Oh, Say Can You See . a Future for the New `Me to Me?' - Analyst Says `Maybe'

SAN FRANCISCO – Consumers may find the idea of moving money between different banks and credit unions attractive, but they won’t pay much for it and they won’t use it often. That’s the conclusion of a new report by Forrester Research analyst Catherine Graeber of the research and advisory firm’s San Francisco Research Center. But, she says, “me-to-me is a good fit for a select group of firms that want to steal savings, CD and money market balances from competitors.” Graeber includes credit unions in that select group, along with mid-tier banks and non-traditional online financial services providers. “As credit unions broaden membership rules to expand their base, they come up against big banks like Bank of America and Washington Mutual, which have branches and ATMs on every corner,” she says. “Instead of competing head-on for checking accounts, credit unions should compete on savings and CD rates, where they typically offer higher yields than their big-bank competitors,” Graeber says. “Smart credit unions like Patelco and Boeing Employees Credit Union should offer a me-to-me service and allow members to set up recurring transfers from their bank checking account to a money market account at the credit union,” the Forrester analyst says. Forrester surveyed the group of consumers it felt would be most likely to use a -me-to-me service: online consumers with accounts at multiple institutions and household incomes of $50,000 or more – about 40% of the online population in the United States. Graeber says they found that most of those consumers – 82% – report moving money between accounts at different financial institutions, but that they don’t usually need to quickly, with about 75% of them sending checks in the mail or depositing checks at an ATM or branch. She also found that while three-fourths of that demographic would be likely or very likely to use an electronic me-to-me transfer system (and that 44% of the country’s larger banks consider offering the service a priority this year), especially for a sweep-like function, consumers largely aren’t willing to pay more than a buck or a so to do such a transfer. In fact, less than 10% would if such a transfer would cost $2.50 or more. Graeber’s conclusion? “Me-to-me is not the next big thing for all financial institutions. Too few consumers would use it regularly enough or pay enough to make it a robust fee-revenue opportunity,” she says. “But there is an opportunity for a select group of firms that want to grab market share for their savings and investment products.” -