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Ally Bank Launches Mobile Banking & Reports on Deposit Growth


Ally issued a press release yesterday with some interesting news. First, Ally Bank has finally released mobile banking. It's the first phase of mobile banking so it doesn't include some features like Ally eCheck Deposit. The second phase is scheduled for later this year. This first phase allows customers to check balances, search transaction history, transfer money between Ally accounts and find ATMs and cash-back locations. I'm not sure how useful the ATM locator feature will be since Ally rebates fees from all ATMs so customers don't have to search for specific ATM networks.

The press release provided the following details about what is planned for the second phase:

The second phase of Ally Mobile Banking is planned to launch later in 2012 and will feature expanded capabilities including bill pay, Ally eCheck Deposit, and transfers outside of Ally Bank—to other financial institutions, or to friends and family by using Popmoney, a simple way to send money without writing a check or getting cash.

I'm surprised the first phase doesn't offer the capability to make transfers to and from external accounts. Perhaps this involves additional security protections which requires more development time.

Mobile Banking and Online Check Deposit

Ally Bank is a little behind others with mobile banking and online check deposit. ING Direct and Alliant Credit Union have already come out with mobile check deposits:

Last week ING Direct released online check deposit, called CheckMate, that works with both PCs and smartphones. The CheckMate feature was added on to ING Direct's mobile banking service which was first introduced in 2007.

Alliant Credit Union recently announced its Mobile Deposit that allows for check deposits using Android or iPhone smartphones. Alliant has been offering mobile banking and online check deposits from PCs for a while.

Ally Bank Deposit Growth

In addition to the mobile banking news, Ally Bank released news of its deposit growth. Here's the relevant excerpt from the press release:

Ally Bank has seen consistent growth each quarter. Customer accounts have grown nearly 30 percent year-over-year, illustrating the continued trend to direct banking. And, total retail deposits grew to $29.3 billion, up 25 percent from the first quarter of 2011.

The Bank has seen an expansion in its loyal customer base; the first quarter 2012 CD retention rate was 91 percent and the number of Ally Bank customer accounts increased 6 percent quarter over quarter—taking the total number of accounts above the 1 million mark.

This might be good news for Ally, but I'm not sure how helpful it is for savers. This kind of deposit growth won't put pressure on Ally Bank to keep deposit rates high. Ally Financial continues to be big in auto financing, so hopefully that will keep deposit demand high.

The high CD retention rate is likely helped by Ally Bank's Loyalty Rewards Program for CD Renewals which I reviewed last week. This is undocumented program that has been going on for several years. It currently rewards customers with a 0.25% rate bump on CD renewals.

There remains questions about potential deposit caps that might still be on Ally Bank. Back in 2009 the Wall Street Journal reported that FDIC asked Ally officials to keep the rates on deposits low enough so the bank wasn't one of the nation's top five rate payers, as measured by Bankrate.com. This came after the American Bankers Association complained to the FDIC about Ally's deposit rates. The ABA thought it was risky for Ally to be allowed to pay above-market rates since Ally was receiving government assistance.

Ally Bank Remains a Good Deal

Even thought Ally Bank may have some downsides, I still consider it a good choice for an internet bank.

Ally Bank's savings account rates and CD rates have always been fairly competitive as compared to other internet banks. Several internet banks have failed to keep both savings account and CD rates competitive. For example, ING Direct CD rates are often low. FNBO Direct, Emigrant Direct and E-LOAN have been unable to keep their savings account rates competitive.

Ally Bank's online banking features and customer service continue to be better than most of the other internet banks. For example, I consider Ally's ACH bank-to-bank service to have many advantages over ING Direct's service.

Ally Bank's checking account provides several perks such as unlimited ATM rebates and free paper checks.

Ally Bank CDs have some saver-friendly features such as a small early withdrawal penalty, a renewal bonus, a 11-month no-penalty CD, and two raise-your-rate CDs.

Ally Bank has a long history for internet banks, but there are some questions about its future. News reports have mentioned that the "U.S. Treasury would like to break up Ally and sell off its bits and pieces in hopes of getting its money back." That shouldn't have any immediate effect on customers, but Ally Bank may look a lot different 5 years from now especially if some megabank acquires it.

Related Pages: Ally Bank

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