UBank brand not quite ready for NAB

National Australia Bank chose the height of the second stage of the great credit crunch as the right time to introduce its alternative retail bank brand UBank to the Australian market.

The first product for NAB's UBank is an aggressively priced three-month term deposit and well-priced 6-month, 9-month and 12-month term deposits.

Why NAB chose yesterday to introduce the brand isn't clear. The bank does not seem to have looked for much free media, nor received much.

UBank made its debut yesterday with one element under prepared. The UBank website this morning noted that "we don't have internet banking for UBank term deposits at the moment" and invites customers to ring the bank instead.

One difference in the UBank service proposition is that the bank plans to staff the call centres 24 hours a day, seven days a week. NAB still shuts its call centres for its core brand at 8pm in eastern Australia (or 5pm in Western Australia during the summer months) and still offers no service over weekends.

UBank is the first product managed under the wing of what NAB was referring to as Star Direct. The bank's worked on this concept for the last 18 months or more.

Part of the vision for Star Direct and now UBank appears to be to foster a somewhat independent culture. The business has its own management board and will have to compete for services (through the bank's new servicing division) as well as funding on commercial terms (through the deposit market or through the NAB treasury) when it's ready to introduce lending products.

Greg Sutherland, is executive general manager of Star Direct and marketing while Gerd Schenkel is general manager, UBank. The bank has not fulfilled requests for a management briefing on UBank over several weeks and declined to do so again yesterday.

In his blog The Bank Channel NAB channel marketing executive Rob Findlay wrote yesterday that UBank offers the first straight through processing for term deposits, where applicants can make immediate payment via BPay upon submitting their application.

Midland Bank pioneered round the clock phone-based service under an alternate bank brand in Britain more than 15 years ago. Many banks in various markets have attempted to copy the idea with mixed results.

Secondary bank brands have limited success in the Australian market.

ANZ continues to plug away with one direct brand introduced a couple of years ago, and aimed at price sensitive home loan customers (and which also offers a high yield savings account). Commonwealth Bank's Homepath, aimed at the same niche, is essentially invisible almost a decade after its debut. More than a decade ago Advance Bank tried the same thing through the One World brand, which faded quickly.

NAB's UBank will offer an interest rate of 8.5 per cent for a three month term for applications received by 12 October.

Among major banks Commonwealth Bank currently pays the highest for a $10,000 three month term deposit at 7.45 per cent. NAB's rate is 4.7 per cent.

Financial institutions offering rates of more than 7.6 per cent include Adelaide Bank, BankWest, Elders Rural Bank, Heritage and IMB.

Returns are higher for longer terms with $10,000 for 180 days attracting eight per cent or above from institutions including Arab, BankWest, Defcredit, Elders Rural and NSW Teachers.

The same value for a one year term will attract eight per cent still at Adelaide, BankWest, Bendigo and NSW Teachers, even after they have all cut rates by between ten and 30 basis points during September.