Banks are using incentives to encourage college students to open accounts online and connect the accounts with their parents'.
PNC Financial Services Group Inc. is making a big push in this area. A linking service from the Pittsburgh company helps parents monitor their kids' spending and could help PNC get the parents to do more banking over the Internet.
Other companies offering such incentives also aim to boost parents' use of Internet banking.
Bonnie Wikert, a vice president at PNC, said the Web service lets parents do free money transfers to their children's accounts.
"The parents are able to see the activity on the student's account" Ms. Wikert said.
PNC's incentives to students for signing up include T-shirts, textbooks, and music downloads.
Ms. Wikert said the number of new student checking accounts opened online through July increased 135% compared with July 2003.
Ms. Wikert credited a mailing to 45,000 freshmen about how to apply for accounts online, and a streamlined online application. It "literally takes students three minutes to complete," she said.
At PNCbank.com, students name their university at the start of the account application process, so the application shows only the products that are available at their school, such as being able to link their student ID cards to a PNC checking account.
Citigroup Inc. charges students a monthly fee of $3 during the semester to maintain a regular checking accounts. The fee is waived for customers who make recurring electronic deposits or maintain a balance of at least $1,500 across all their Citi accounts. (Wells Fargo & Co. students with direct deposit get a discount on the monthly fee; to eliminate it completely they need to link accounts with their parents'.)
Citi realizes that the fee and the $1,500 minimum could be a problem for these customers, so it is trying to get students to link their accounts to their parents'. The service allows parents to do free transfers to the students' accounts.
Catherine Palmieri, the director of Citibank.com, said parents with accounts linked to their children's accounts use the Web more.
"Anytime you add a feature that makes it convenient for people to move money, it makes the usage" of Internet banking go up, she said.
Citi is offering students 100 free song downloads for using the Internet to open an account, and is advertising the offer at collegesports.com.
"We've also been working at integrating the checking application with the student loan application," Ms. Palmieri said.
The integration is to be finished sometime this fall. Students would then be able to finish filling out their loan applications and have the relevant personal information carry over to a checking account application so they can open a checking account in the same session.
Ron Shevlin, a vice president with Forrester Research Inc. of Cambridge, Mass., said that if banks make it easy to open and fund student accounts online, chances are they will get older customers to use e-banking more. Promoting the older group's use of the Web through their kids makes sense, because once the parents start banking online, their kids get faster and easier access to their parents' money.
Mr. Shevlin said 18-to-28-year-olds, often called Generation Y, are the age group most inclined to use the Internet to research and buy financial products. About 40% of them research such products online, according to a Forrester study that came out last month.
"If the consumer isn't researching the product online, they are incredibly unlikely to apply online," Mr. Shevlin said. "The percentage of people who apply online but did not research online is like 1%."
Students frequently use the Web to check their account balance, he said. "This is the group that, at 3 o'clock in the morning, wants to know if they can go down to the ATM and take out 20 bucks." (This is not lost on Citibank. A caption for one Citi advertisement says, "John, marketing major, runs track, plays in jazz band, banks from dorm room at 2 a.m.")
Some banks let customers know when the balance is dipping. PNC started offering e-mail balance alerts for student accounts in April. This helps the account holder avoid penalties, and helps PNC solidify a budding customer relationship, Ms. Wikert said.
