Direct banks continue to grow deposits

Direct banks continue to outpace bricks-and-mortar banks in terms of deposit growth.  These direct banks continue to aggressively promote high rates, and are also benefiting from consumers’ increased comfort with online banking.

USAA grew deposits 16% in 2009 to $33.5 billion

Ally Bank (a unit of GMAC) grew deposits 55% y/y to $30.0 billion at the end of 2009, based on offering high rates on deposits, strong customer services, clear terms and conditions, and a significant investment in advertising.

American Express launched its Personal Savings from American Express program in the second quarter of 2009, and this contributed to its U.S. retail deposits rising 70% y/y to $26.3 billion at the end of 2009.

–Like American Express, Discover has been on the hunt for deposits in order to create more diverse funding sources for credit card and other lending. Its deposits rose 114% to $14.8 billion at the end of 2009.

–Bucking the high-growth trend were ING Direct, which grew U.S. deposits by only 5% in 2009, having grown at very strong rates in recent years.  In addition, E*Trade Bank reported a decline in deposits in 2009, as it sought to reduce its balance sheet.

Going forward, the rate of growth in deposits for direct banks should moderate (with many of these banks having attained a critical mass of deposits that they can deploy to fund lending).  The focus for many direct banks will shift from aggressive deposit acquisition to customer retention as well as cross-sell of additional products and services.

Does social media really work?

Clients ask us all the time.  Our answer:  depends on what you’re trying to do and whether you’re committed to an ongoing honest dialogue with your markets.  If you’re trying to sell a story in social media, we’d advise you not to bother.  If you’re up for learning what your buyers want, imaginative in finding creative ways to reach them, and capable of articulating how your product or service meets those needs…or not…then it’s a potent channel, to be nurtured and nourished like any other powerful medium.  But marketers beware…marketing was once about creating a dream, and now it’s about being clear, concise, transparent and relevant.  Without these,  you’ll do more harm than good.