BURLINGTON, Mass. - A new website that allows small and mid-sized banks to compete online for consumers’ savings business may be expanded to include credit unions, and a lending component will be added, too, says the site’s founder.
MoneyAisle.com lets banks “bid” for consumers’ CD and high-yield savings business through an automated process that returns the highest-paying product to a consumer in about two minutes, according to Mukesh Chatter, president and CEO of neoSaej here, the company behind MoneyAisle.
“Within the next 60 days we will be announcing an online lending product very similar to MoneyAisle and I think credit unions will be excited,” explained Chatter, who said neoSaej initially considered including credit unions in MoneyAisle but decided against it because field of membership restrictions and the belief that banks have a more pressing need for deposits.
“Our intention is to possibly have a separate network for credit unions, and we have not made a final decision,” said Chatter about creating a savings and CD bidding site for CUs. “But it would have to be separate. This way consumers will not be confused between a credit union and a bank. We do intend to move forward with the lending site,” which will have channels for credit unions and banks.
What will also be available for credit unions in the next 45 days is a customized interface that allows credit unions to invest in a bank CD using MoneyAisle. A streamlined interface will eliminate many of the ID verifications steps a consumer currently completes.
To use MoneyAisle, consumers register, select either “Bank CDs” or “High-Yield Savings,” enter the deposit amount and term, the state they live in, and hit “Run Auction.” Banks participating in a consumer’s state receive the request and an automated bidding process determines the “winner.” Consumers read a short profile about the bank and determine if they want to go with the institution or run another auction excluding the first winner.
Once consumers choose a product, they can open an account online if the bank permits. If not, the winning bank contacts the individual the same business day. At the time the site launched, most of the 60 banks online with MoneyAisle did not offer online account opening, Chatter said. MoneyAisle had 90 banks under contract at launch. “We are signing more than a bank a day,” Chatter added.
Banks using MoneyAisle access the site through a web interface. They can monitor auction results daily and receive reports from MoneyAisle. But the system is designed to be hands-off once the bank tells the site what its goals are, Chatter said.
“MoneyAisle has a seller-automated engine that runs the auction for them. It’s hands-off from a manpower standpoint. Banks configure the engine the way they want, enter how much they want to raise–for example, $10 million in seven days–the maximum interest rate they are willing to pay, and then they choose the mathematical bidding algorithm. They decide how aggressive they want to be...It’s highly customized.”
MoneyAisle charges banks per acquisition–$37.50 for each savings account and a percentage of each CD deposit. “For a $20,000 CD it would cost about $35-$40,” Chatter said.
The advantage to banks, and eventually CUs, is expanding their reach without paying “big” advertising money, Chatter contends. “Advertising costs have become such a huge dominating factor that the numbers don’t work for most small to mid-sized banks, and credit unions.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
