How an Indianapolis financial institution achieved big growth in online banking.

Union Federal Bank of Indianapolis earlier this year was cited by its online banking vendor for "out-standing growth" of its online banking channel in 2004.

The vendor, Digital Insight Inc., Calabasas, Calif., said that Union Federal (assets: $3.5 billion) had increased Internet banking penetration among retail customers to 22 percent. Bill-pay penetration had grown to 33 percent, with a 96 percent retention rate.

At its annual meeting, the vendor honored Union Federal and attributed the financial institution's high growth to four actions:

* Use of the vendor's "welcome" e-mail pilot program that provided targeted e-mail communications to customers and included a response monitoring mechanism. The hank followed up with its own e-mail campaign, pushing those who sign up for the online channel to stay active (at least once a month).

* The use of a bill-pay prompt as part of the online interface. The prompt, together with the bank's decision to offer bill pay for free, boosted new monthly bill-pay customers from an average of 60 to more than 300.

* The development of highly simplified enrollment for online banking. The bank is currently working with the vendor to create immediate, automated verification for new user enrollment.

* The distribution of a magazine-style online newsletter called The Money Center. The periodical highlights online banking benefits as well as other timely banking issues every month--another way to keep online users active.

"Retention has always been important for us," says Preston Thornton III, the bank's assistant vice president of Internet sales and development. "By offering the best in online services, we enhance our customers' perception of us and our level of service, which builds loyalty."