A coalition of Indiana CUs have developed a new automatic savings product tied to auto loans called DriveUp Savings. With the account, you can contribute up to 10% of the amount of your loan payment to a savings account every time you pay your loan. (The amount you contribute is in addition to your loan payment, not deducted from it.) Your savings rate is equal to your loan rate.

Some people have complained that savings programs tied to loans is a band-aid solution to promoting thrift. Others have suggested that the only way you can get Americans to save is to make it automatic, and link it to spending behaviors.

Six Indiana credit unions are piloting the program:

• Members United FCU - July 2008
• Purdue Employees FCU - July 2008
• Three Rivers FCU - August 2008
• Kemba Federal Credit Union - Q4 2008 (ETA)
• Eli Lilly Federal Credit Union - Q4 2008 (ETA)
• VIA Credit Union - 2009 (ETA)

For other financial institutions considering the product, the coalition of credit unions beind DriveUp Savings offers a simple implementation plan and low-cost marketing materials. You can check it all you at their website:

If you want some more information, check out this brief presentation (PDF).

Apparently, uptake was 30% of all new auto loans for one of the pilot CUs. The participating credit unions also predict an increase in- and added stability to deposit portfolios.

Last week, Bank of America launched Morris on Campus,™ Life According to an Upperclassman™. According to the bank, the promotion is designed to “educate and empower students to take control of their finances and bank with confidence in this new academic year.”

Unlike other Gen-Y online promotions, “Morris” is not the product of a “spokester contest,” but is instead a 23-year old actor from Teaneck, New Jersey, the bank hired for the promotion. You can view his MySpace profile here, where he goes by the pseudonym “Lo Profile.”

The campaign includes a microsite embedded within the B of A mastersite. The microsite includes a series of 7-8 video webisodes, some tips, tools and a glossary. Here are the highlights:

College Tips

13 financial tips (although #2 and #13 are the same)
7 dorm room tips (although #1 and #7 are the same)
9 food tips
7 class tips
5 random tips
======================================

“Be Money on Campus” Contest

There’s a contest to submit your own tips too, but you have to be 18-25 years of age and going to college. Five finalists will be selected by B of A late next month. Each finalist will receive $5,000, then compete for an additional $25,000.

The finalists will have 14 days to use social media tools — including video, PowerPoint, third-party endorsements and a mandatory essay of 500 words (or less) — to argue why their tip is the most helpful and relevant their peers.
======================================

Student Financial Handbook

A 65-page guide to basic financial services. Chapters include budgeting, checking, savings, investing, online banking, bank fees, credit cards, identity theft, a quiz and a glossary that’s 10 times better than the one at the On Campus website.
======================================

Student Package

Includes CampusEdge Checking, with a check card, online banking and a Stuff Happens card that gives you a one-time bank fee refund, no matter what.
======================================

B of A will also be taking its On Campus promotion on tour, with stops at colleges and universities across the country in coming weeks.

This is at least the third high-profile social media initiative from Bank of America this year. In April, B of A launched an online competition to support its Olympics’ sponsorship called America’s Cheer. And in June, B of A introduced Mo Rocca on Banking. (Note: there are blimps in both the Mo Rocca promotion and the Morris campaign. What’s up with that?)

You can read B of A’s press release about Morris on Campus here.

In this promotion from Arizona State Credit Union, college students can get a free cheeseburger with a new checking account.

The concept exploits the wildly popular LOL Cats’ signature punchline, “I CAN HAS CHEEZBURGER.” (sic)

If you haven’t heard of LOL Cats, go check them out. It’s a series of cat cartoons – many of them are terribly funny – from people from around the world. Each cartoon relies on a photo with a caption personifying cats that be not good with duh Ingleesh.

Key Questions:

• Is a cheeseburger an adequate incentive for a checking account?
• If the cheeseburger is merely a creative hook, will it connect with the target audience (starving college students?) the way the credit union intends?

Key Takeaway: It is possible to build promotions – even build an entire brand image – by exploiting topical issues and pop culture. But how can you control the message?

Thank UAE’s National Bank of Dubai for this one. They recently wrapped up a promotion: “Win 12 Times Your Salary.”

It’s simple. Transfer your direct deposit to the bank and you’re entered to win a year’s pay.

What a great idea.

“We have exceeded our expectations and have managed to secure a record number of accounts,” said Mr. Jamal Bin Ghalaita, one of the bank’s general managers, about the promotion.

The bank gave away two grand prizes. Why two? Who knows. But look at these winners. They just won as much money as they make in a whole year! Are they pumped or what?!!?

Key Question: Did the bank get enough additional business to justify doubling up the giveaway?

It’s doubtful. One grand prize is probably enough to motivate the type of people who respond to these kinds of promotions.

Apparently, this isn’t the first or last promotion of this kind from the Dubai bank. They had previously held a “Win Your Car Free” auto loan promotion, and they currently have a “Live Free for a Year” loan promotion.

“Aren’t you ready
for real differentiation?”

Financial institutions across the country are duking it out over high-interest checking accounts, the ones paying upwards of 6.25%.

These high-interest checking accounts were a differentiator for a brief while when they first came out. Today, there are multiple financial institutions offering the exact same account in every city in America.

Take Portland, where at least three different community credit unions are slugging it out. There’s Rewards Checking from Rivermark. There’s Remarkable Checking from Oregon Community. There’s Fusion Checking from Advantis.

Which one to pick? “Hmmm, I’ll go with this one. They’ve got the best rate.”

Fusion Checking was the latest to enter the market, so that’s probably why they had come in with a higher return.

All these accounts are identical in every way except the rate. They all offer a high interest rate and free ATM refunds, with no monthly fees. They all require 10-12 debit transactions, and you must access online banking and receive electronic bill payments every month.

There are minor variations with only slightly different requirements, such those that require direct deposit. Oregon Community offers a derivative it calls FreeTunes Checking, where you can get four free iTunes downloads each month in lieu of earning interest. At least that’s a little something different.

Reality Check: Trying to create differentiation around any financial product or service is tough. Once anything is successful, everyone will be doing it.

There’s one company behind this widespread high-interest checking phenomenon: Bancvue. They are the folks that first introduced Rewards Checking (as it’s commonly called), and they’ve been marketing it very aggressively. Earlier this year, Netbanker reported that there were over 400 Bancvue accounts, and that Bancvue adds 30 customers every month.

Bancvue’s website is a slick Flash tour that does a fantastic job selling the Rewards Checking solution. There’s language all over the place touting how Rewards Checking can “truly differentiate you from the competition,” and asking questions like “Aren’t you ready for real differentiation?”

The company’s “distinctive” claims were very true in the beginning — before everyone had Rewards Checking — but probably not anymore.

The folks at Bancvue shouldn’t take this the wrong way. Bancvue isn’t to blame. They’re doing exactly what anyone else would do in their shoes. They have a hot product and they are selling it to everyone who will buy it. But is it the best thing for their bank and credit union customers?

Key Questions:

• What would have happened if Bancvue had offered exclusivity in certain markets, as Currency did with Young & Free?
• Reverse-engineering a Rewards Checking account seems pretty straightforward, so what value does Bancvue provide? Wouldn’t an intelligent CFO be able to crunch the backend numbers to make them work?

Bottom Line:

• It’s not “differentiating” when everyone is doing it.
• If your financial institution deploys a Bancvue-style product, please, do yourself a favor and don’t use the generic name, Rewards Checking. There’s already way too many of those. Just Google it and you’ll see.

Here’s an interesting idea from — of all places — Azerbaijan, where Unibank is giving away three 1-carat diamonds every month for a year.

Well actually, only for 11 months. The winner of the final drawing in the 12th month (March 2009) will receive three 3-carat diamonds.

Winners are selected in a raffle from bank customers with at least $1,000 in the bank. You get extra entries for each additional $1,000 you have on deposit.

One-carat diamonds are
worth at least $2,500,
and 3-carat diamonds
are worth between
$15,000 and $30,000.
Bluenile.com

Someone might be thinking, “Yeah, okay. Diamonds are fine for women. But what about men? What guy wants to win a diamond?” Answer: The guy who wants to give his wife jewelry but is too lazy (or cheap) to buy it — e.g., most men.

Key Questions:

• What else can be used as promotional incentives instead of the omnipresent iPod?
  Why do financial institutions always give away the same stuff?
• How much new money is Unibank’s diamond campaign bringing in?
  Or is it essentially a “thank you” promotion to existing customers?

You can do this same kind of promotion in the U.S. as long as you allow anyone to enter. It’s generally okay to give customers entries to a raffle-style drawing, as long as the drawing is open to the general public and it doesn’t require any purchase.

Bottom Line: If you’re going to do a giveaway, as least follow in Unibank’s footsteps and pick something unique and differentiated from your competition.

Wachovia is making it easier to save money with an automatic savings system similar to Bank of America’s “Keep the Change” program.

Way2Save transfers $1 from a customer’s Wachovia checking account into a new, special Way2Save savings account each time he/she makes a purchase with his/her Check Card or makes a payment via an online bill payment or automatic debit from his/her checking account.

In addition, customers can choose to transfer up to $100 a month from their Wachovia checking account to the special Way2Save savings account to see their money grow even faster.

The savings account will earn 5% in their first year, with an additional 5% bonus (up to $300) paid on the full balance after 12 months.

The interest rate drops to 2% in subsequent years, as does the annual bonus (also capped at $200).

After that, the account will pay “a standard savings rate.”

Assuming 23 check card transactions, four online payments, and a recurring transfer of $25 per month, a typical customer can expect to save the following:

In this article, Kathryn Black, savings director for Wachovia Bank, says the product will be supported with TV, radio, print and online media.The program will also be promoted through savings seminars at branches and through its Wachovia at Work program.

Innovation: CU introduces three new branded savings products

Green Branch: Community First CU in Florida builds a LEED certified branch

Update: Norlarco CU to get a new name

In this press release, Personal Care America FCU announces three new savings products.

G.R.A.D. - “Getting Ready for A Degree”
A savings account that is available to members wishing to save money for future education. It can be used personally for the individual or for any family member including children, grandchildren, nieces, and nephews. The money collected in this account can be used for, but is not limited to, educational expenses such as tuition, books, and registration fees at both primary and secondary institutions.

H.O.M.E. - “Home Ownership Made Easier”
An account designed to help buyers save money that can be applied towards the purchase of their first home. The home must be purchased in the name of the account holder. Acceptable costs that are covered by the account include down payments, inspections, mortgage fees, and closing costs.

P.A.C.E. - “Planning Ahead for a Cash Emergency”
Provides a way for members to save money for unexpected cash emergencies that might otherwise deplete traditional savings accounts or be paid with credit cards. Events such as job loss, auto or home repair, and family illness are just a few that qualify for this savings plan.