holding back online shopping

A lack of consumer confidence is preventing online retailing from reaching its full potential, according to a watchdog's report.

Almost a third of internet users are not shopping online because they do not trust the system, the report by the Office of Fair Trading (OFT) claimed.

Personal security was high on the list of concerns.

Meanwhile, a banking analyst has claimed that internet-only savings accounts are offering better returns.

David Black, of banking consultancy Defaqto, said that average interest rates for a £1,000 deposit in an instant access savings account would be 0.49% with a branch-based account, but 1.48% with a internet-only account.

Online sales

The OFT said that one in five internet users who chose not to shop online failed to do so because they were worried about personal security.

Savers need to be aware that just because an account is internet only does not automatically mean that it is a good deal  David Black, Defaqto Payment fraud: Your rights

Some 15% of those who turned down the chance of internet shopping said they did not trust the retailers.

"Online retailing is the future for many businesses and increasingly important to the economy," said OFT chief executive John Fingleton.

"If consumers are not confident online, demand will grow at a slower rate. So we must tackle these concerns right now if the online market is to grow at its full potential."

However, the figures show that consumer confidence is growing compared with three years ago.

Among the people who do shop online, 54% felt it was as safe as shopping in store, compared with 26% in 2006.

"UK consumers buy almost twice as much over the internet compared to their European neighbours," said Consumer Minister Gareth Thomas.

"It is encouraging that the OFT's survey shows increasing consumer confidence when buying online - but people still have concerns."

Banking changes

Mr Black, principal consultant for banking at Defaqto, said that similar fears over security - as well as a lack of internet access - meant people were missing out on better returns.

Returns on savings have been cut dramatically as account providers have mirrored falls in the Bank rate.

Mr Black said that introductory offers being offered on accounts meant savers could get a better deal by switching accounts.

"However savers need to be aware that just because an account is internet only does not automatically mean that it is a good deal. There are examples of internet only accounts that are paying as little as 0.10%," he said.

Sunmark promotes online banking as ‘green’ on Earth Day

Sunmark Federal Credit Union picked Earth Day to introduce an initiative to encourage its members to be more energy efficient in their financial transactions.

The Latham, N.Y.-based credit union will promote online banking by educating members about how easy it is to use and about the cost savings it provides Sunmark. It also will offer members free reusable grocery tote bags, made of recycled material, for enrolling in e-statements or online banking.

“This online process saves money for the credit union, improves the use of our resources and offers convenient service to the members,” said Susan Siegel, vice president of marketing and operations for Sunmark .

The new initiative joins Sunmark’s Members Helping Members program. That program, launched in the fall of 2008, created a network between Sunmark’s members and area businesses to foster cooperation in dealing with economic and energy issues. The credit union serves people who live and/or work in Albany, Schenectady, Montgomery, Saratoga, Schoharie and Rensselaer counties.

Citizens Financial Group, a Providence, R.I.-based institution with New York state headquarters in Albany, introduced its electronic banking promotion, called Green$ense, in October. Green$ense rewards customers 10 cents for each electronic payment they make, up to $10 per month and $120 per year. Over the past six months, customers of Citizens Bankand Charter One, the company’s banking subsidiaries, reaped nearly $2 million under the program.

Citizens now has announced that new customers who enroll by May 15 will receive double the award, or 20 cents a transaction up to $240 a year.

Based on current enrollment, the company expects Green$ense to result in a savings of more than 220,000 pounds of paper, and one million gallons of waste water, in 2009. More than 6,300 garbage bags will not be filled.

“The benefits of this program show how small, everyday activities such as reducing paper-based transactions can have a tremendous impact on the environment,” said Theresa McLaughlin, Citizens’ chief marketing officer.

Online banking continues to gain popularity despite recession

Banking and credit card satisfaction have proven to withstand the current recession. The number of online banking customers is on the rise despite the troubling economic environment, according to an annual review of the online banking industry released Tuesday by comScore Inc. 

The past few years have shown a strong growth in the use of online banking at the top 10 banks, including Wachovia Corp., Bank of America Corp., and Wells Fargo and Co. After a short slowdown during the second half of 2007, there was an 8.6 percent increase in online banking customers at these banks in 2008. 

Last year, banks began spending a lot of time and energy on customer acquisition strategies, in order to boost clientele and revenue. Banking customers were looking for financial incentives, as well as financial guidance, from banks during the economic downturn.

Online banking became the major platform for many banks, said Sarah Radwanich, senior analyst at Chicago-based comScore, Inc. Banks were offering high interest rates, gas points, and large cash incentives for each new checking customer. They also began offering services such as online personal financial management tools as incentives for people to open online accounts. 

There was a 4.8 percent hike in online banking customers just during the third quarter of 2008, compared to a 1.8 percent increase during the first quarter the same year.

Harris Bank in Chicago has recently seen a considerable rise in online banking and online bill pay usage at its 281 Illinois branches, according to Chris Nardella, spokeswoman for Harris. So far this year, there has been a significant jump in the bank's online channel usage. The number of loan and deposit accounts opened online has gone up by more than 150 percent.

The proactive outreach provided by banks, such as online chat sessions for customers, brought a sense of reliability to their services, leaving customers more satisfied with the institutions, despite any personal financial trouble. In a comScore survey of 5,000 U.S. online banking customers, the number of people responding they were highly satisfied with their banks dropped only one percent between 2008 and 2009, and the number of those highly satisfied with their credit card issuers only decreased three percent during the same period.

"That customers are asking for more services to help them manage their personal finances during these economically-challenging times is a positive sign for banks," said comScore Senior Director Marc Trudeau in a Tuesday press release. "It's clear that most customers are paying close attention to their personal finances..."

Convenience has also played a major role in expanding the trend in online banking, said Carol Kaplan of the American Bankers Association. People choose when and from where to manage their finances, and they can keep a closer watch on their accounts with anytime online access. These services are also most often free, which can save bank customers money and a trip to the ATM, offering more attractive incentives.

About a year ago, Bank of America introduced its mobile banking service, offering customers free access to their personal accounts from their cell phones. Since its launch the service has attracted 2.3 million users. The service allows them to transfer funds, pay bills and check account balances, all from a mobile device.

"The fact is that it's all about convenience and accessibility," said Tara Burke, spokeswoman for Bank of America. "People want to be connected."

Many customers said they couldn't resist the easy access and finally caught on to the online trend.

"It's easier and more convenient," said twenty-year-old Adam Abusaleh who started using his bank's online services only a year ago. "I can also keep track of my finances a lot better now that I do it online."

Forty-five-year-old Cindy Kitzman also said convenience is what got her into online banking a year ago. "I use it for paying last minute bills, checking balances," she said. "It’s easy. I can get to it right from my desk at work."

Security, however, still remains a concern for people using online banking services.

Many customers continue to bank online despite security fears, but security management tools are high on the list of desired online services for many of these users. According to comScore's survey of about 5,000 U.S. online banking customers, 63 percent expressed interest in free identity-theft services, and 52 percent favored free credit score monitoring. So although many were concerned about security issues, only a small percentage of those surveyed indicated they were willing to pay for these services, demonstrating customers' focus on financial incentives.

Once banks have attracted customers with online incentives, the next challenge is keeping them. As the number of new customers is beginning to increase at a slower rate, banks must shift their focus to customer retention in order to see the long-term benefits of the significant increase in online banking.

Test your online banking page to make sure it’s secure

Online banking is an extremely popular way to access your bank account. You can pay bills, make transfers, check your balance, apply for a credit card and much more. Plus, you can do it 24 hours a day, 7 days a week, whenever you want! However, it pays to be aware that your online account is safe. 

A study by the Identity Theft Resource Center (ITRC) reported that electronic security breaches(82.3%) still prevail over paper breaches (17.7%). At the end of last year about 35 million data records were exposed in 656 reported security breaches. It is 47% increase compared to the 446 data loss calamities reported in 2007. 

Keep in mind that nearly 40% of all security breaches go unreported because no company wants to lose customers, so the real number of exposed records is likely to be higher than these figures.

Massive increase in cyber fraud makes people worry about the protection of their sensitive information - name, address, date of birth or financial account information. Security breaches put individuals at risk of losing theirmoney. There are several ways to check that your online banking account is safe:

1.    The bank's website must use SSL (Secure Sockets Layer) encryption technology. Nowadays banking servers require the browsers to connect at 128-bit encryption (versus the less-secure 40-bit encryption). According to ITRC reports, only 2.4% of all websites that were cracked had encryption or other serious protection methods in use.
SSL encryption prevents fraudsters from tapping into the exchange of information between the user's computer and the bank's server. All data transmitted become unreadable for third parties. 

It works this way. When using online banking, your browser will establish a secure session with the bank’s server using a SSL encryption. This protocol requires the exchange of what are called public and private keys to decrypt messages received. So you can be sure that no one who may be able to spy on the data transmission will understand the SSL encryption. 

The SSL protocol also ensures that no other company can "impersonate" your bank's website. It will identify itself to all visitors with the help of digital certificates. It means that you can check that you have connected to the server you wanted to reach.

To learn whether your browser is in secure mode, look for the small, yellow closed padlock icon at the bottom of your browser window. You can also notice https:// at the top of your screen where the URL is displayed. The “s” after “http” indicates that web site is secure. Often, you will see the additional “s” when you actually move to your online banking page.

2.    The bank should use multifactor authentication. It requires more than just one independent piece of information to verify your identity and ensure that only you have access to your account. So besides a username andpassword, the user would need some other means to prove his or her identity. 

Each bank uses its own multifactor authentication strategy. For example, it can be one time "tokens" (codes) used for high-risk transactions involving access to customer information or the movement of funds to other parties:money transfers, issuing of a new password, changing the spending limit, giving instructions regarding deposits, etc. Each user should be equipped with a special device that generates codes or they can receive them via SMS. 

Other banks can require you to enter the answer to a secret personal question, select two letters of your memorable word from the drop-down lists or you can be sent to a page with a picture and a phrase underneath it that you have created.

If you (or somebody else) make several incorrect attempts to log in using multifactor authentication, the bank must disable your access. It is necessary to stop fraudsters who are repeatedly trying to break into your online account. 

3.    The bank should insist on long and complex passwords: at least six characters, allowing combinations of numerals and letters, including capitalized ones. Using computers, fraudsters can process a large amount of data in a very short period of time - about 1 billion guesses a second. So it can take just 10 seconds to guess 5-character password! On the contrary, 10-character password will require 3,000 years to guess. That’s why you need to have a long password for your online account. 

It also makes sense to use complex passwords containing upper case and lower case, numbers, dashes, symbols, international characters. It adds dozens of possible combinations for each character, so a hacker will need much more time to guess your password.

4.    Account holders should not use their computer keyboard to type in passwords. It is a well known fact that many fraudsters use keystroke-monitoring software on public computers. It records the URL of online banking accounts, login names and passwords. All keystrokes entered on the computer will be immediately sent to the fraudster.

That’s why banks should provide their customers with a drop-down menu or a “virtual keyboard” - a tiny on-screen graphic that looks like a keyboard. You can just select the check box “Use virtual keyboard” and use your mouse to enter the data. It will reduce the risk of password theft.

5.    The bank’s website should not re-direct its users to other sites or domains because they might be less secure. The easiest way to steal money from an online bank account is not to target the bank itself but to break into the website of a subcontractor hired by financial institution to process bill payments and transactions. 

In many cases, banks allow such companies to run its entire network. However, if a financial institution spends thousands of dollars on protection of sensitive personal information, a small third-party company may not have enough funds to install the same innovative software. Subcontractor security breaches affect hundreds of companies each year.

6.    A bank should log you out if you haven't used the online banking service for 10 minutes. This feature is very useful if you tend to leave your computer and forget to log-out. In order to continue your session you will need to log in again. 

7.    The bank should not send information relating to your online account via e-mail. You can become a victim of aphishing scam if someone identifies themselves as a bank employee and asks to click on a link and change your password.

8.    Make sure that your bank can send you real-time alerts that will keep you informed about all important transactions related to your account. Basically, there are two types of alerts: bank-initiated and optional. 

Bank-initiated alerts provide additional level of security by reporting any critical changes, for example a new password. Optional alerts are set up by an account holder to track his or her banking transactions. For example, you can receive alerts about your balance or payment due dates. 

In the busy rhythm of present-day life it can be difficult to find a time for a trip into the bank. Online banking provides a lot of excellent services to make your life easier. However, looking for the cheapest options, don’t forget to make sure that your money will be safe online!

Solution brings merchant rewards onto online banking platforms

Cardlytics revealed today the emergence of its patent-pending banking rewards solution that allows merchants to access one of the most trusted and widely used, yet least penetrated, consumer channels – online banking. For the first time, merchants can reach customers based on what they actually purchase and present them with valuable incentives directly within their online banking pages. Merchant incentives fund either cash-back rewards or accelerate earnings for a bank’s existing rewards program.

"First generation merchant funded rewards programs don’t meet the needs of banks or merchants," said Scott Grimes , Cardlytics’ CEO. "They are largely untargeted Internet-based affiliate marketing offers that require customers to leave the banking site and make a purchase on-line. Offers are not relevant and have relatively little value, customer response is low and merchants see little incremental sales. Ultimately, they add cost to the card relationship without materially moving the needle on loyalty."

Cardlytics is being launched by a team of marketing, technology and banking veterans led by Scott Grimes and Lynne Laube, former executives with Capital One, who together developed and introduced another revolutionary banking product – decoupled debit. In addition to his role at Capital One, Grimes formerly led investments in early-stage tech companies with Canaan Partners and has also served as a Principal at McKinsey & Co. Laube is a seasoned banker with over 15 years experience building and growing new businesses at Bank One and Capital One.

Bankers are increasingly challenged to evolve rewards programs from a retention tactic to a strategic competitive weapon. An essential element of this evolution, merchant funded discounts bring a rich new source of loyalty economics into the banking system while providing a powerful new channel for merchants to attract and retain customers.

While many banks offer programs that direct customers to a Rewards Mall, Cardlytics delivers proprietary merchant offers that are targeted by an individual consumer ’s purchases enhancing the relevance and value to account holders. Cardlytics also delivers unparalleled targeting, messaging and reporting to their merchant partners.

"Among the vendors in the bank rewards/loyalty industry, Cardlytics’ solution has raised the industry standard for its competitors by offering unique value to their banking clients, their customers and their merchant partners." said Elizabeth Rowe, director of Banking Services for Mercator Advisory Group.

"We bring consumers great offers from the merchants they shop with every day," said Laube, Cardlytics’ President. "Because they can target consumers based on exactly how they shop and precisely measure the results, merchants are excited to provide rich incentives to attract new customers and build customer loyalty." Consumers will also find taking advantage of offers to be convenient and familiar.

Consumers receive relevant and valuable incentives via their online banking pages based on how they already shop. They redeem the offers by using their bank card with no coupons or other actions required. With even moderate participation, consumers can save several hundred dollars a year. The Cardlytics solution was designed specifically to meet privacy, security and regulatory demands of banking. Consumer data never leaves the bank or is shared with third parties.

Banks can significantly grow the value of their current rewards programs with the Cardlytics solution, which in turn can more than double the potential profitability of a typical debit account. Banks can easily implement the Cardlytics solution with no capital investment and no ongoing expenses. "In today’s economic climate, financial institutions are challenged to reduce their dependence on fees and interchange while cutting costs," said Laube. "Our solution requires minimal IT development, has no one time or ongoing costs, and provides banks with new source of revenue and rewards at a time when they need it most."

About Cardlytics

Cardlytics is changing the dynamics of online advertising with solutions that connect merchants and consumers to create a better kind of rewards program for bank customers.  Privately held and headquartered in Atlanta, Cardlytics can be found at www.cardlytics.com   

Online Banking Report Publishes "Selling Behind the Password: Leveraging the Marketing Potential within Online Banking"

Online Banking Report announces an in-depth new research report that analyzes the efforts of 15 banks and payments players to cross-sell products within their secure online banking areas.

One of the most often cited, but seldom realized, benefits of online banking is the ability to market to users at precisely the time they are ready to buy. Marketing to users after they have already logged in allows for precise targeting of individual users without requiring them to identify themselves or fill out a lengthy form. With financial institutions facing mounting cost pressures, now is the perfect time to take behind-the-password marketing to the next level.

This report will help financial institutions improve their efforts to sell behind the password and leverage this ultimate form of one-on-one marketing. Included in the report is an analysis of six key areas behind the password that can be effectively used for sales and marketing messages:

• interstitial (splash screen) pages
• banner and keyword advertising
• product placement
• transactional upgrades
• pages displayed after an online banking session has concluded
• product/shopping portals

Also included in the report are lessons from the leaders in behind-the-password marketing, complete with detailed examples.

This exclusive research is available only from Online Banking Report and is a must-read for any financial institution. It can be downloaded immediately after purchase at www.onlinebankingreport.com.

Companies Mentioned:

American Express, Bank of America, Chase Bank, Citibank, Discover Card, Everbank, First Tech Credit Union, ING Direct, Jwaala, Mint, Netflix, PayPal, Revolution Money, US Bank, WaMu, Wells Fargo

About Online Banking Report

Founded in 1995 by former banker Jim Bruene, Online Banking Report provides in-depth analysis, relevant data, and informed recommendations to financial services executives in 50 countries. Online Banking Report is published by Online Financial Innovations, a Seattle-based research company. For more information and free sample reports, visitwww.onlinefinancialinnovations.com, email info@netbanker.com or call (206) 517-5021. You may also find OFI’s blog on the latest in online finance & banking at www.netbanker.com.

Sunmark promotes online banking as ‘green’ on Earth Day

Sunmark Federal Credit Union picked Earth Day to introduce an initiative to encourage its members to be more energy efficient in their financial transactions.
The Latham, N.Y.-based credit union will promote online banking by educating members about how easy it is to use and about the cost savings it provides Sunmark. It also will offer members free reusable grocery tote bags, made of recycled material, for enrolling in e-statements or online banking.
“This online process saves money for the credit union, improves the use of our resources and offers convenient service to the members,” said Susan Siegel, vice president of marketing and operations for Sunmark .
The new initiative joins Sunmark’s Members Helping Members program. That program, launched in the fall of 2008, created a network between Sunmark’s members and area businesses to foster cooperation in dealing with economic and energy issues. The credit union serves people who live and/or work in Albany, Schenectady, Montgomery, Saratoga, Schoharie and Rensselaer counties.
Citizens Financial Group, a Providence, R.I.-based institution with New York state headquarters in Albany, introduced its electronic banking promotion, called Green$ense, in October. Green$ense rewards customers 10 cents for each electronic payment they make, up to $10 per month and $120 per year. Over the past six months, customers of Citizens Bank and Charter One, the company’s banking subsidiaries, reaped nearly $2 million under the program.
Citizens now has announced that new customers who enroll by May 15 will receive double the award, or 20 cents a transaction up to $240 a year.
Based on current enrollment, the company expects Green$ense to result in a savings of more than 220,000 pounds of paper, and one million gallons of waste water, in 2009. More than 6,300 garbage bags will not be filled.
“The benefits of this program show how small, everyday activities such as reducing paper-based transactions can have a tremendous impact on the environment,” said Theresa McLaughlin, Citizens’ chief marketing officer.

Money's now mobile: Online banking

It’s your phone, your music player and your laptop, and one day it might even be your wallet.Several financial institutions with a presence in Northeast Ohio, including some of the state’s largest banks, are starting to let customers use their mobile phones to do their banking.An increasing number of banks are allowing customers to get information via text messages and to conduct some transactions using the Internet browsers available on most mobile phones.Those offerings are steppingstones to the industry’s larger goal to turn mobile phones into electronic wallets that can make transactions normally reserved for checkbooks, debit cards and cash, said Roger Entner, senior vice president of the communications sector at IAG Research, which has offices in New York and Los Angeles.“A lot of people see this as the next stage,” Mr. Entner said.National City Corp. released its first mobile banking product in February when it began letting customers send text messages to receive information such as balance updates and lists of recent transactions, said Tom Trebilcock, vice president of E-Business and Payments for PNC Financial Services Group Inc., which late last year bought National City.PNC released a similar product last October, and four months prior it released software that customers could download onto their phones, allowing them to pay bills, transfer funds between accounts and find bank branches and ATMs.“It’s really just like online banking on the go,” Mr. Trebilcock said.PNC’s largest local rival, Cleveland-based KeyCorp, is developing mobile products that it plans to release sometime this year, said David Reavis, senior vice president and public relations manager. He would not give more detail about the plans.Other banks starting to push mobile banking technology in Northeast Ohio include Fifth Third Bancorp of Cincinnati and Huntington Bancshares Inc. of Columbus.Fifth Third launched its mobile banking products in the region on March 19, said Paul Moore, senior vice president and director of alternative delivery. Now the bank’s customers here can set up text message alerts that let them know when bills are due or when account balances have reached certain levels. The bank also launched a web site, www.53.mobi, meant to make it easy to transfer funds, check transactions and find branches and ATMs on a small screen.Mobile technology is an “emerging channel” that Fifth Third could not ignore, Mr. Moore said, especially because other banks, particularly the bigger ones, have started pushing mobile products.“Other banks are out there, so we have to remain competitive,” he said.About 5% of Huntington’s online banking customer use its mobile web site, activated last July, and another 5% use its text messaging service, launched in January, said Brandon McGee, vice president and senior product manager of mobile technology.

Mr. Trebilcock said mobile banking is taking hold now because carrier networks and mobile phone technology have progressed to the point where customers “can actually have a pretty decent user experience.”Plus, mobile banking has proven to be secure, Mr. McGee said, noting that mobile phones are no different than small PCs. To reassure customers, however, Huntington offers to repay any funds lost because of mobile banking, he said.“We have not had a single instance of fraud, period,” Mr. McGee said.Although mobile products mostly are offered by big institutions, some small ones are getting into the act.Akron Firefighters Credit Union, with help from the company that handles its data processing, offers text banking services as well as a web site accessible by a mobile browser, said CEO Linda Williams.About 10% of the credit union’s members frequently use the products, which Ms. Williams wanted to implement after watching how her adult children use their phones.“My children are in that age bracket,” she said. “That’s what they do. They wanted texting.”Diebold Inc. also stands to benefit from the adoption of such technology. The North Canton-based maker of ATMs, bank security equipment and electronic voting machines in about two months expects to begin selling banks access to its mobile banking software, said Keith Lewis, director of marketing at Diebold.“I get requests probably every couple weeks from another customer who is interested in mobile banking,” Mr. Lewis said.Demand should keep growing, according to statistics from ABI Research, a New York-based technology research firm: The number of people using mobile banking services grew to 3.1 million in 2008 from 400,000 in 2007, and the number should hit 7 million this year.The available technologies should keep growing as well. PNC’s Mr. Trebilcock said he could say little about the company’s plans, but both Fifth Third’s Mr. Moore and Huntington’s Mr. McGee said consumers one day might be able to wave a phone over a product to buy it.The combination of such technologies with the popularity of mobile phones leads Mr. McGee to believe that the personal computer may not always be the medium of choice for electronic banking.“Mobile banking will pass online banking,” he said.