Jim notes the progress made by HSBC Direct with great statistics.
Assuming typical high-yield balance levels of $8000 to $10,000 per account (our estimate), the bank has attracted more than $3 billion in deposits. The bank has marketed its 5%+ APR account heavily, so it’s not likely that the new business is making much of a profit contribution yet.
Based on the bank’s reported online ad spending, its acquisition costs were $75 per account from the online spending only, not including what it spent in other media to support the direct business unit (see note 1).
Source: NetBanker 2.0: HSBC Directs attracts 350,000 accounts
This is however interesting in comparison to Citigroup last spring when they did this same volume in 2 months. Without any analysis, this suggests the high rate savings play is, either:
- played out
- actually driven by branch recognition and brand more than rate
Multiple factors come in to play, but which are the core drivers of results that explain this discrepancy?
Bankwatch 
I’m having trouble understanding how you came to either of your two conclusions.
The fact that HSBC picked up 350k customers after Citi did something similar, tells me that this is nothing MORE than a rate game with a minority of rate-sensitive, high-rate seeking consumers chasing the best rates. (HSBC just raised its rates, again, btw).
And the (albeit limited) success of Emigrant leads me to conclude that branch recognition is not a factor at all.
You commented on my site re: the effectiveness of advertising spending post that advertising didn’t drive asset growth. I’m inclined to disagree (partially). I’d argue that its dependent on the product and the offer. The HYSA market is proving that if you’re willing to offer ever-increasingly higher rates, and willing to throw some [online] ad dollars out there, you can acquire some customers.
Whether you can KEEP these customers is an entirely different subject.
Ron … We are both agreed on one point. Retaining those customers is the key metric.
But back to how they got them. We don’t have all the facts, merely what we see. Once did in two months what the other took 12 months. I am merely ‘suggesting’ that the reason could be the brand and branch presence.
HSBC increased the interest rate on their Direct Online Savings Account to 6% for new money. until April, 30, 2007.
From the HSBC site:
6.00% APY* on New Money until April 30.
New Money earns this promotional rate until April 30. Then your money gets our highly competitive rate, currently 5.05% APY. For more details on the New Money Promotion, please see footnote below.)