A disruptive new way to connect customers with banks has emerged: online money auctions. Allowing banks to save hundreds of euros on marketing and advertising, they can bid directly on a customer’s money through special auction sites.

How exactly do the online money auction sites work? Easy enough: individuals, companies and government organizations can post the amount of money they would like to save, and for how long.

Participating banks can then place bids in the form of interest rates, directly competing with each other for the customer’s money.

Customers are then free to commit to the highest bidder and can effectuate the transaction directly through the site. Or they can tweak the amount and duration to see if they can get even higher interest rats.

Fixed commission
According to co-founder Arjo van Vueren of the Dutch money auction site spaarbod.nl, their website is a viable alternative to traditional methods of drawing in customers. Especially the reduced costs can make this interesting for banks, he said in an article in the Dutch newspaper De Pers.

“A bank can join for free. We get a fixed commission over every euro that is deposited through our site.”

“Normally, it would take two to three hundred euros worth of marketing and advertising to have a new customer open a savings account. We are considerably cheaper.”

Best interest rates
Spaarbod.nl has only been online for a couple of days and is the first of its kind in the Netherlands. UK based Maxbips.com has also been launched recently, US based Moneyaisle.com has been around for about a year.

The Dutch mortgage auction site, www.internethypotheekveiling.nl, was launched a couple of years ago. It allows customers to auction off their mortgages to get the best interest rates.

Find it outside
It is interesting to see how sites like these turn the roles in the client/company mating game. In a way it makes sense. The client has something to offer: an amount of money to use for a certain amount of time; and it’s up to the banks to show what they can offer in return.

However, it remains to be seen how many banks will invest the time to actively bid, and how many banks will instead just post the going rates. If none of the participating banks bother to make a personal offer, customers might just as well revert to a regular interest rate comparison site.

In any case, it is good to note that while spaarbod.nl guarantees the highest interest rate of the participating banks, customers may still find a higher interest rate outside the spaarbod.nl site.