Capital One Continues to Innovate

Historically an aggressive marketer and innovator in the credit card industry, Captital One has expanded its reach in recent years, using their growing banking franchise as the foundation for introducing innovative banking products. In addition to having a relatively rich debit rewards program and expanding into online and small business banking, they have recently introduced a new savings product called "InterestPlus Online Savings".

The saving program offers an above market interest rate on balances over $2,500 in addition to a 10% quarterly interest bonus payment paid if the customer uses their Capital One credit card once a month.
The bonus can also be earned if the customer maintains a minimum balance of $15,000 each month. The bonus for using the credit card is similar to other promotions done by Captial One in the past 12-18 months to cross-sell services and relationships off their credit card foundation.

The promotion of the new service began in December of last year through the bank's web site, statement inserts, direct mail and with email according to Comperemedia. Using strong visual elements such as comparative bar graphs and icon buttons similar to what I have seen with ING mailings, it is clear that Capital One plans to leverage their strong marketing talents from the credit card industry in building a strong bank brand.

Credit Card DM Volume Finally Rises

For the first time in three years, credit card-related direct mail volume increased during last year's fourth quarter according to research recently released from Mintel Corporation.

According to the research, while the volume of credit card direct mail in 2009 (less than 2 billion pieces) was 66% less than in 2008 and far less than the annual level of 7 billion a year experienced from 2004-2007, there was an increase of 47% during the fourth quarter of last year, compared to the previous quarter. Contributing to this increase, Chase increased their credit card mailings by the largest amount – 87% over the same period in 2008. In addition, US Bank's credit card mailings were up 64% over the same period of time, according to the study.


Unlike in the past, more than a third of credit card offers sent in 2009 included an annual fee (compared to one-fifth in 2008). While most banks are still working hard to assist customers with credit challenges in the mortgage and home equity areas, this trend in credit card mailings could be reflective of a view by some banks that the economic recovery could be beginning.

Mintel Comperemedia Looks at Financial Service Mega-Trends

In a Mintel Comperemedia presentation recently, Economic Psychologist, Susan Menke, PhD. presented the trends that are expected to have the greatest impact on consumer financial behavior and the banking industry during 2010. Based on tracking of direct marketing programs during the last half of 2009, the following predictions were made:

• The end of Free Checking: Banks such as Fifth Third and BBVA have already eliminated the account while Free Checking leader TCF announced the end of their Free Checking program at their investor meeting this week.
• Explosion of reward banking: The decline in Free Checking will most likely result in an increase in checking programs with rewards, especially in light of the increased importance of direct deposit, online bill payment and debit card interchange.
• Account builder program introductions: Following the trend started by 'Keep the Change', 'Way2Save' and PNC's 'Virtual Wallet', automatic transfers from checking to savings and the linking of credit lines to checking will be two ways to expand relationships beyond a single service.
• More aggressive debit card marketing: The importance of interchange income to the financial viability of many relationships will lead to many more debit card activation and utilization promotions in 2010.
• Cash will continue to be king of offers: The offering of cash incentives for opening new accounts ramped up in the latter part of 2009 after a short hiatus. Chase continues to offer different bounties ranging from $100 to $200 and more with many other large banks following.
• Increased popularity of prepaid cards: While larger banks have not yet focused on prepaid cards, changes brought on by Reg E may change the way banks serve the underserved and unbanked segments.
• Expansion of mobile banking: There are still several large banks that have only rudimentary mobile banking initiatives while others such as Bank of America, Wells, USAA and Chase have created innovative iPhone Apps. The financial incentive to move more expensive transactions to the mobile channel and the rapidly increasing acceptance of smart phones is expected to fuel rapid growth of this channel.
• Proliferation of financial literacy programs: Customer experience research for years has indicated the importance of being more transparent, building trust and educating customers on how to make informed financial decisions. Mintel believes that 2010 will be a watershed year for banks to use customer advocacy as a competitive differentiator.
• Increased use of social media sites: The popularity and growth of social networking sites has made it impossible for financial institutions to sit on the sidelines. One firm is offering a service where customers can receive alerts through social networking sites rather than email while many banks are using these sites for enhancing or reinforcing their brand. Twitter is also used to broadcast changes in rates and to introduce new products.

Unlike 2009, where most banks significantly scaled back marketing efforts and were on the defensive, proactivity seems to be the norm in 2010. Product innovation, changes in pricing models, utilization of new channels and an increased emphasis on the customer experience will definitely put the spotlight on marketing.