Paytrust's Marketer Interviewed; Bank Grows 20% Online

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FinancialMarketingBiz from MarketingSherpa.com
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February 8, 2001 - Vol. II, Issue 6
Please forward! Free subscriptons: http://www.financialmarketingbiz.com

1) NEWS: Giantbank.com, LendingTree, Corillian, Unisys,
PrivateTrade, FinancialOxygen, E*TRADE

2) CASE STUDY: Small Community Bank Grows Online Customers 20%

3) INTERVIEW: Paytrust's Chief Marketing Officer, Anil Singh

4) More MarketingSherpa Headlines

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NEWS
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*Giantbank.com Launches Online Loan Center
BORROWED HELP: Giantbank.com, the Internet banking division
of FL-based Landmark Bank, announced the release of
giantbank.com Loan Center, powered by LendingTree. The Loan
Center will be co-branded and will enable customers to submit
requests for home mortgages, home equity, and automobile
loans. Combined deposits for giantbank.com and Landmark Bank
are $120 million.
http://www.giantbank.com
http://www.lendingtree.com

*Corillian and Unisys in Global Reseller Agreement
MOVING PLATFORMS: Financial services software providers
Corillian and Unisys announced today a global reseller
agreement to provide mid- to large-sized financial
institutions with Internet banking and account aggregation
services. Essentially, Unisys has agreed to sell, implement,
and support Corillian’s Voyager Internet banking software
platform and integrate it with its own platform, Unisys
e-@ction Financial Solutions. Corillian spokesperson Steve Shaw
says marketing efforts for the alliance will revolve around
internal communications procedures educating the respective
sales forces and business development teams of the enhanced
level of services for clients. As far as Corillian’s
marketing efforts, “PR is the crux of what we do.”
http://www.corillian.com
http://www.unisys.com


*PrivateTrade Begins Roll-Out of Marketplace for Private
Equity Transactions
SUPPLY AND DEMAND: In advance of its formal launch later this
quarter, PrivateTrade, an investing portal for the secondary
private equity market, announced a member registration
campaign targeting institutional investors via multiple direct
contact promotions. PrivateTrade also plans to launch monthly
auctions for investors later this year.

However, the secondary private equity market has had a tough
time convincing investors that such transactions can
transition themselves properly or more efficiently to the Web.
Schroders-backed Liquid Alternatives, a direct competitor, was
shut down in December. Other competitors such as OffRoad
Capital and WR Hambrecht, continue to struggle to create a
profitable online marketplace for private equity.
http://www.privatetrade.com

*FinancialOxygen Out of Stealth Mode
BREATHE EASIER: “We’re officially out of stealth mode,”
explained Greg Berardi, spokesman for FinancialOxygen, a
provider of capital markets technology and trading
marketplaces for middle-market customers.

160 institutions have already signed on for the Company's
first operational product, BankOxygen, is a trading platform
created for America's 21,000 community-based, independent
financial institutions and banks with assets of $10 billion or
below. BankOxygen allows these banks' senior management to
access a broad cross-section of products, software, and market
information, including Federal Funds and money market
instruments, online. So far, $1.5 billion per day in
securities are passing through the platform.

FinancialOxygen plans to launch MuniOxygen to municipalities
with populations of less than 1 million, in Q3 2001, and
InsuranceOxygen to middle-market insurance companies, in Q4
2001.
http://www.financialoxygen.com
http://www.bankoxygen.com

E*TRADE Bank Completes Acquisition of LoansDirect, Launches
Re-Engineered Bond Center
FEEDING THE MACHINE: In a move to diversify into consumer
lending, and to further integrate its online banking and
brokerage initiatives, E*TRADE Bank has finalized its
acquisition of LoansDirect, one of the nation’s largest online
mortgage originators. Deborah Newman, a spokesperson for
E*TRADE Bank, admitted that the new name of the integrated
platform and brand is still to be determined.

E*TRADE Bank also announced that it has re-launched its Bond
Center, expanding product from 3,000 to 7,500 fixed income
securities. E*TRADE has a network of over 25 dealers and was
one of the first online brokers to offer bond trading, when
the service launched two years ago. “E*TRADE’s strategy is to
continue creating a more diversified financial services
company,” said Newman.
http://www.etradebank.com
http://www.etrade.com


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CASE STUDY: Small Community Bank Grows Online Customers 20%
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CHALLENGE
David Munroe, Vice President of Marketing for
Danvers Savings, says the small community bank was never Web-
phobic. “Our principal concern was having a party and no one
showing up.”

Danvers Savings had its Web site http://www.danverssavings.com
up and running back in the summer of 1997, but it was mainly
brochureware. “Our main priority with the first Web site was
not transactional,” Munroe explains. Then things changed
fast in November 1999 when the bank was ready to put
transactions online. Munroe needed a cost-effective marketing
campaign that would make sure enough clients used the online
services to be worth the cost of implementation.

CAMPAIGN
When the new site launched, the bank wanted to
cover all customer touch points. First, they developed a new,
unique logo, rolled out in September 1999, instantly giving
the bank and its new online property its own brand identity.

To ensure that everything had the new logo on it, “We
developed print ads, lobby posters, counter cards, direct mail
pieces to all households, and a ‘carpet mailing’ to our
communities,” explains Munroe.

As an initial promotion, DanversSavings.com offered the first
6 months of bill paying free for retail customers, with 3
months free for business customers. Three different
advertisements were created, each for a different customer
segment. One was for entrepreneurs. A second was aimed at
the corporate/business customer, and the third was for retail.

Danvers Savings also wanted to use the site to foster local
goodwill by stressing its community-focus. So, it created
“Partners in Progress” a site area dedicated to all of the
charitable community work in which the company is involved.
All of the information is built into a searchable database and
includes news clippings of past events and benefits. Munroe
says, “It is important for people to understand that community
banks -– even those of us who operate online -- are doing good
deeds and are a real force for change in the communities in
which we operate. We aren’t ‘slash and burn’ banking. It’s
wonderful to be involved in a community bank.”

RESULTS
As soon as the campaign launched for the new online
transactional services, there was an instant acceleration of
site traffic. After a little over a year, DanversSavings.com
represents 20% of the bank’s retail customers with respect to
demand deposits and checking accounts, and 15% of its
clientele on the commercial side.

TECH NOTES: Rather than build the technology from scratch,
Danvers Savings tapped Austin, Tex.-based Q UP to provide the
back-end technology. Q UP’s sophisticated Cash Manager product
was integrated into the bank’s online service. Munroe
explains that the bank did a fairly extensive vendor search
project, bringing in about ten different providers, starting
in January 1999, and then eventually selected Q UP.

Danvers Savings http://www.danverssavings.com
Q UP http://www.qup.com
Danver's Agency, Martin & Co. http://www.prresults.com


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EXCLUSIVE INTERVIEW: Paytrust's Chief Marketing Officer
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The electronic bill payment and presentment (EBPP) market is
white-hot right now. We contacted Paytrust's Chief Marketing
Office, Anil Singh to find out how this industry leader was
marketing itself, and how it plans to trounce the competition.

Q: What is the total EBPP market size and what kind of
consumer adoption rate does Paytrust have so far?

Singh: Paytrust has seen very strong growth and, though we
are at a relatively early stage in our business, we are
pleased with our excellent progress to date.

Every household and small business in the United States has to
deal with bills and no one likes it. J.P. Morgan Chase has
estimated that the EBPP market will grow from $80 million in
1997 to over $2.3 billion in 2001.

However, today, according to Jupiter Communications, 5.3
million households in the United States already pay bills
online. That number is expected to rise dramatically –- to
25.8 million by 2005, with another 40 million also receiving
bills electronically. That is a compounded annual growth rate
of almost 100%.

So why are billers still printing out pieces of paper, putting
them in the mail, and carrying them to your house, so you can
collect them on your kitchen table before you pay the bills?

Paytrust believes that consumers will not abandon their
traditional methods until they are presented with an option
that is truly better than their mailbox -– a service that
gives them the ability to receive, review, pay and organize
100% of their bills online. A service that can deliver all of
a consumer’s bills online offers a tremendous differentiator
when compared to the “bill pay-only” services that many banks
have offered to date.

Financial service institutions recognize the value of this
“killer app” and have clearly been eager to partner with
Paytrust to implement a complete bill management service on
their own Web sites. We expect to see an ongoing strong
adoption rate as our business partners continue to market
their new private-label Bill Centers that are “powered by
Paytrust.”

Q: How much do you plan to spend on marketing in 2001?

Singh: Paytrust is not pursuing any direct to consumer
marketing campaigns in 2001. Paytrust is focused on
delivering our service through our partners, rather than
direct to consumers.

Our partners have already established one-to-one communication
with their existing customer base and are looking for more
services to sell into that base. Our partners are
implementing a variety of creative, highly integrated
marketing campaigns that leverage their existing customer
communication vehicles, including email, banner ads, statement
inserts, direct mail, and event marketing.

Citibank, for example, is targeting their 3 million Account
Online customers through email, banner ads, and direct mail.
American Express has leveraged email and direct mail campaigns
as they have been classically testing a variety of offers.
OnMoney.com, another partner, has promoted an “I Hate My
Bills” Sweepstakes with the chance to win $25,000 via
newspaper inserts, polybags, and flyers that were handed out
at the Bloomberg Summer Concert Series in New York, as well as
at a booth presence they had in Newark Airport.

Q: How are you dealing with competition from other bill
service providers?

Singh: CheckFree can be seen as a competitor of sorts, but
there really is no direct comparison because CheckFree and
Paytrust offer very different products. CheckFree is a “bill
pay-only” service with only one or two bills available
electronically for a consumer to view online. In contrast
Paytrust is a complete bill management service, where you can
receive, review, pay and organize 100% of your bills online
today. Paytrust is also the largest independent distributor of
electronic bills today. These are two very different products
and platforms.

In the “complete bill management” category our closest
competitor was a company called PayMyBills.com. Paytrust
finalized a merger with PayMyBills.com this past October.
Because this is a very compelling category, we expect to see
other products being introduced into this space and more
competition in the future. CyberBills has an entry in the
market, but rich, substantive differences exist when comparing
the actual service, infrastructure, management team, etc.
Most recently, Intuit has put forth an initiative in this
space, however, it is strictly based on a partnership with
CheckFree and it is hard to gauge the impact of this offering
at this time.

Q: Will the U.S. Postal Service’s EBillPay succeed because of
its brand backing and/or deep pockets of its government
parent?

Singh: The U.S. Postal Service offers partial delivery, or
“bill pay-only” with a very small handful of electronic bills
available online. It is essentially a rebadge of the
CheckFree service. We feel it is far more likely that
consumers will look to their financial services provider than
the Post Office for their bill management solution, and that
is why Paytrust has partnered with major financial services
institutions.

Q: Isn't bill paying really just a small fraction of the
larger peer-to-peer market? Where does Citibank’s c2it
or X.com’s PayPal fit in?

Singh: The P2P market is “person to person” and is a small
fraction of the larger bill payment market. From our Paytrust
data we see that only about 10% of payments made with our
service go to individuals or “micro” organizations such as
lawn care providers or babysitting services.

Our service works together with a bank’s existing offering.
Recently, Paytrust introduced the Citibank Bill Center on the
c2it site. A consumer can use c2it to email payments to
individuals, but now they can also use the private-labeled
Paytrust service to pay all their bills on c2it. This extends
the functionality of the site significantly. Before,
consumers certainly could not simply email their payments to
utilities like the phone company -– but now, with Paytrust,
they can actually make payments to anyone through their
enhanced complete bill management service.

Contact Singh at anil.singh@paytrust.com.

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