Account Alerts Get Personal

CU360
February 19, 2010 | COMMENTS

Many financial institutions' alert systems can notify members/customers when their balances reach a preset threshold, or when a deposit clears, but observers say these features are not especially compelling. To really make these notices useful, institutions should offer alerts that can deliver more information to more destinations.

"In the realm of alerts, innovation isn't a word that comes up as often as it should," Mark Schwanhausser, a research analyst at Javelin Strategy and Research, said in a recent interview with American Banker newspaper.

Andrew Taylor, the chief technology officer at Jwaala, said one way to improve alerts is to incorporate the feature into personal financial management (PFM) applications, which are designed to help people keep track of where they spend their money.

The Austin company offers financial institutions PFM software that includes alert capabilities. Jwaala recently updated the application to deliver notices through Twitter's microblogging service, eBay's Skype, and Google's iGoogle. And it said it would offer alerts through Facebook in the second quarter, after the social networking service makes certain software changes. In all cases, the alerts would be sent to users as private messages. Jwaala's bank and credit union customers can also send alerts via e-mail, text message, and as an RSS news feed.

"It's not so much that one channel doesn't work for a person," Taylor said. "It's more what they prefer. There are a lot of people who are trying to cut down on what's showing up in their e-mail box" and may not appreciate the added clutter of e-mailed alerts even if they want to be notified about their spending.

Many people check their Facebook pages several times a day, he said, much more often than they visit their online banking sites, and alerts sent there can help financial companies engage people when they are not thinking about their finances.

The software is more flexible than other offerings. “If you just want to be tweeted about your paycheck when it shows up, you can search for it and make that an alert," Taylor said. The system can also show when someone logs in to online banking—or tries to log in and fails.

Michael Poulos, the president and chief executive of Michigan First Credit Union, said, "A lot of people who use online banking aren't used to this kind of customization. Before, they used to get five or six different choices. Now they can make their own."

The Lathrup Village-based credit union has used Jwaala's PFM software and alert application for about a year and plans to add the social networking feeds by mid-March.

Poulos said that sending alerts to more destinations will make the service more appealing to some members. "If we're willing to reach out to them and they can do their banking where they hang out—versus having to conform themselves to us—we have met more of the customer's needs," he said.

However, Marc DeCastro, a research manager at IDC Financial Insights, said there is no shortage of options for people to monitor their spending and many people are already set in their ways.

"I definitely think there's value in customizable alerts,” he said. "I just wonder if people will go through the exercise of, one, setting them up and, two, acting on them."

For those who do act on them, the Jwaala software allows users to analyze their spending and create detailed searches for specific types of spending. Any search term can also become an alert so that a user could opt to get alerts only for specific dollar amounts spent at specific merchants.

About 20% of Michigan First's 20,000 active online banking users also use alerts, and another 1% sign up for alerts each month. One-quarter of its alert users have created the customized alerts Jwaala's platform allows. Michigan First defines an active user as someone who has signed in within the previous 30 days.

Schwanhausser said that sending alerts to social networking sites is "really likely to hit home with a younger audience in particular," though this feature might not appeal to everyone.

Alerts "have now become a commodity," says Edward Woods, a principal at research firm Mindful Insights. Financial institutions feel compelled to offer them, but they no longer differentiate one's financial institution. Jwaala's new approach "just made it more relevant," he adds.

Financial institutions that allow this level of customization for their alerts have "one more lever that will keep that institution in front of the customer," says Woods. "This is definitely a way to participate in how we've changed how we communicate."