E-Trade Financial Corp., which wants more customers to use it as their primary bank, is developing an account comparison tool to tout its interest rates.
R. Jarrett Lilien, the New York company's president and chief operating officer, said in an interview Wednesday that too many of his brokerage customers consider the banking services an "oh, by the way" feature.
That idea was reflected in E-Trade's fourth-quarter earnings report, which was released before the market opened Wednesday and indicated that the banking arm is losing ground.
In the fourth quarter, it lost 5,655 banking accounts, and its account total at yearend fell 2% from a year earlier, to 626,673. Mr. Lilien said the decline includes certificate of deposit accounts that were closed after the CDs matured.
Fourth-quarter earnings fell 8% from a year earlier, to $98.4 million, or 26 cents a share, but full-year net income rose 92%, to $389.1 million, or $1.01 a share.
E-Trade's fourth-quarter banking revenue rose 25%, to $162 million; the company attributed that increase to an 11% increase in balances.
In addition, Mr. Lilien said E-Trade reached a major milestone in the quarter - for the first time it had more than $100 billion of brokerage assets and banking deposits.
Many prospective banking customers would choose E-Trade if they could see that it offers better interest rates for savings accounts, CDs, credit cards, and other products, but there is no easy way to compare its rates to those at other banks, he said.
To fix that, E-Trade is developing a tool that will show interest rates on various accounts. Mr. Lilien said that the tool, which will be available this quarter, is meant to persuade customers to move funds from their brokerage accounts into E-Trade banking accounts.
At first, the tool will show rate for a customer's E-Trade accounts only, but by yearend it will also include rates at a customer's non-E-Trade accounts. (The customer will have to provide information about outside accounts.)
The side-by-side comparison could entice customers to move money into an E-Trade savings account or transfer debt to a lower-interest E-Trade card, he said.
The comparison tool would work in conjunction with E-Trade's existing Quick Transfer feature, which lets customers move funds between their E-Trade accounts and accounts at other banks.
George Tubin, a senior analyst at TowerGroup Inc., a Needham, Mass., unit of MasterCard International, called the idea a smart one.
"For the most part, because E-Trade is an Internet bank and a discount brokerage, they do attract people with rates," Mr. Tubin said. Spelling out the price difference can only help E-Trade, "assuming that their rates are competitive."
Also, linking the comparison feature with Quick Transfer could drive up the total deposits in its bank accounts, because banks that offer money transfer services "tend to notice a net inflow of funds," he said.
Banks have long been reluctant to offer easy electronic interbank transfer services, out of a fear that people would move their balances elsewhere, but Mr. Lilien said most of the transfers at E-Trade are inbound.
Dan Schatt, a senior analyst for the Boston market research firm Celent Communications LLC, said that the comparison feature could help E-Trade further knock down the walls between its businesses.
"They really want to try to get customers to understand that they're really not just a brokerage firm," he said.
Its customers are "really looking for convenience," so in addition to trying to impress customers with its rates, E-Trade can impress them simply by having such an informative service, Mr. Schatt said. "Information is definitely power."
