Direct to the top

‘Young Ambition’ might sound like a cheesy pop group but is actually one of the new demographic segments that could make or break your online success

By Sandra Hanchard

February 20, 2009

Internet-savvy consumers have been prompted to seek out the benefits of greater savings and convenience promised by direct banks. By and large, direct banks in Australia have been successful in capturing key segments online, but Hitwise data shows there is still opportunity for direct banks to improve brand awareness, particularly in association with product offerings. Hitwise takes a look at how websites like one direct and UBank are faring, and where they are sourcing their traffic.

Direct vs traditional
Online maturity is one factor that determines how much traffic each direct bank attracts. ING DIRECT Australia, which has a relatively long-established presence here, competes strongly in the Hitwise Banks and Financial Institutions category, ranked as the 21st most visited website in January 2009.

Younger brands such as RaboPlus, one direct and UBank were positioned outside the top 100 websites, ranked at 149, 190 and 255 respectively.

UBank made some impact on immediate competitors when it launched late last year, briefly overtaking one direct and RaboPlus in market share of visits for the week ending 11 October 2008. Since then, RaboPlus and one direct outstripped visits to UBank in January 2009 by a factor of 2.75 and 1.9 respectively.

Search terms drive traffic
A key product area for direct banks is term deposits. Search analysis reveals that ‘term deposits’ was the leading generic search term driving traffic to direct banks, with 41.4 per cent of traffic on that term received from paid sources (four weeks ending 31 January 2009). Despite the high paid search allocation, there is still an opportunity for direct banks to improve their brand association with term deposits. When Australian users researched ‘term deposits’, they were more likely to look for traditional brands than direct banks, with top searches including ‘anz term deposits’, and ‘westpac term deposits’. Among direct banks, ING DIRECT received the highest volume of searches in association with term deposits.

Similarly, direct banks were not likely to be well represented in brand searches for other key product areas such as ‘home loans’ and ‘home insurance’. While keeping operating costs low is crucial for direct banks, branding campaigns should be improved to get the most return from the online channel.

Leverage social networks
Direct banks attract a similar breakdown in traffic sources to the Banks and Financial Institutions Industry in general. Like traditional brands, comparison-shopping is a key source of traffic to direct banks, with other banks and financial institutions accounting for 39.8 per cent of upstream traffic in January 2009. Search engines referred 22.4 per cent of visits, reaffirming that every competitor in the financial services industry needs to be well optimised for search traffic.

Social networking and forums were more influential in referring traffic to direct banks than news and media websites and email, highlighting the importance of having a social media strategy in place. Social networking and forums in fact were a key source for customer acquisition; one direct and RaboPlus were 61 per cent and 56 per cent respectively more likely to receive ‘new visitor’ traffic from social networking and forums sites than any other source in January 2009.

Hitwise Clickstream data also highlighted an opportunity for direct banks to boost the traffic received from comparison shopping affiliates. Websites such as RateCity and InfoChoice were more likely to refer traffic to traditional brands than to direct banks.

Direct attraction
The ‘fresh’ appeal of direct banks and the alternative they offer to major brands appears to be helping direct banks attract key audience segments. In aggregate, direct banks were 44 per cent more likely than other nanks and financial institutions to attract visits from households in the Hitwise Lifestyle Group, ‘Young Ambition’ – educated and high-earning young singles and sharers in the inner suburbs (12 weeks ending 31 January 2009).

Direct banks in fact attracted a skew towards affluent households compared to other banks and financial institutions; direct banks were 36 per cent more likely to attract ‘Privileged Prosperity’ – the wealthiest online segment, and 28 per cent more likely to attract ‘Academic Achievers’ – wealthy areas of educated professional households.

One direct was typical in its audience profile to direct banks, but was also highly represented among ‘Learners and Earners’ – students and professionals living in high density, lower cost suburbs, and ‘Pushing the Boundaries’ – young families in growth corridors. While ‘Pushing the Boundaries’ are an ideal demographic for one direct’s home loan offering, its traffic from ‘Learners and Earners’ also represents an opportunity to expand into product areas such as direct debit cards.

ING DIRECT was notable for attracting a high representation in visits from ‘Privileged Prosperity’. This highlights an opportunity for ING DIRECT to promote wealth management products online.

Direct banks have offered an attractive alternative to consumers, who have faced a less competitive banking landscape in Australia with recent mergers. While direct banks have gained some mileage among Internet-savvy consumers, the challenge now will be to improve brand awareness and online leads by boosting partnerships with leading media and comparison shopping websites.

Sandra Hanchard is a research analyst with Hitwise Asia Pacific