Increasingly positive media coverage of consumer spending contributed to a significant rise in the Dow Jones Economic Sentiment Indicator (ESI) from 36.9 in October to 38.3 in November. The ESI has risen 11 out of 12 months since its low of 22.2 in November 2008, confirming the consensus among economists the U.S. recession ended sometime early in the summer. Consumer confidence is an important factor that is improving as the holiday season approaches. In November 2008 gloomy shopping-related articles outweighed positive ones by three to one, helping drive the ESI down to its lowest ever level of 22.2. This November the balance is much more equal, indicating a healthier economic outlook and pushing the indicator back to levels not seen since the collapse of Lehman Brothers.
The Dow Jones “Economic Sentiment Indicator” increased for the sixth
consecutive month to 35.5 in August. This continued improvement
indicates the U.S. economy may be advancing into a period of recovery.
The Dow Jones “ESI” predicts U.S. economic health by analyzing the
coverage of 15 major daily newspapers in the U.S., using a numerical
scale from 0 to 100 to express the balance of sentiment in articles
about the economy. A drop below 50 marks the point at which there is a
clear risk of a slowdown and a jump of three points or more usually
indicates a sign of significant improvement. The ESI implements
comprehensive and far-reaching examinations of media coverage as an
economic indicator, using a proven formula used to predict recessions of
the early 90’s and 00’s.
San Francisco-based Pay By Touch has hired Bill Townsend, formerly with Lycos, GeoCities, NewsAlert, as EVP, office of the CEO. Townsend’s 20 years of diverse business experience span education, media, and technology. Prior to joining Pay By Touch, Townsend was a partner and managing director of Interminds, LLC, a management-consulting firm that assists companies with strategic planning, troubleshooting, consumer adoption, incubation, and pre-IPO guidance. He also served as chief marketing officer of Cyber Operations, a technology research and development firm conducting military and government initiatives, and vice president and director of marketing for Ketchum, a global Top 20 advertising agency, where he ran global new business. Pay By Touch is the global leader of biometric authentication, personalized rewards, and payment solutions.
First USA announced this morning a multi-million dollar partnership with LifeMinders, a provider of Web and wireless direct marketing infrastructure that uses a proprietary personalization platform. Under terms of the deal, LifeMinders will send targeted promotions of First USA’s card products to its more than 18 million members. This relationship is one of the first-ever multi-product packages to be co-marketed by the financial leader with another company. LifeMinders will send targeted offers for various First USA credit card products, including the ‘e.card Platinum VISA’, LifeMinders co-branded cards and a diverse array of partner cards. These personalized offers could represent hundreds of different cards with benefits specific to the needs and interests of each targeted member. As an example, LifeMinders members who are signed up for the LifeMinders Travel emails may be offered the ‘British Airways Platinum VISA’ card, allowing members to accumulate airline miles for travel benefits. Financial terms of the deal were not disclosed.
Capital One and iWon.com announced Tuesday they are launching the ‘iWon-Capital One’ credit card. The program, scheduled to launch later this summer, will enable iWon cardholders to earn additional entries into iWon’s daily sweepstakes. Cardholders will be able to earn 50 entries per transaction (up to 500 per month) into iWon.com’s monthly $1 million sweepstakes and annual $10 million sweepstakes. Launched 10 months ago, iWon gives away to users, $10,000 every day, 30 prizes of $1,000 every week, $1 million every month and $10 million on Tax Day. By simply using the site to search the Web, check email, go shopping, read the news, or perform other regular Internet activities, iWon.com users earn entries with practically every click. To date the CBS-funded iWon, has given away more than $22 million in cash prizes.
New research released Monday by Jupiter Communications shows that financial services firms that focus on gathering assets, not driving transaction fees, will dominate the Internet. The new research showed that the adoption of online financial management by more mainstream consumers is the catalyst for numerous changes to this landscape. The new online financial services consumer represents a less affluent demographic group that tends to trade less frequently than current users. Jupiter advises firms to look beyond their traditional client base and reach out to consumers who have purchased goods online. A recent Jupiter/NFO Consumer Survey indicated that there is a strong correlation between online shoppers and traders: More than 40% of US online shopping households also bank or trade online. A smaller but significant 30% of US banking households will manage their bank accounts online in 2003, growing from just under four million in 1998 to 26 million by 2003.
Cash Technologies, announced Wednesday a strategic partnership with Sensar, the manufacturer of iris recognition products, to allow millions of consumers to shop securely on the World Wide Web. The goal: to allow consumers to shop online securely with their ATM cards. 24.7 percent of Americans who are eligible do not have a major credit card, Web shoppers will be able to use their ATM cards without ever having to remember or type in a PIN. Cash Tech’s new EMMA e-commerce transaction processing software, combined with Sensar’s iris recognition products, will secure online transactions by taking a video picture of a shopper’s iris.
Bank One reported this morning that managed credit card loans slipped from $70.0 billion to $68.4 billion during the first quarter. The figure includes both bank credit card and private label products. However average managed credit card loans increased 18% from 1998’s first quarter to $69.1 billion. First USA, Bank One’s credit card division, reported it added 2.9 million accounts in the first quarter, matching the record setting fourth quarter. Credit card revenues grew 13% to $347 million, while service charges and commissions increased 5%. Compared to the fourth quarter, fee-based revenue declined due to the seasonal level of credit card fees. Managed net charge-offs for credit cards were 4.89% and the 30+ day delinquency rate for the first quarter was 4.51% compared to 4.82% one year ago. Full financial details for Bank One’s first quarter as well as historical data are available via CardData ([www.carddata.com])
BANK ONE U.S. BANKCARDS SNAPSHOT
1Q/99 4Q/98 1Q/98
Receivables $68.4b $70.0b $57.7b
Volume $26.9b $29.2b $22.7b
Cards 58.3m 56.6m 51.2m
Chargeoffs 4.89% 4.79% 6.05%
Delinquency 1.51% 1.41% 2.09%
volume- quarterly volume only; charge-offs- net credit loss;
delinquency- 90+ days past due
Source: CardData (www.carddata.com)
CyberCash, Inc. is gearing up for a major marketing campaign for its new ‘InstaBuy Agile Wallet’ service. Yesterday CyberCash announced it has raised an additional $5 million in equity capital through a private placement. CyberCash says it will use $2.5 million of the equity funding to continue to underwrite the marketing, sales and customer support efforts behind the roll out of its ‘InstaBuy’ one-click shopping service. First USA, the first financial institution to participate in the ‘Agile Wallet’ program with its ‘VersaPay’ wallet, has recently announced several marquee merchants who have signed up for the ‘InstaBuy’ service. These merchants include Borders.com, CDnow, ZD Net, 1-800 Flowers, CBS MarketWatch and Cyberian Outpost. As of this morning CyberCash says it has over 11,000 merchants using its ‘CashRegister 3’ service processing more than 3.1 million transactions per month. Last month CyberCash added more than 900 merchants to the service.
First USA has signed-up major Internet merchants for its ‘VersaPay’ digital wallet. New clients include Borders.com, CBS MarketWatch, CoolSavings, CyberianOutpost, FANSonly, Impulse! Buy Network, iVillage, Recompute, SkyMall, ToySmart, Virtual Technology Corporation, Virtual Vineyards and ZD Net. The First USA ‘VersaPay’ service is built on the ‘InstaBuy’ new ‘Agile Wallet Platform’ by CyberCash. Consumers can register for the ‘VersaPay’ service by shopping at e-retailers or visiting websites that use ‘VersaPay’ digital wallet. Once registered, consumers can use ‘VersaPay’ at all merchants offering the service.
GetSmart.com got sold yesterday to Providian Financial for $33 million in cash. GetSmart.com is a free, on-line marketplace for home loans, personal loans, credit cards, student loans and auto leases. The company offers loan products, via performance-based contracts, from more than 100 lenders. GetSmart’s revenues are derived from approved applications it produces. While the company promoted itself as a source of objective and unbiased loan info, the firm simply refers visitors to loans products offered by its participants. GetSmart.com offers no educational content. The company says it attracted eight million visitors last year producing nearly 450,000 completed applications. GetSmart’s traffic was generated from paid banner ads on so-called portal sites such as Yahoo!, Lycos, Wired Digital, InfoSeek, DoubleClick and CBS MarketWatch. The two-year old company spent $13 million for banner ads during 1998. GetSmart.com was founded by a group of executives from Wells Fargo and ex-McKinsey partners from the Mitchell Madison Group. Former Wells Fargo executive Bill Fisher lead the group and served as CEO. Capital partners included Reuters, Goldman Sachs, Robertson Stephens and technology investor Roger McNamee. Fisher indicated yesterday he is leaving the firm after the buyout, which is expected to close by March 1.