Stirring Up the Market

I discussed Ally’s hugely successful media advertising campaign here, concluding that the bank has implemented a bold, values-based strategy in rebranding and  advertising.  It’s a bank on the move, restlessly reaching for the next big opportunity. As acknowledged by Moneyrates.com, they are aggressively courting angry customers with ads that ridicule banks that charge hidden fees and use “sneaky disclaimers.”  The Bank secured $2.9 billion in new deposits shortly upon beginning its anti-bank re-branding campaign. Rivals have not been too happy with Ally’s bold approach. In 2009 the American Bankers Association sent a letter to the FDIC asking why Ally should be allowed to provide such high interest rates on savings accounts when its parent company, General Motors, is a taxpayer-funded enterprise.

Consumer-Centered Appeal

In November, 2011, Ally conducted a survey to identify consumer discontent about what they consider the least acceptable bank fees. Respondents expressed dissatisfaction with several kinds of fees:

  • 84% believe it is unacceptable to charge a fee for checking.
  • 79% believe it is improper to charge a monthly maintenance fee
  • 77% believe it is not acceptable to charge an ATM fee
  • 53% said they would rather take time to search for a free ATM than pay a fee for the closest, time-saving option.

Ally Bank has its finger on the pulse of these consumers. Ally doesn’t charge monthly maintenance fees, provides 24/7 live customer services and offer a debit rewards program. Diane Morais, deposits executive at Ally Bank states,

We understand that our customers are busy. But, we don’t think they should have to pay to access their money. So we don’t charge customers to make withdrawals from their Ally Bank account at an ATM and we reimburse all ATM fees nationwide that other banks may charge.

Online Banking & Social Media

Ally Bank has been recognized as a leader among financial services companies in social media, according to Change Sciences Group, which listed Ally Bank first among 22 companies, rated for their approach to the social media space. Their presence on Facebook, Twitter and YouTube, and level of engagement displayed on each all contributed, as well as the product ratings and reviews on allybank.com and Straight Talk blog.

CMO Sanjay Gupta says, “Social media allows Ally Bank to connect with customers in a straightforward way, in forums that make it easy for them to access information.”

Every month, an average of 1,500 pieces of content are published on Ally Bank social media channels, including the Ally Straight Talk Blog, Facebook and Twitter channels. Topics range from Ally Bank product information to personal finance tips and tools. Followers across these channels increased more than 550% in 2011.

Ally is planning to release the initial version of Ally’s mobile banking application in early 2012 .In 2012, they’ll release several mobile offerings, starting with apps for both the iPhone and Android and the ability to access accounts through any phone that has web access. More Ally mobile services will follow, including the ability to deposit checks using the mobile phone’s camera, bill pay and more.

Why Raise Online Banking Privacy Concerns?

Setting out to provide customers with 24/7 support, with the flexibility to move money at any time, Ally has been evaluated by PC Magazine as one of the “five great Internet banks.” This review discusses Ally’s advantages as an online bank.

However, recently, Ally’s practice of tracking customer locations has raised concerns about online privacy. Although technology companies such as Google and Facebook use personal information, such as e-mails, online search histories, browsing histories, recommended articles, and online profiles, to target particular users with particular advertisements,  banks have been less eager than technology companies to use personal information to profit from online advertising.

Ally Financial appears to be the first to request to track the locations of customers when they go to Ally’s “Find ATM” page. Since other big banks, such as Bank of America, Chase, and Citibank, do not, the move is raising concerns that banks will begin to profit off the personal information of its customers.

“In these economic times, financial institutions like banks are looking for extra revenue sources,” said Amber N. Yoo, a spokesperson for Privacy Rights Clearinghouse. “One day, it’s collecting locations for your nearest ATM. Tomorrow, it might be selling that location data to third-party advertisers for a profit.”

Beth Coggins, a spokesperson for Ally Bank, said that location tracking helps customers find the closest ATM more conveniently, and affirmed that Ally does not retain the information or use it for any other purpose, but she did not rule out the possibility that Ally Bank could monetize customers’ location information in the future.  An additional statement from Ally Financial, clarifies that technically Ally does not track user locations but instead the bank allows web browsers to capture this information.

Banks and credit card issuers including Wells Fargo, Citibank, and Discover are already using customers’ purchasing histories to offer targeted discounts from retailers via online bank statements, text messages, and e-mails. When customers buy the advertised product, the retailers pay the bank a fee of about 10 to 15 percent of the product’s purchase price, according to data from Cardlytics, cited by CNN.  Visa and MasterCard are planning to allow third-party advertisers to use consumers’ recent purchases to specify advertisements, according to the Wall Street Journal.

If Ally seeks to differentiate itself from the practices of the big banks and continue to appeal to an internet savvy demographic, sensitive issues like these will need to address more proactively. It’s one thing to upset rival banks, and quite another to alienate your core target demographic.

Snap principle of consumer trust:

Be responsive and transparent.

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