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.
- MasterCard and Visa Report Increases in Payments
MasterCard Inc. and Visa Inc. on Wednesday reported higher spending on their U.S. debit and credit cards. Visa said total payments made with its U.S. debit and credit cards rose 13%, between Nov. 1 and 28, from a year earlier. Spending on the San Francisco payments network’s credit cards grew 9%, while spending on its debit cards increased 17%. Cross-border payments volume also grew 17%, from a year earlier. MasterCard reported that for the fourth quarter through Nov. 28, its processed payments volume for U.S. debit transactions rose about 25%, excluding portfolio deconversions.
- Social Media Focus of Fiserv Survey
Fiserv Inc. has released the results of a survey the technology company said shows a high interest in social media among members of credit unions and customers of banks. The company said a nationwide survey of 3,000 representative online consumers conducted with The Marketing Workshop in August showed that 11% already are connected with their credit union or bank through a social media site and more than 36% of those who are not said they would be interested in doing so. Interest in making that connection is highest, at 45%, among Gen Y consumers, the survey found. All participants in the survey had to have a checking account and some responsibility for paying bills online, Fiserv said.
- 11% of Consumers Have a Social Media Connection with Their Bank? No Way…
A social media white paper released by Fiserv, the leading global provider of financial services technology solutions, says that “11% of online consumers are currently connected with their bank or credit union through a social site.” Fiserv’s white paper was based on an August 2010 survey of 3,000 U.S. consumers who had checking accounts. This finding — that 11% of people online who have checking accounts are connected to their financial institution on a social networking platform — is shocking. Out of 307 million people in the U.S., 231 million of them are online, or 75.2% of the country. That means a financial institution with one million customers — we’ll use the fictitious “Acme Bank” as an example — could feasibly reach 750,000 people via social media. If Fiserv is right and 11% of Acme’s customers are indeed already connected to Acme Bank through social networking platforms, then Acme would have a following/community that totaled 82,500 people. Everyone wants the social media hype to be true so badly that they swallow favorable studies without much analytical scrutiny or intellectual skepticism.
- What Do YOUR Internet Banking Customers Want?
First, Internet banking (to include mobile banking) is popular and growing more so every day. Second, a dichotomy has developed between the Internet banking systems provided as an extension of core processing and the Internet banking systems provided by “free-standing” vendors such as Q2, S1 and the like. The free-standing systems are generally going strong and in some cases are taking market share away from the “imbedded” core-provider Internet packages. Security issues still exist and customer service is still sometimes spotty (just within the last 60 days a major bill pay provider experienced significant customer disruption), but the security issues are being managed and quality is on the rise. And the major core providers and their “imbedded” systems? Without getting personal or ugly, some of them have gone through more OLB systems than Henry VIII went through wives. Some are still trying to get it right. To a large extent, although they have some advantages, the core-provided Internet banking systems generally do not match the functionality of the free-standing systems. Why have the free-standing OLB systems not disappeared into obscurity? What are the differences, and why should bankers care?
- Black Friday, Cyber Monday, And The Rise of E-Commerce
Black Friday 2010 currently holds the place of being the second-largest online shopping day in history, following the Internet-focused Cyber Monday. This year’s Cyber Monday boasted record e-commerce sales, with purchase volume increasing by 16% from $887 million in 2009 to $1,028 billion in 2010. In fact, the entire holiday shopping season to date has seen a considerable increase in e-commerce sales, which follows Javelin’s findings that the entire U.S. e-commerce market has grown significantly during the post-recession market of 2010. While these statistics are specific to Black Friday and Cyber Monday, Javelin data shows that the number one driver preventing consumers from shopping online is that they prefer to see merchandise in-person and to avoid returns (36%) – suggesting that in-store shopping is still driven by a desire to hold to a traditional method of selecting purchases. With more and more large retailers offering online shopping with free shipping (with many including free return shipping) for the holidays and during other promotional deals, It’ll be interesting to see how long traditional retail avenues remain the preferred method of shopping for consumers.
- Banks Pin Revenue Hopes on Prepaid Cards
Big banks may soon start pushing a different type of plastic to their customers. Financial institutions such as U.S. Bancorp, Wells Fargo & Co. and Bank of America Corp. are exploring prepaid cards as a way to make up revenue that will likely be lost from federal restrictions on debit cards. That is because prepaid cards, which are preloaded with funds and used like debit cards, are exempt from restrictions in the Dodd-Frank financial-overhaul bill. The law, enacted earlier this year, is expected to reduce significantly the transaction fees that banks collect from merchants with each swipe of a debit card, known as interchange fees. The Federal Reserve hasn’t yet provided details on the new debit-card restrictions, but a survey released by CardHub.com last month estimated banks could lose as much as $9 billion of the $22.8 billion collected each year in interchange fees.
- Firms, Funds Feel Squeeze Of Low Rates
Historically low interest rates are starting to take a toll throughout the financial industry, presenting a potential downside to the Federal Reserve’s aggressive efforts to reignite growth in the sluggish economy. Rock-bottom rates are squeezing profit margins at banks that rely on the gap between what they charge borrowers and pay depositors. They also are hurting returns at pension funds already under mounting pressure to meet obligations to retirees, while making certain kinds of insurance more expensive as firms try to recoup earnings that are likely to shrink if the ultralow rates linger. Two years of generally falling interest rates, along with the Fed’s plan to buy as much as $900 billion of U.S. Treasurys through mid-2011 to keep bond rates low, have delivered a much-needed lift to borrowers such as companies, consumers, cities and states.