Magazine article American Banker

Novel Way to Market CDs: Auction Them over the Web

Magazine article American Banker

Novel Way to Market CDs: Auction Them over the Web

Article excerpt

A Philadelphia community bank plans to use the Internet to let customers set their own rates on short-term certificates of deposit.

Starting next Monday, Bank Philadelphia will offer 12-month CDs at rates to be determined on-line by auction-style bidding. The thrift expects the novel move to attract national attention to, the Web site operated by its parent company, USABancShares.

"Rather than banks dictating what rates should be, on-line customers will now be able to set rates themselves," said Kenneth L. Tepper, president and chief executive officer of the $192 million-asset company.

"The auction process is already incredibly successful on the Internet, and it's time that our industry follows with banking products."

Indeed, companies such as Inc. of Stamford, Conn., have been phenomenally successful allowing customers to name their price on products such as airline tickets.

Dave Koto of Brintech Inc., a New Smyrna Beach, Fla., bank technology consulting firm, said this is the first time he has seen a banking company try it. "I think we are going to see a lot of this going forward," Mr. Koto said.

BankPhiladelphia will start the bidding next week by posting an abovemarket ceiling rate-perhaps 10%, Mr. Tepper said. But consumers' responses will determine the actual rate to be paid.

Would-be investors will be asked to declare the lowest rate they would accept. After an hour the thrift will offer CDs at the lowest figure bid. …

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