Ally Bank has been adding products so it can offer its customers a “one-stop shop.” The result has been major growth in client numbers and deposits with millennials accounting for over 50% of new customers in the past year, Anand Talwar, Ally’s Deposits and Consumer Strategy Executive, tells Robin Arnfield
Leading US digital-only bank, Ally, was founded in 2009, Ally as the direct banking subsidiary of Detroit-based automotive financing provider Ally Financial. It offers online and mobile bank accounts along with mortgages, savings products, Ally Invest wealth management products, car loans, vehicle protection products, and credit cards.
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Growth
As of 31 December 2017, Ally Bank had 1.4 million banking customers, up from 1.2 million a year earlier, with $77.9bn in direct customer deposits, up 17% year-on-year from $66.6bn at the end of 2016.
In addition to direct customer deposits, at the end of 2017 Ally also had $15.3bn in brokered deposits and deposits from mortgage escrow, dealers, Ally Invest sweep deposits, and other deposits. This was up from $15.2bn at 31 December 2016.
“The growth in bank deposits is fuelled by new customers and also significantly by existing customers, Anand Talwar, Ally’s Deposits and Consumer Strategy Executive, tells RBI.
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By GlobalData“We’ve seen phenomenal growth in the banking side of our business.”
Interest rates
“We strive to be consistently competitive in the marketplace in terms of interest rates,” says Talwar. “In comparison with the broad market, we’re very competitive, but there are online-only banks that have more competitive interest rates.
“However, they don’t offer the broad value that we offer beyond interest rates in terms of our suite of products and customer service. For example, we offer 24/7 customer care, so you can always speak to a human being. We have a best rate guarantee for our mortgage rates – if you can get a better rate from another provider in the last five days, we will match it.”
Ally said in its March 2018 earnings statement that its goal for its mortgage business is to grow to $3bn+ of annual originations over the medium term.
“The majority of our customer interactions are via desktop and mobile, but we find that our call centres are definitely a strategic asset,” says Talwar. “A lot of customers want to talk to a real person, and not just when they have a problem.
“We have a wide customer demographic and good distribution across demographic bands. But in the last year over 50% of new customers were millennials. This is because millennials are likely to be comfortable banking via digital channels.”
New products
“Our customers said they wanted more products from us, for example credit cards and investment tools,” says Talwar. “So we’ve added products that customers told us they wanted in order to be able to expand their relationship with us.”
In May 2017, Ally Financial launched its digital-only brokerage and wealth management platform Ally Invest. The launch follows Ally’s June 2016 acquisition of US online brokerage TradeKing, which it integrated with its Ally Bank subsidiary and rebranded as Ally Invest.
As a result of this integration, when customers log in to their Ally banking and investing accounts on Ally.com, they see a single dashboard for all their Ally accounts.
“Our goal is to enable customers to access our products seamlessly,” says Talwar. “We offer a single sign-on allowing customers to view all their accounts and carry out transactions across their entire relationship with us via our mobile app and our website. We just have one app now where you can do everything.”
Ally Invest
As of 30 January 2018, Ally Invest had 260,000 customer accounts totalling $5.4bn in assets. In the year to 31 December 2017, the number of funded brokerage accounts rose by 7% year-on-year and customer assets were up 12% year-on-year.
“Ally Invest has two options for customers,” says Talwar. “You can have a DIY self-directed brokerage account and pay $4.95 per self-directed trade. We also offer a managed product which consists of a suite of professionally developed and rebalanced portfolios.
“Many people in the industry would call this account a robo-advisor, although we don’t use this term. In the managed account, we interact with you to understand your goals, risk tolerance, and time horizons. Then we recommend the right portfolio for you and offer rebalancing.”
Credit card
Ally offers a cashback credit card which is co-branded with its issuer, US-based TD Bank. Although unable to disclose cardholder data, Talwar says Ally has seen significant growth in applications for the credit card.
“The card offers unlimited cashback rewards,” says Talwar. “There’s no annual fee and cardholders get 2% cashback on petrol and grocery purchases, plus 1% cashback on everything else. We offer a 10% bonus on the cashback if it is deposited into an Ally account.”
In its March 2018 earnings statement, Ally says that the majority of its credit cardholders are multi-product Ally Bank customers.
Greenlight
In February 2018, Ally Ventures, Ally Financial’s Fintech investment arm made an undisclosed investment in Greenlight Financial Technology Inc, creator of a smart debit card for teenagers and college students.
The prepaid card comes with a mobile app which the teenager or student and their parent both download and that helps the parent control their child’s spending. The app also sets savings goals for the young person.
Ally said the investment supports Ally Ventures’ goal of promoting innovation through key alliances with young companies that are developing new financial services technologies. It also aligns with Ally’s broader corporate focus on financial well-being, and empowering consumers with smart digital financial products, along with knowledge, tools and resources to help them better manage their money.
Talwar adds: “We don’t have any plans to offer a smart debit card with Greenlight as yet. But we’re looking at what products it would make sense for us to develop with them.”
CDs
Ally offers a range of savings products including money market accounts, interest-bearing current accounts, savings accounts, Certificates of Deposit (CDs), and Individual Retirement Accounts (IRAs).
In 2015, Ally introduced an online CD management tool with interest disbursement options for non-IRA CDs. Initially available only for customers logging in via the Ally website, the CD portfolio management tool is now also available for mobile app users.
“In the past, you didn’t need to watch your CD rates,” says Talwar. “But, as rates rise, people want to be able to manage their CDs more actively.”
The CD management tool allows clients to specify renewal instructions for their CDs up to a year in advance without having to contact the call centre. For example, they can roll the CD into a different type of CD, add money either from an Ally or non-Ally account, or move funds to their Ally bank account. Clients can also set CD interest disbursement options online or using their smartphone.
Customers who prefer to talk to an agent on the phone may continue to do so, Ally says.
Ally Assist and Ally Skill for Alexa
Introduced in 2015, Ally Assist in an Apple-Siri style mobile virtual assistant for iPhone users that responds to queries and commands submitted via speech or text.
In 2017, Ally launched Ally Skill for Alexa, enabling customers to manage their Ally accounts using an Amazon Alexa-enabled device. Customers can interact Ally Skill to perform tasks such as balance checks, making transfers or listing recent transactions.
The AI-based too included Ally CurrenSee, designed to help customers make more informed buying decisions, examples including telling cardholders how many hours they have to work to pay for the price of a purchase.
Other digital banking innovations include offering Face ID and Touch ID on iPhones; P2P transfers via the Zelle network to any US bank customer’s email address or mobile phone number; and the Ally Card Controls mobile app.
While other issuers simply offer and on or off control for their customers’ cards, Ally Card controls gives Ally debit cardholders a range of options.
“With our card controls, you can block international transactions or transactions at certain categories of merchants or turn off online transactions or ATM withdrawals,” says Talwar.
“You can ring-fence the region where the card can be used for example only in the area where you live.”
