E-Trade Financial Corp. on Wednesday added the latest phase of its year-long deployment of its next-generation E-Trade Complete service.
The latest component, dubbed Intelligent Lending Optimizer, brings a self-service loan search capability that lets customers compare E-Trade's loan offerings with those of competitors.
The service follows the launch of Intelligent Cash Optimizer in April, and its Intelligent Investment Optimizer last month.
The Intelligent Lending Optimizer lets customers compare E-Trade's loan products, like home equity loans, credit card loans, and margin accounts, to those available at other financial services companies. Customers can then decide which company offers the best deal.
"The idea is to provide transparency and enable the customer to make an informed decision and look at different options, including options that may not come from us," said Liz Scholz, the $44.6 billion-asset New York company's director of retail lending.
E-Trade has been testing the loan tool since November with selected customers. However, on Wednesday it would not say how its products fared against those on offer at competitors, saying the pilot test offered limited insight into customer preference.
E-Trade's Intelligent Cash Optimizer, which lets customers compare deposit rates at different institutions, did not appear to harm E-Trade's ability to gather deposits in-house last year. For the full year, its deposits rose 29.6%, to $15.9 billion, though the jump was helped in part by the acquisitions of JPMorgan Chase & Co.'s BrownCo and Bank of Montreal's Harrisdirect.
In 2004, a better year for industrywide deposit growth, E-Trade's deposits shrank 1.6%.
E-Trade Complete also includes the Intelligent Investment Optimizer, which was added last month and lets customers compare investment products such as mutual funds. The three elements are currently being offered on separate Web pages, but the company is planning to combine them this year. E-Trade executives have also said that they are on track to combine the company's brokerage and banking balance sheets by midsummer.
When E-Trade launched the cash optimizer, executives expected it to be a product that would appeal only to some of its most devoted customers. But R. Jarrett Lilien, E-Trade's president and chief operating officer, told American Banker in an interview in October that 2.2 million of the company's 2.9 million customers were using the product. "We went a whole lot deeper, and our vision is actually to give it to everybody over time."
Executives had expressed some fears that helping customers shop around for deposit products could drive deposits out the door, but Mr. Lilien said last month that has not been the case. During his company's fourth-quarter earnings conference call, he noted that 200,000 customers initiated deposit transfers in December, and that E-Trade gained $2 for every $1 transferred to other institutions.
E-Trade's success in gathering deposits last year came while its once fiercely competitive rates fell below those of competitors, particularly online ones.
For example, E-Trade pays 3.6% on its money market account, while EmigrantDirect.com, the online unit of New York Private Bank and Trust Corp., pays 4.25%. HSBC Holdings PLC's HSBCdirect.com offers 4.8% for its online savings account. A three-month certificate of deposit pays 4.25% at E-Trade, but 4.35% at KeyCorp's KeyDirect.
On Wednesday, Ms. Scholz said E-Trade hopes to be as successful making loans as it has been gathering deposits. "We expect good result in terms of volume."
Last year loans grew 68.8%, to $19.4 billion, and E-Trade's profits rose 13.1%, to $430.4 million.
E-Trade, like other companies, already offered consumer loans, including credit cards and home equity loans, but no other company lets customers bundle all the debt they have anywhere for an easy comparison in order to find deals tailored for their individual needs, Ms. Scholz said.
Also Wednesday, the company introduced a 3.99% promotional rate on margin accounts through June 30, a 5.99% 90-day introductory rate for its home equity loans, and pre-approved credit cards to specific customers through the lending optimizer.
E-Trade started making the lending optimizer available to certain customers Nov. 17 and has tweaked it several times since as it received customer feedback.
"Some customers may be motivated by lowering interest expense. Some may be motivated by getting their loan balance down," she said.
For one thing, E-Trade changed the look of the lending optimizer's site and how customers can access it, because customers found the prototype too clunky, she said.
