Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.
- Who Says Prepaid Cards Are Only for the Unbanked?
Prevailing wisdom holds that prepaid cards are an alternative or, at best, a bridge to a bank account, not an overlapping product. But Fuze Network Inc. says there is enough overlap today that consumers can use a bank’s online bill-payment software to load funds to prepaid card accounts. Fuze works from the premise that many consumers both use prepaid cards and have bank accounts. That contradicts the common thinking that most prepaid card users are unbanked, meaning they do not use mainstream banking services either by choice or because of financial hurdles. In a survey that Mercator conducted last May, 8% of the 1,009 respondents said they had purchased a general-purpose reloadable card in the previous 12 months.
- Issuers Look to Promote Small On-Time Payments
TD Bank has launched a credit card for customers who are responsible, but not too responsible. It rewards customers for paying on time, but not in full — the incentive for an on-time payment is a reduction in the interest rate for carried balances. Similarly, Capital One Financial Corp. has a new card rewarding students for on-time payments, but imposes strict, low credit limits. A number of credit cards rewarding consumers for more responsible financial behavior have been rolled out since the financial crisis as issuers seek to woo back potentially credit-wary customers with strategies that hedge risk on both sides. “Banks are trying to figure out how to expand their universe of customers,” said Judy Cohen, vice president at EMI Strategic Marketing.
- Point, Click, Capture: Credit Unions Should Race to Offer Mobile RDC
Most analysts and experts agree 2011 is the year mobile capture goes mainstream. In fact, Andrew Tilbury predicts within two years this service offering will be as ubiquitous as online banking and bill pay. FI members will demand it, and statistics demonstrate that some members will even go so far as to switch financial institutions if the service isn’t offered at their current institution. A few early adopters launched the service in 2010, but the race has officially begun for the rest of the country. Tilbury assures, that financial institutions’’ competition is at the very least evaluating mobile capture. The question is not if your institution should offer mobile capture–but rather how quickly?
- BankSimple Wants to Shake Up Banking, With Cutting Edge UI Design
The founders of a startup called BankSimple have the same gripes as author John Pavlus (although perhaps not as vituperatively expressed). “Most people have a horrible relationship with their banks,” says Alex Payne, BankSimple’s co-Founder and Chief Product & Technology Officer [pictured above]. “We wanted to make the experience a lot more human.” BankSimple’s creative director, Bill DeRouchey, puts a finer point on it: “We’re focused exclusively on the user experience of banking.” Besides a host of up-to-date technology running under the hood, Payne and DeRouchey are mainly betting on good design itself to entice customers to ditch the Chases and Bank Of Americas of the world.
- Credit Card Data Tells Mixed Story
While the average debt on credit cards in December decreased by 4 percent compared with the same month a year before, Americans still carried an average of $4,284 on credit card statements in December 2010, according to data released this week by the credit monitoring company Experian. The data offers conflicting versions of the economy’s already mixed picture. While some consumers spent more during the holidays because the economy was rebounding, others were still unable to cover expenses without leaning on their credit cards. And while holiday spending also appeared to have been more robust than in the last several years, even more recent data has shown a bit of a slowdown in consumption this year.
- Checking Will Stay Free, Says PNC Bank
PNC Financial Services Group Inc., bucking a trend that is sweeping the banking industry, is vowing to keep its most-basic checking accounts free of fees. The Pittsburgh-based regional bank on Tuesday is expected to start notifying its five million checking customers of changes to some of its accounts, which won’t include any new fees. But the free checking comes at the price of other perks: Basic accounts will no longer enjoy debit-card rewards, and non-PNC automatic-teller-machine fees will no longer be reimbursed. PNC has estimated it could lose $800 million a year from the new rule, which is set to kick in this July. Bank of America Corp. and J.P. Morgan Chase & Co. are among the banks that have put free checking on the chopping block and are testing a slew of new accounts around the country.