A few days ago, I received a press release from the marketing company representing the First National Bank of Omaha, which recently created FNBO Direct to compete with online outfits like ING Direct and HSBC Direct.
The new FNBO Direct account, with no minimums and no fees, offers 6.0% APY through September 28. The big question is what will the rate be after that time and whether they will still be significant competitors with HSBC Direct’s 5.05% APY. There has been some discussion about FNBO Direct already thanks mainly to a media push by the company, and you can check pfblogs.org to find those articles. I find it unlikely that I’ll open an account as the difference in current APY isn’t worth the risk to me of changing banks whenever a new one pops up with an expiring deal.
For those who are interested, here is the full press release.
NEW INTERNET BANK WITH 6.00% APY ONLINE SAVINGS ACCOUNT (OSA) LAUNCHED BY FIRST NATIONAL BANK OF OMAHA
New OSA, with no minimums, enables Internet banking customers to start saving at more than 10x the national traditional savings average
OMAHA, Neb—MAY 21, 2007—First National Bank of Omaha, member FDIC, a subsidiary of First National of Nebraska, Inc., the largest private banking company in the United States, today launched its new Internet bank – FNBO Direct – to establish a national presence in the $120 billion Online Savings Account market (1). FNBO Direct is entering the market with a 6.00% APY (2) Online Savings Account (OSA), an industry high, with no fees or minimum balances required. Any and all account holders will receive the rate of 6.00% APY, today through September 28, 2007. Consumers can sign up for the FNBO Direct OSA online at www.fnbodirect.com/pr.
“This is an opportunity to compete with the large, national banks on their own turf, bringing a well-established, all-American bank to customers across the country,” said Rajive Johri, president and director, First National Bank of Omaha. “Not every investment-savvy consumer wants to invest his life savings with a large conglomerate bank. As the nation’s largest private banking company, we’re stepping up to the table with FNBO Direct, a new Internet banking option for consumers. And, we plan to win significant OSA market share.”
FNBO Direct provides a low-risk Online Savings Account (OSA) for investors looking for a safe place to invest their money. The uncertainty surrounding the future of social security benefits, recessionary fears and stock market volatility are among the economic indicators that have encouraged more and more investors to consider cash as a way to diversify their portfolios. With FNBO Direct, consumers can go online and sign up for an OSA with no minimums, today, and start saving at more than 10 times (3) the national average. (www.fnbodirect.com/pr)
“Attracting and retaining Internet banking customers requires being near the top of the list of rates offered at any given time,” said Johri. “With our 6.00% APY, FNBO Direct is currently the most competitive OSA on the market.”
To ensure high levels of customer service, FNBO Direct provides its Internet banking customers with call center support 24 hours a day, seven days a week.
“Consumers are increasingly looking to invest their money in online savings accounts as their experience with ecommerce matures and they recognize the significant rate advantage provided by these accounts,” said George Tubin, research director, TowerGroup. “While competitive rates may initially attract new customers, Internet banks must provide exemplary service and the online banking features that customers demand.”
Multimedia Elements
- Listen to a podcast about the benefits of an Online Savings Account (OSA), featuring Rajive Johri, president and director, First National Bank of Omaha; and George Tubin, research director, TowerGroup. Cut and paste this link: http://spe.atdmt.com/lp/fnbo/FNBODirect_podcast.mp3
- View FNBO Direct’s advertising campaign: www.fnbodirect.com/pr/mkt
- Link to the FNBO Direct del.icio.us page for more industry information about Online Savings Accounts: http://del.icio.us/FNBO_Direct
About FNBO Direct
FNBO Direct (www.fnbodirect.com/pr) is an Internet bank that offers consumers innovative online banking products. Its first offering is a high-yield Online Savings Account (OSA). FNBO Direct is part of First National Bank of Omaha, a subsidiary of First National of Nebraska, Inc., the largest private banking company in the United States. First National Bank of Omaha and its affiliates serve more than 6.6 million customers in all 50 states, with more than 90 banking locations in Nebraska, Colorado, Illinois, Iowa, Kansas, South Dakota and Texas.Footnotes:
1 – Financial research and consulting firm Celent estimates that $120 billion in deposits were gathered online as of the end of 2005 and expects that figure to more than triple to $380 billion by 2010.2 – This Annual Percentage Yield is accurate as of 5/18/2007. Rates may change after the account is opened, but we will not change rates until September 28, 2007 on deposits that are accepted before the rates are changed. Fees may reduce earnings. Minimum balance to open an account is $1.00. Maximum principal deposit balance: $1,000,000. See the Disclosures for additional information and limitations.
3 – According to Bankrate.com, the average yield on statement savings accounts dropped 8 basis points to 0.46 percent since fall of 2006.
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2:26 pm (reply)
“The big question is what will the rate be after that time”
It is not for certain, but I will assume it will be competitive. Their rate prior to this promotion was 5.25% (according to their FAQ).
I am going to read the site in greater detail tonight and will probably open an account assuming there are no surprises in the fine print.
4:25 pm (reply)
I really feel that these are more or less non-events. It seems silly to me that each of these banks take turns offering a promotional rate. I’d rather them just put an extra 10-20 basis points out there in interest year round and be done with it.
5:33 pm (reply)
I’m with Lazy Man, chasing the highest return has gotten old. Unless I can get 100 basis point, I’m not going to chase rates any more. Even at 100 basis points i’m not sure I would change given i think either HSBC or ING (the two accounts i have) would raise rate to complete.
5:50 pm (reply)
I’m with ING, and they still haven’t raised their 4.0% rate. ING was rated among the lowest. While I think it would be beneficial to keep a bit of money in an account at ING, why not have two online savings accounts? When either one promotes a special rate, you can transfer the bulk of your money in the higher interest account.
I wouldn’t bother signing up for multiple accounts chasing every little percentage point, but I’d like to take advantage of the competition.
7:15 pm (reply)
There’s little reason not to open an account with the generous terms. If the rate is not competitive in Sept, then I’ll move it back to another account. All I lose is 3 days in ACH-limbo.
8:16 pm (reply)
Why would you consider getting another account will give you “the risk to me of changing banks”? I don’t see where that risk comes from, unless you feel the bank itself is not safe. I have multiple accounts and I don’t mind to get a couple of more if the rate is really competitive. For me, the only purpose of getting an online bank account is to get the most of my money.
8:36 pm (reply)
Sun: The “risk” I speak of is the chance that these online bank accounts appearing every few weeks with “promotional” rates will cease to be competitive. I don’t have time to jump at every offer that sounds good. I’m trying to simplify my financial life, not add new accounts every week with the latest promotional offer.
A 6% APY just isn’t enough of a pull for me when my money is making 5.05% elsewhere.
I have no problem with people who want to move their money each month to the bank offering the latest highest promotion, but it’s not worth the effort for me.
9:03 pm (reply)
ING’s is not 4.0 as stated above.
7:55 am (reply)
Don’t forget about the lag time in the transfer. We’ll have to wait and see if it takes as long as HSBC. If so, it could be a wash.
9:43 am (reply)
saladdin, their checking account is 4.0, their savings is 4.5%, an error on my part. This is still significantly lower than 6.0 or even 5.25.
I signed up for an FNBO account last night. Their website is a bit glitchy in my opinion, and they say it is incompatible with Firefox, though I could not get it to work well with my IE7 either. I was able to open the account, but I’m waiting for further emails to begin verification and transfer.
Transfers are supposed to take only a few business days when processed electronically. Not too impressed with them so far though.
10:57 am (reply)
For application I had to manually enter a URL due to busted javascript on Firefox. But I’ve had no problems with the regular site (though it is spartan), and the several xfers have gone smoothly.
1:32 pm (reply)
I’m on it! Thanks for the info!
9:10 pm (reply)
9:51 pm (reply)
9:48 pm (reply)
I opened an FNBO account in late May, and transferred a large amount from my credit union last week; this transfer executed correctly. I started another transfer from the same credit union to my FNBO account on Monday, but today received an email from FNBO stating that someone had tried to call to verify the account, and since I could not be reached, I now need to fax (a toll call) copies of my driver’s license, latest statement from this credit union account, and a voided check from this account before the transfer would be completed. When I called FNBO, the representative told me that this was a new security procedure and that if I didn’t send the info, the transfer would not be completed. Yet they could not reverse the transacction. Beware, FNBO makes life very difficult in the name of “security.” The money had already been debited from my credit union account, but will not earn interest in the FNBO account until it is verified. Countrywide has a SavingsLink account the yields 5.40% and GMAC has a savings account yielding 5.30%. Both have easy online transfers. Stay away from FNBO!
9:09 pm (reply)
9:28 pm (reply)
As you said: FNBO makes life very difficult in the name of “security.�
It was a pain to open an account with follow up calls I had to make while customer support was useless.