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It's not often that a new banking product changes the way consumers talk about money. But it's even rarer that an offering changes the way banks talk about money.
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PNC Financial Services Group is betting that its new Virtual Wallet Student account will help parents of college-age students get more involved with their children's spending — and that it will turn the parents into PNC customers as well.
July 27
PNC Financial Services Group Inc. is betting that its Virtual Wallet account, which has always focused on showing consumers how to be better savers, can also teach them to be better spenders.
Virtual Wallet, a three-in-one deposit account that PNC introduced in 2008, lets users manage a pool of money across one checking account and two savings accounts. Though Virtual Wallet is similar to third-party personal financial management websites, PNC is one of the few banks embracing PFM that have not allowed users to pull in data from outside accounts.
PNC opened that door a crack last week when it allowed its Virtual Wallet customers to import data from their PNC credit cards — and to apply for a new PNC credit card from within Virtual Wallet.
Nicole Sturgill, research director for delivery channels at TowerGroup, said that since Virtual Wallet is aimed at a younger crowd, "you're looking at a demographic that's in a learning phase," and PNC is providing its customers with "the educational tools that will hopefully make them a better customer, a better money manager."
And with credit cards, "the best customer is one who uses their card and pays it down or off," she said.
Thomas S. Kunz, a senior vice president and director of payments and e-business for PNC, said that the same tools the Pittsburgh company built to help its customers become more responsible savers can also be used effectively with credit.
"By helping customers be smart credit users, and giving them the tools and information to do that … customers will know when they want to make the trade-off between paying now and later," he said.
The Virtual Wallet deposit account is a combination of three accounts: checking, short-term savings and long-term savings. The short-term savings account pays no interest but provides instant access to funds that can be used in an emergency as overdraft protection. Money is moved among the three accounts by manipulating a graphical slider.
Many of Virtual Wallet's features, like the slider, shun conventional online banking practices in favor of something more visual. One of Virtual Wallet's central features is the calendar: rather than lump recurring payments in with a long list of other transactions, Virtual Wallet presents past and future bill payments visually by marking the days they are paid and due.
With credit cards, the statement date and due date would automatically be added to the Virtual Wallet calendar, making the customer's use of credit fit naturally with other bills.
Once PNC's consumers make the decision to accumulate debt on a credit card, Kunz said, Virtual Wallet's tools can also help them budget properly to pay that debt down.
Kunz said that although checking and credit are very different products to bankers, "in the customer's mind … they're integrated and they're interchangeable."
For that reason, PNC's customers have been asking for credit cards to be integrated with Virtual Wallet for some time. Kunz said that in the first week since that integration went live, many existing card customers have linked their PNC cards to their Virtual Wallet account. He said it is too soon to tell how popular it is to apply for a new card to use with Virtual Wallet, though PNC includes a link to apply for a card within the Virtual Wallet view.
PNC aims to let all its consumer credit cards be linked to Virtual Wallet, though users would still need a Virtual Wallet deposit account — its online tools are not offered to people who have only a PNC credit card. Kunz said the only cards that may not be linked are some belonging to customers of National City Corp., which PNC bought at the end of 2008; PNC expects to allow those customers to link their cards by yearend.
Last week the Pittsburgh company added more detailed alerts, which can be sent to two people at once. PNC also added new tools to help set budgets.
Kunz said PNC may consider allowing Virtual Wallet customers to connect other accounts, even those outside PNC. For now, though, it is focused on working with PNC accounts. "We're better able to help the customer if we own the data," Kunz said.
PNC's more immediate goal is to bring its app for Apple Inc.'s iPhone up to speed with its website. Examples include letting customers initiate person-to-person payments from a mobile device, and adding new features such as remote deposit capture, which allow users to deposit checks electronically by photographing them with the iPhone's camera.
Though PNC is also not alone in its decision to allow its PFM users to view only accounts at the same bank, many banks that offer PFM let customers import spending data from rival banks.
The same is true for third-party PFM providers like Intuit Inc.'s Mint.com, which has more than 3 million users.
Sturgill said PNC's decision to restrict Virtual Wallet to its own accounts does not indicate it is playing catch-up. Despite Mint's popularity, "the overall issue with Mint is that it's not a bank," Sturgill said. A bank can allow its customers to manage bill payments from within their PFM view, which PNC does, whereas third-party PFM websites typically do not let users initiate new payments.
Cathy Graeber, founder of the consulting firm Swimming Upstream, said that although there is value to having this data presented all at once, there may not be many customers who get a credit card and checking account from the same bank.
"It's more than likely that they have a credit card somewhere else," unless PNC has made unusual efforts to market its cards to the same audience for which it designed Virtual Wallet, Graeber said. The reason consumers tend to keep their checking and credit card accounts at separate banks is that they have a different standard for choosing each account.
"Many times they're picking their … [checking account] based on their ATM locations and their branch locations," Graeber said, whereas with credit cards, the bank most likely to get that business is simply "who solicited when they were in college."
PNC said that of the Generation Y demographic it is targeting with Virtual Wallet, those with a Virtual Wallet account are more likely to also have a PNC credit card than those with any other PNC checking account.
Despite her concern, Graeber said PNC's decision to extend Virtual Wallet's online features to its card accounts should benefit the bank and consumers alike.
Putting PNC's financial tools "front and center" will make its customers "better financial consumers," Graeber said.
