Account-to-account transfer and funding technology is becoming a key part of bankers' strategies for high-yield online savings accounts.
Huntington Bancshares Inc. introduced its Anywhere Savings account through its DirectHuntington Web site in January and began promoting it last month. The Columbus, Ohio, company uses software from CashEdge Inc. of New York to allow new customers to open and fund accounts entirely online.
Timothy Scholten, Huntington's online services director, said its previous online account-opening process, which was paper-intensive and drawn out, drove up costs; to offer the high interest rates that are now the norm for these Internet savings accounts, Huntington needed to automate the process.
"Without the proper technology tools … it takes two to three weeks to get an account set up, open, and funded," he said.
In the past some banking companies have touted their online opening process for traditional accounts, but the process may have required people to print out some forms and mail or fax them to the bank.
Observers say such a process is less effective for online-only accounts, which often are marketed to people accustomed to conducting business entirely online, and that requiring them to handle paper forms could drive them away altogether.
Huntington is using CashEdge's OpenNow and FundNow products to enable new customers to open and fund accounts through the Internet. A process that once took two or three weeks now takes six days or less, Mr. Scholten said. "Customers coming online expect a real-time experience. In this virtual world, people are expecting things in a real-time basis."
In the last two weeks 1,200 users have signed up for Anywhere Savings accounts. The fact that none of them have had to mail in paper forms has lowered Huntington's costs and enabled it to offer a higher savings rate, he said. "We can offer back a part of our savings."
Huntington is advertising interest of 5.2% for balances of less than $1 million and 3.94% for larger balances.
(Also, more than 300,000 of its more than 1 million customers bank online each month.)
ING Group NV has long been one of the most prominent companies offering a high-yield savings account that could only be opened and accessed online. More recently companies such as HSBC Holdings PLC and Citigroup Inc. have offered similar accounts.
Neil Platt, CashEdge's vice president for sales and business development, said his company is "benefiting from the direct banking trends," though each banking company has a different strategy. Huntington, for example, is using CashEdge's products initially with DirectHuntington and is considering using them in other areas, he said; other companies roll out CashEdge software in several areas at once.
"Our technology is indifferent to the type of account," Mr. Platt said. "However, if you want to open a direct bank, you really do need technology that opens remote accounts."
HSBC and Flushing Financial Corp. also use CashEdge products for funding accounts.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said that bankers need to have easier account-opening process before they can hope to attract customers for an online-only savings accounts.
"The online account-opening process at many institutions is a black spot on their online records," he said. "People don't have time" or patience for cumbersome processes.
