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BankTech Site Feedhttp://www.banktech.comall banktech articles and blogsen-usCopyright 2011, United Business Media.2012-01-27T11:37:00Zhttp://www.banktech.com/articles/232500621Google Could Benefit from Gupta's ResignationThe resignation of Vikas Gupta, Google's head of consumer payments, may be exactly what the company needs.After an 18-month run as Google's head of consumer payments, Vikas Gupta has resigned from the company, <A HREF="http://allthingsd.com/20120126/googles-head-of-consumer-payments-vikas-gupta-resigns/"target="_blank">according to AllThingsD's Tricia Duryee</a>. I believe that a major staff change such as this one presents a great opportunity for a company to refresh and progress. And after an anticlimactic September launch and limited adoption of the company's much-hyped Google Wallet, a breath of new life may be exactly what Google's consumer payments division needs. [<A HREF="http://www.banktech.com/payments-cards/231602024?itc=edit_in_body_cross"target="_blank">Read my blog about Google Wallet's launch here.</a>] I have not yet been able to connect with Google regarding the conditions of Gupta's resignation, restructuring possibilities or the company's larger goals for its consumer payments division, but check back here for more on the next moves in Google's consumer payments division and how it will affect the banking industry. 2012-01-25T11:31:00Zhttp://www.banktech.com/articles/232500445How Satisfied Are Consumers With Their Banks?A survey commissioned by TD Bank finds that most bank customers are satisfied, and that avoiding fees is the key to satisfaction.The past year was a tumultuous time for banks, to say the least. In the U.S. and elsewhere, consumer backlash was loud and pronounced against bank initiatives, such as debit card fees, that were perceived to be anti-consumer. Even so, the majority of customers are still happy with their bank, according to the results of a survey released today. One caveat: The survey was conducted by a bank -- TD Bank, in conjunction with global research company Angus Reid Public Opinion. <a href="http://www.marketwatch.com/story/td-bank-checking-poll-reveals-majority-of-consumers-remain-committed-to-their-bank-2012-01-25" target="_blank">The survey polled 1,010 consumers</a> who have checking or debit accounts, and two-thirds responded that they are committed to their banks and "feel valued" by them. When asked what was most important to them when it comes to choosing a checking account, the number one answer of those polled cited "no monthly fees," not really a surprising answer. Additionally, more than 40 percent of those polled say their bank demonstrates a commitment to them through no or low minimum balance requirements. Other reasons for consumer satisfaction with their banks were good customer service, an easy-to-use online banking service, and convenient branch locations. While this may not be the most scientific or in-depth survey ever done, I think the results are generally true. It takes a lot for most people to leave their bank. A big reason for that is consumers feel it's too big of a hassle to switch banks. But also, I think unless a bank commits some truly egregious customer service error, most people are relatively content. However, I do believe in the coming years banks that don't offer optimal mobile banking solutions for smartphones and tablets will start to get left behind. We live in a world where the consumer, especially the younger, tech-savvy one, wants to be able to do everything on their mobile device quickly and easily. It will be interesting to see the results of a similar survey five years from now, and what bank customers list as their top banking priorities. 2012-01-19T12:11:00Zhttp://www.banktech.com/articles/232400463Are Banks' Legal Costs 25% Higher Than They Need to Be?New research from a Viewpointe-sponsored AIIM report reveals that without a comprehensive records management system in place, financial institutions may be exposed to costly and potentially damaging legal action due to their limited ability to identify and isolate key records.Putting a comprehensive records management system in place across the entire organization not only increases the accessibility of information, it also can significantly drive down compliance and legal costs. That's a key finding from a recent <a href=http://www.aiim.org/About>AIIM</a> (a non-profit association serving the ECM industry) survey and paper, <a href=http://www.aiim.org/Research/Industry-Watch/RM-Strategies-2011>"Records Management Strategies -- Plotting the Changes</a>," which Viewpointe co-sponsored. The majority of the 783 respondents to the AIIM survey indicated their companies could reduce audit costs, legal costs, court costs, fines and damages by 25 percent if they implemented best practices in their records management. However, while many recognize the cost-saving benefits, few actually have such comprehensive strategies in place. Only 13 percent of the survey respondents think their organizations already follow a best practices records management program. Manual Searches Cost Time, Money Responding to a pre-litigation discovery request would be a timely and costly process for more than half of the survey respondents, who said their company relies on manual searches across file shares, email and physical records. <a href=http://www.aiim.org/Research/Industry-Watch/ERM-and-eDiscovery-2010>Previous AIIM research</a> revealed that discovering electronic records takes twice as long for companies with no management system as it does for those with a system. Clearly, an efficient e-discovery system includes more than just searching for relevant documents and records. As noted in AIIM's report, "Possible discovery candidates need to be put on hold, de-duplicated, assessed for relevance, moved into a case management area, and on completion, released back to normal retention policies." Only 35 percent of the participants believe their company has or is close to having a consistent and effective e-discovery mechanism across physical and electronic records. These trends suggest many companies are allocating significant time and resources to inefficient e-discovery efforts. More important, they also may be exposing their companies to costly and potentially damaging legal action due to their limited ability to identify and isolate key records across the organization. Putting Reputations at Risk Further underscoring the importance of a best-practices-based recordkeeping strategy are the potential damages to a company's reputation that can arise from not having one. For example, 28 percent of the participating organizations in the Viewpointe-sponsored survey said they have faced auditor criticism in the last three years for poor records management and security practices. Six percent admitted their records management practices have led to criticism from industry regulators, while 5 percent said their records management had been criticized by their lawyers. Meanwhile, "one in 25 organizations has made the news for their poor records management," according to AIIM's research. When AIIM asked respondents if their organizations have suffered a loss of business or loss of reputation due to poor records-keeping practices, 6 percent indicated it was a frequent occurrence, while 21 percent reported isolated incidents. In today's challenging business climate, customer service and company reputation carry substantial weight. The lost opportunities and damages to a company's reputation stemming from an inefficient records-keeping system underscore the importance of automating and upgrading the records-management process. Deleting Records Just As Important As Storing Them A key component of a comprehensive records-keeping strategy is the need for retention and deletion management to overcome rapidly increasing storage volumes. In addition to creating additional costs, undeleted records held beyond their retention periods influenced the outcome of court cases for 26 percent of the participants in a 2010 AIIM survey on e-discovery and ERM. More important, these "outdated" records were much more likely to weaken the case than to help it. Organizations are beginning to realize the volume of information is only going to expand, presenting ongoing content-management challenges. Meeting the challenge head on, with a proactive strategy for managing all forms of company records, reducing records duplication and forcing the safe and timely deletion of outdated files, is the only real solutions to the cost, knowledge-sharing, e-discovery and space challenges facing financial services corporations. Rich Walsh is President, OnPointe Services, at <a href=http://www.viewpointe.com/About-Viewpointe.aspx>Viewpointe</a>. He has more than 25 years of operational information technology experience. 2012-01-18T12:00:00Zhttp://www.banktech.com/articles/232400413It's Time for Banks and Financial Services Institutions to Rethink the Data WarehouseThe new reality of data management requires financial institutions to undertake a shift from passive data warehouses to integrated analytical platforms.The financial crisis of 2008 made it painfully clear that critical decision-making in financial services hinges on the quality of analytical data. This, in turn, has cast new scrutiny on the data center and firms' analytical capabilities, as well as spurred requirements for new approaches. In many cases, traditional approaches to data warehousing and analytical capabilities that were in place during the recent financial crisis (many of which remain even to this day) failed to meet demands during this critical period. At the same time, increased competition has ramped up the pressure for banks to support their operations with analytical information that can be delivered in time for in-transaction decision-making. This is in stark contrast to traditional, "offline" analytical applications used solely to support senior management decisions. In today's transformed environment, many financial services organizations are waking up to a new reality: It is time to rethink and rework their data management strategies. Financial services organizations, and their CIOs, are finding that they can no longer approach data management using a "data provider" mindset that is disconnected from downstream functional needs. Instead, to efficiently serve multiple, and often intersecting, user communities, they need to develop a holistic mindset that spans the entire data lifecycle from operational data to analytical systems and reporting. And, time is of the essence, as institutions no longer have the luxury of large, multi-year initiatives to identify and address data management issues using a "big-bang/big data project" approach. Where should today's financial institution CIO start? Three core principles point the way forward: 1. Understand the Use Cases. The core underlying principle driving the data warehouse should not be "data for data's sake" but a clear, unwavering focus on the end uses supported by the data warehouse environment. The first step is to clearly identify the key, top-level analytical solution areas in financial services: <li> Risk</li> <li> Performance/Profitability</li> <li> Customer Insight</li> <li> Compliance</li> These represent the constituencies in any financial services institution that are the owners of analytical data flows, and hence consumers of data from operational systems that are used as inputs to these flows. Second, understand the use cases that exist at the intersection of the above areas. This is a key idea -- since it involves moving beyond a siloed view of departmental data to a holistic view that includes all the cross-functional use cases. Increasingly, this is a strategic imperative for financial institutions, as a new class of regulatory and competitive mandates emerges. Any "single source of truth" data platform has to, therefore, recognize and account for these new emerging needs, such as liquidity risk regulatory and economic capital, and customer profitability. 2. Understand the Processes that Produce or Consume Data. The second critical point in rethinking data warehousing is the need to truly appreciate the computational methods and techniques that are used in financial services analytical processes. These computations place specific, clear demands on the underlying data provider (and hence the data model). For example, stress testing a balance sheet involves the need to clearly identify specific scenarios used in a stress test, the scenarios used in developing or calibrating a computational model, and the detailed dataset corresponding to each such scenario, all of which need to be accounted for in the underlying data model. Knowledge of the computational processes that depend on the warehouse expands the warehouse from being merely an "external" data provisioning platform, to a central platform that encompasses all these analytical data flows, thereby guaranteeing consistency, traceability, and verifiability of both the data inputs and the generated results. 3. Understand the Ultimate Use of Analytical Outputs. The warehouse environment needs to support not just an enhanced approach to data provisioning and computations, but also the complete set of use cases with respect to analytical outputs/results used in reporting and business intelligence delivery. The discipline of data warehousing in financial services is fundamentally shifting from an assembly of generic components and tools toward a holistic, integrated platform that supports the unique analytical needs of financial services institutions worldwide. Key tenets for creating this new environment include: A Focus On End-to-end Data Flows to Support Key Use Cases. Rather than merely being a provider of operational/business data for downstream analytical consumers, the warehouse should be a single foundation that supports end-to-end analytical processing including data sourcing, calculation and aggregation processes, and results/reporting for every use case. Minimally, this requires the IT organization and the user communities to work together to understand and agree on: <li> The list of use cases for each user community. </li> <li> The list of use cases that straddle different user communities. </li> <li> The minimum common set of underlying data elements to support each use case through its full lifecycle -- from data sourcing to results/reporting. </li> Purpose-built Analytical Platform Rather than a Collection of Tools. Custom assembly of a data-warehousing environment has historically proven costly and prone to high failure rates partially because of ill-defined and often overreaching scope. A more reasonable way to address this problem is to utilize a unified analytical platform that can support all the key requirements and usage patterns of a typical financial services institution -- rather than attempting to combine general-purpose tools to achieve the needs of the institution. Scalable, integrated infrastructure. At a technical level, the warehouse platform should be deeply integrated with the underlying infrastructure -- specifically being able to leverage the power of the infrastructure to scale out in a flexible, transparent, and cost-efficient manner. In summary, it is time for financial services institutions to recognize that the new reality of data management requires a shift from passive data warehouses to integrated analytical platforms. Venkat Krishnamurthy is Director, Product Management, <a href=http://www.oracle.com/us/industries/financial-services/018739.htm>Oracle Financial Services Global Business Unit</a>. 2012-01-13T12:00:00Zhttp://www.banktech.com/articles/232400358Do Banks Deserve What’s Coming to Them?Challenging market conditions, coupled with new legislative restrictions, make it essential that banks take a new approach to realizing revenue earned and to innovate for new revenue growth. Recent legislation has created an environment where a "must-have" for any bank to have in its playbook is how to maximize revenue collection and identify revenue replacement opportunities. At CAST Management Consultants we have seen many of our clients become vigilant in what we term ERR or Revenue: Efficiency, Recovery and Replacement. We believe banks that most effectively execute strategies to bolster ERR will greatly enhance their chances of survival in these economic times. Essentially, these pillars form the foundation of our Revenue Enhancement Practice, which enables financial intuitions to identify new and innovative ways to <a href=http://www.castconsultants.com/services.aspx?q=10054&c=10025>increase and maintain revenue</a> across their enterprises. From our experience in working with many of the top 25 banks in the US.., banks can experience revenue leakage through various outlets. With all the merger activity over the past 10 years, it's not uncommon for the combined organization to suffer revenue leakage due to the integration or transition to new internal operating systems. Often billing codes are not properly mapped, volume is not captured or client profiles are simply not transferred to the surviving platform. And we seldom, if ever, hear from our banking clients that a customer called to let their banker know they weren't being charged for a particular service. Additionally, over the past several years, the industry has seen a morphing of retail and business banking products that has led to further unintentional loss. In many cases, products were not properly positioned and priced, which led to the client choosing the less-expensive and often less-feature-rich product simply because it was cheaper or in some cases free. Now some might say that banks have no one to blame but themselves for these inefficiencies and lost opportunities, and in many cases, I would agree. However, over the past three years of working with clients to identify gaps in revenue collection, CAST has seen a heightened sense of urgency around closing the cracks in the armor. There must be continued vigilance around ensuring operating processes, procedures and controls are in place to maximize revenue efficiency and recovery. Now turning to another juggernaut the banks must deal with, over the past few years Congress has intervened and is now more aggressively regulating what banks can charge for particular services. The "spirit" of the Durbin Amendment was to shift much of the revenue from the banking sector to the retailing sector in hopes that retailers would lower prices, and pass the savings on to consumers. To date, there is little to no evidence this dynamic has occurred (nor will occur), and to make matters worse, the Durbin Amendment has forced banks to identify new ways to make up for lost revenue, including considering new fees such as the controversial monthly debit card fee. Let's not forget banks, like any other corporation in the U.S., are accountable to shareholders and expected to make a profit and pay dividends. Earnings announcements can often present a double-edged sword, as the same consumers who are shareholders and cheer robust earnings also cringe as they contemplate being overcharged by their bank. So when many of the top-20 banks are forced to retract a proposed monthly debit card fee due to a tidal wave of consumer backlash, it is a shining example of how difficult it may be for banks to implement new fees. All that being said -- yes, the financial services industry has gone through a seismic shift over the past three years, and yes, banks must innovate to survive. This brings me to the third pillar of a coordinated revenue strategy related to revenue replacement. One avenue that many banks have not explored or too few have implemented is related to Alternative Financial Services (AFS). Targeted to both the un-banked and under-banked, a well-coordinated and executed AFS strategy can be a rich source of new customers and new revenue streams. Often these products offer the potential for high-margin interest and non-interest (fee) income, a fact not lost on many savvy retailers that have aggressively entered, and now dominate, this space. A recent report from the Center for Financial Services Innovation indicated the under-banked consumers are 60 million strong and they spent an estimated $45 billion on banking fees and interest in 2010. Most of these consumers are untapped by the banking sector. This lever of revenue growth represents a new, profitable revenue stream, from an untapped, plentiful market segment that better services the broader consumer market. We believe the time is right for banks of all sizes to be pursuing concurrent, complementary strategies focused on revenue efficiency, recovery and replacement. The combination of market conditions, coupled with legislative restrictions, compel every financial institution to be steadfast in its pursuit to realize revenue earned and innovate for new revenue growth. We believe the confluence of these forces, if properly understood and managed, will create a positive growth event for the banking sector as a whole. Jack Leach is Executive Vice President and Principal of <a href=http://www.castconsultants.com/about.aspx>CAST Management Consultants</a>, which provides management consulting services to companies within the financial services industry. 2012-01-10T11:15:00Zhttp://www.banktech.com/articles/232400051The Path to SmartPhone Banking AppsDespite mobile banking's growth, many financial institutions still view it as a cost rather than a revenue opportunity. In this roundtable we discuss how banks can speed up adoption rates and increase profit margins, and where deployment of apps fits into the strategy.Why should banks embrace mobile technology? Steve DuPerrieu, <a href=http://csiweb.com/getPage.cfm?selectID=137>CSI</a>: Mobile solutions can help banks meet three primary needs: recruiting and retaining customers, delivering cross-sell opportunities for customers who do not visit branches and delivering cost savings. Mobile banking meets banks' need to grow and remain relevant with changing customer expectations. Customers still expect the same level of service, but just in new, convenient, around-the-clock ways. Also, mobile banking solutions complement current bank services. By adding another, easy-to-access channel, banks better meet the needs of changing customer expectations. Banks also increase convenience by allowing customers to bank on their own terms. For banks looking to lower their environmental impact, mobile banking fits in with "green" or lower-cost-to-serve initiatives in place at many financial institutions. Robb Gaynor, <a href=http://www.malauzai.com/solution.html>Malauzai Software</a>: Mobile technology adds a new dynamic and interactive channel that lets banks communicate with and influence account holders in an unprecedented way. By building usage patterns and solving early technology problems, mobile banking has provided the infrastructure needed to introduce mobile payments. [Discover <a href=http://www.banktech.com/management-strategies/231002539>10 Keys to Mobile Banking Success</a>.] What will be the biggest opportunities in mobile over next five years? Michael Stevenson, <a href=https://www.royalbanksofmo.com/About.aspx>Royal Banks of Missouri</a>: Mobile banking is a competitive advantage for financial institutions like us. It's hard to believe, but there are a couple of big banks that don't even have apps, yet practically every successful retail company has one. Great Clips, for example, has an app to schedule hair cut appointments. Apps help us attract younger customers, which is one of our business and marketing goals. People aren't surfing the Internet anymore; they want a native app -- to tap the icon and go to what they want. It's about convenience, and let's face it -- no one is carrying a laptop anymore. People carry an iPad or a smartphone. With the app, it's all there. DuPerrieu: Celent research indicates that banks receive a 10-20 percentage point increase in client retention for mobile users. The report also suggests that banks acquire up to 2 percent of new customers due to mobile availability. On the retention side of things, mobile banking provides unique ways to encourage cross-selling for customers who do not visit the branch. Banks can post banner ads or send targeted messages advertising specific products or promotions through mobile apps. Gaynor: Right now the biggest opportunities in mobile will be realized by financial institutions that get the customer mobile banking experience right. As smart phone adoption increases, mobile marketing will provide unprecedented opportunities for banks to cross-sell and up-sell directly to account holders. Mobile capture will continue to grow, and social media will increase referral opportunities for banks. Banks will leverage consumer usage data from mobile banking to improve and tailor mobile offerings. Outside of customer experience/retention, what other areas in a bank benefit from mobile channels? DuPerrieu: Mobile reduces fraud, since users typically monitor their account more frequently. Banks can also set alerts that immediately notify an account holder as transactions occur. Celent research suggests that there is up to a 25 percent reduction in fraud losses for mobile users, depending on the breadth of account alerts. Stevenson: Apps give us the ability to send alerts to our customer base faster than the web or mail. There are compliance and security gains, as well, and with new regulations, the speed in which we communicate with our customers has become increasingly more important. Examiners are extremely diligent about multi-factor authentication and security. Your mother's maiden name is no longer an acceptable challenge question to confirm identity. Examiners want us educating our staff and clients, and sending out updates on a regular and timely basis. Marketing was one of the primary reasons we upgraded from SMS text and browser mobile to app-based mobile. The [Malauzai] SmartApp platform gives us the ability to market to our customers in an unprecedented way. It allows us to create market messages that are tailored to any specific segment of our customer base and deliver those messages immediately within the SmartApp. For example, we may want to target homeowners. If customers within that segment have amassed equity, we might send them a message about home equity rates. On the other hand, customers within a younger segment might be living in an apartment, so we might send marketing messages about the benefits of owning a home or getting prequalified for a home loan. Native apps give us an opportunity to deliver relevant and timely offers, in real time, to very different customer segments. Gaynor: We believe local marketing is going to be big, because it allows local merchants, banks and consumers to interact within a closed-loop payment eco-system, which makes payments possible now without waiting around for NFC and other infrastructure improvements. A mobile channel can extend the brand of a bank by empowering the bank to deliver a great customer experience through this new and dynamic channel. Further, a customized SmartApp experience can be tailored for each unique customer segment. What are the differences between browser-based mobile solutions and an app offering? Gaynor: The basic difference is technology. The browser makes Internet banking available on a mobile device via popular mobile browsers, such as Safari or Chrome. Conversely, a [solution such as] SmartApp delivers banking services via a native app created to leverage all of the Smart phone's capabilities. From a customer standpoint, the experience is profoundly different; browser-based mobile technology attempts to shrink the Internet down, so that it fits on a mobile device. In the process, the Internet banking site is changed and simplified to work on the small screen, which severely limits capabilities and diminishes customer experience. DuPerrieu: The primary benefit of apps is that the app is easy-to-use. Buttons and finger swipes allow easy, quick access to common tasks, such as bill pay, funds transfers, balance inquiry, etc. Apps are everywhere, and distribution is easy through both direct downloads and app stores. Customers will often share and compare apps with other smartphone users, so an app gives the bank a presence/advertisement on the phone. From a functionality point-of-view, apps are more equipped to handle more complex services. For example, cameras on the phone enable consumer check capture, and NFC chips open the door for cardless payments. What is involved in implementing mobile banking apps? DuPerrieu: The most important piece is a good partner or a strong technical staff to develop a set of mobile banking services. If a set of services is purchased from a provider, the internal needs of the bank are impacted much less. A mobile banking rollout needs to be lead by a person or team interested in and knowledgeable about the new technology, its ability to promote and market to customers, and aware of bank policies. It helps to have bank employees actually using the service so they can aid in customer understanding and advocate for the new product. Stevenson: Our core processor (CSI) worked closely with the app developer (Malauzai) and our staff on a very aggressive timetable. We were in beta within 45 days of signing our contract. Once in beta our core processor made a major investment in their infrastructure, which allowed them to deliver a top-notch platform to support our mobile banking apps. CSI is very committed to the success of our bank. They aren't just our core processor, they are a partner. We've been with them for 10 years and have a contract for another 10. When we tell them we need something, they come up with a solution. We have trained the support staff on the product, so not only can they sell it, but they can offer technical support to customers if needed. The majority of our staff uses smartphones, so the training was more of an overview of the app and its capabilities. Ultimately, how can banks make money or see a tangible return on investment? Gaynor: Banks can make money by leveraging the mobile channel to cross-sell and up-sell within [apps such as] the SmartApp to mobile customers. This is a very similar story to the learnings of Internet banking. First, a SmartApp increases the customer experience, which raises satisfaction and value and, ultimately, increases revenue. Second, once the bank earns the right to present offers to customers, they can use a mobile marketing framework to cross-sell and up-sell to customers. As social media and banks collide, there will be opportunities for banks to use their customers' friend networks to increase referral opportunities -- social banking. Stevenson: We believe that it's going to take at least six months before we see the true return. We need to build up a stronger user base before we will see true ROI. We are completing a soft launch to our St. Louis client base before we launch the product nationally. The biggest changes we expect are less foot traffic in our branch and increased mobile transactions. We view our mobile banking platform as a seventh branch. We view our website the same way, but to stay competitive we had to have good mobile banking offering. We see the ability to constantly improve the organization by conducting primary research within the apps. We are able to send surveys to our customers and ask what new product they are interested in or how we can improve customer service. Would they like us to hold an educational class about first time homebuyers? Would someone like us to hold a class about small business finance? On Thanksgiving, we can send out a message to our clients thanking them for choosing our bank to take care of their family's finances. The app is limitless. It gives us a way to touch the client more, in a cost-effective manner. Plus the app is just fast. I can create a message, read it, proof it and send it within 30 minutes. I don't have to mail it and wait days for customers to get it. Michael Stevenson is Senior Vice President and Senior Retail Banking officer at St. Louis-based Royal Banks of Missouri. Robb Gaynor is Chief Product officer at Austin, Texas-based Malauzai Software Inc. Steve DuPerrieu is Director of Product Marketing for Paducah, Ky.-based Computer Services Inc. (CSI). 2012-01-05T12:05:00Zhttp://www.banktech.com/articles/232301344Why Banks Should Support CFPB's CordrayA day after a recess appointment officially made him head of the Consumer Financial Protection Bureau, Richard Cordray defended the agency's role, reported on accomplishments so far, and identified upcoming agenda items -- including more scrutiny of non-banks. The <a href=http://www.consumerfinance.gov/>Consumer Financial Protection Bureau</a> can be considered a success "if financial markets become more fair, more transparent, and more competitive," according to <a href=http://en.wikipedia.org/wiki/Richard_Cordray>Richard Cordray</a>, who officially became head of the CFPB on January 4 thanks to a <a href=http://www.washingtonpost.com/blogs/ezra-klein/post/who-is-richard-cordray-and-what-is-he-going-to-do/2012/01/04/gIQAV4EraP_blog.html>controversial recess appointment</a> by President Barack Obama. Cordray wasted no time in outlining his priorities and agenda for the CFPB -- he is speaking today at the Washington, D.C.-based Brookings Institution. I understand that the banking industry has serious and legitimate questions about how the newly empowered CFPB will create and carry out policy and the impact this may have on banks' abilities to create new products and drive revenues. At the same time, I think the spread and intensity of the Occupy Wall Street movement this past fall, and the generally low esteem in which U.S. financial institutions currently are held, require the industry to acknowledge that there have been serious problems and misdeeds in consumer finance and that the CFPB could actually help banks rebuild profitable relationships with their consumers. [For more about the CFPB, check out BS&T's <a href=http://banktech.com/dodd-frank/?itc=edit_in_body_cross>Dodd Frank Cheat Sheet</a>, which includes details about the structure, goals and mandate of the agency.] In prepared remarks released by the CFPB Office of Public Affairs, Cordray addressed three questions: "First, why does this Bureau matter -- not just to me, as its first Director, but to people all across this country? Second, what have we already been doing for our first six months? And third, what does it mean for the consumer bureau now to have a director, and how will we use our full authorities to protect consumers?" Addressing the first question, Cordray pointed out that, "Consumer finance is a big part of our economy -- and it plays a large role in the daily life of almost every American … But these same financial products can also make life harder … Sometimes people make the wrong choices and get in over their heads. Others get swindled by scams." Factor in that "consumer finance clearly has become more complicated and more risky in recent years," and the need for a regulatory body that "will protect them against fraud, and who will <a href=http://www.consumerfinance.gov/guidance/supervision/manual/>ensure they are treated fairly</a> in the marketplace" is clear, according to Cordray. Regarding the CFPB's activities so far, Cordray reported on several initiatives geared toward meeting the "primary objectives" of bringing "clarity to the financial markets." These include the <a href=http://www.consumerfinance.gov/credit-cards/knowbeforeyouowe/>Know Before You Owe</a> campaign designed to provide consumers with disclosures "that make clearer the prices and risks of financial products right up front." The CFPB also released a "Financial Aid Shopping Sheet" to help students compare financial aid packages and payments. Cordray also discussed steps the CFPB has taken around bank supervision, including investigations and providing easier access to the agency for informants and whistleblowers. "The consumer bureau will make clear that there are real consequences to breaking the law," he said in his prepared remarks. To answer the third question, about the implications of having a director in place at the CFPB, Cordray announced the launch of a program for supervising nonbanks -- something that may please banks that have been critical of other aspects of the CFPB's mandate. Cordray explained: <blockquote>"We will begin dealing face-to-face with payday lenders, mortgage servicers, mortgage originators, private student lenders, and other firms that often compete with banks but have largely escaped any meaningful federal oversight … Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them. But we must establish clear standards of conduct so that all financial providers play by the rules." </blockquote> Cordray also alluded indirectly to the fact that technology will play a big role in how the CFPB carries out its activities. "We need to consult the best data and information we can to really understand what is happening in the market and how consumers and businesses are faring," he stated. I think it's worth supporting Cordray in his <a href=http://www.banktech.com/regulation-compliance/229300620>goals</a>, which he described as follows: <blockquote>"We are determined to deliver positive results for American consumers. We want people to know what we are doing. Our work will support the honest businesses in financial markets against those who deceive consumers or otherwise break the law. We are confident that if the public understands our job, they will help us play our important role in safeguarding consumers as well as the broader American economy." </blockquote> 2012-01-04T16:42:00Zhttp://www.banktech.com/articles/232301298Will Yahoo Make a Play In the Payments Space?Its incoming CEO, former PayPal head Scott Thompson, grew the eBay subsidiary in the digital and cloud payments arena. The big news that former PayPal head Scott Thompson is <a href="http://online.wsj.com/article/SB10001424052970203513604577140271482613862.html" target="_blank">leaving the payments company</a> to become the CEO of Yahoo could have ramifications well beyond search engine marketing and online advertising. PayPal has grown from its humble roots as a mere facilitator of eBay transactions to become a giant in the payments space. Last year, <a href="http://www.banktech.com/blogs/231900743"target="_blank">PayPal announced several new payments initiatives</a>, including ramping up its presence in the P2P and mobile space. [Click here for more on <a href="http://www.banktech.com/payments-cards/231901951?itc=edit_in_body_cross"target="_blank">PayPal's involvement in the digital payments space.]</a> Already, some are speculating whether this moves means Yahoo will look to <a href="http://www.bankinnovation.net/profiles/blogs/with-paypal-s-thompson-at-its-helm-expect-yahoo-to-charge-at-paym"target="_blank">step up its payment activities.</a> It remains to be seen whether Thompson will seek to position Yahoo to eat into PayPal's marketshare in the online payments space. Remember, Yahoo did try its hand at the payments game once before, with its now defunct PayDirect P2P money transfer service. This bears watching for banks, as Yahoo could become another player in payments. 2011-12-26T15:03:00Zhttp://www.banktech.com/articles/232300606Collateral Benefits: Reducing Inefficiencies in Collateral ManagementBanks historically treated collateral management as something of an afterthought, but there are opportunities and profits for those can that get this function right.Historically, many banks treated "collateral management" as an afterthought, a perfunctory back-office function that could simply be tracked in a spreadsheet. That approach may have worked when the global markets weren't so interconnected, and even then, when they were awash in liquidity. But with the ubiquitous spread of derivatives and securitized asset pools, collateral management has become a complex process with interrelated functions involving multiple parties. And as the last financial crisis showed, unexpected problems with one counterparty can create a domino effect that causes the credit markets to seize up overnight. There's great opportunity here for the banks that can get this key function right, because the reality is much of the $16 trillion or more in collateral held by financial institutions globally can be managed far more efficiently. Against the headwinds of weak loan demand and tougher regulation, better collateral management could not only help banks reduce costs, but could help boost their chances of weathering future market upheaval. Collateral management could even become a profit center for banks and infrastructure providers, as smaller institutions look to outsource this task to third parties that can help them optimize their own holdings and reduce their technology and personnel costs. <a href=http://www.accenture.com/us-en/industry/financial-services/Pages/index.aspx>Accenture</a> and Clearstream recently studied the collateral management practices at some of the world's largest banks. As part of our research, we conducted interviews with more than 30 executives at 16 global banks that collectively manage nearly 20 percent of banking assets worldwide. Our conclusion: Banks collectively could save billions each year by better managing their collateral. The benefits don't end there. Banks that better manage their collateral not only save money but become more competitive in the marketplace. Improved collateral management helps banks lower their financing costs, and frees up liquidity that could be put to other uses. By offering cross-asset class collateral and netting, banks are able to provide better pricing and do more business with their counterparties and provide additional services and products for their clients. The Regulatory Wild Card Granted, making estimates such as these also means predicting the future of regulation. While that's an inexact science, it's clear the efforts to reduce systemic risk will affect how banks manage their collateral. Recent regulatory reforms will likely require banks to hold more collateral from trading partners with whom they've had a history of disputes in the past, and could crimp the ability of banks to re-use collateral that's already committed to another counterparty. Regulatory restrictions such as this could render inter-bank lending less attractive and make liquidity more critical. Regulators also are demanding banks hold more equity capital, which is the most expensive source of capital. To reduce their capital needs, banks will have to mitigate their credit and counterparty risk exposures through collateralization. Having a better handle on their collateral would enable banks to move these funds efficiently, and in the process, boost liquidity and their return on capital. Accenture estimates banks could save roughly $5.5 billion by reforming their internal processes, which historically have kept collateral in separate silos -- either by geography, asset class, business unit, or by department (repos, treasury, securities). To be sure, banks can still allow each unit to maintain their own collateral pools. But what banks need is the ability to capture more information on every asset in their various collateral pools. While some banks once revalued collateral on a weekly or even monthly basis, today's bankers need the ability to determine the value of their collateral daily -- and in some cases intra-day. This requires banks to have detailed information on every asset, as well as an internal transfer pricing framework that measures the liquidity and funding costs and, thus, aids in cross-product netting. This approach carries more benefits than bankers might think. For one, having a "holistic" view of their worldwide collateral -- and in real time -- would enable them to identify at any point what assets exist and to measure them by asset class, geography, currency, or legal entity. Having a holistic view also tells banks which assets are available, which are encumbered -- and whether substitution is possible. That helps banks avoid being over-collateralized and, in turn, enables them to put those excess funds to more-profitable uses. Even more important, though, better collateral management can help banks maximize liquidity and even help lower the cost and duration of their funding by qualifying them for cheaper unsecured debt. Much of this can be done today with automated collateral management systems, which enable banks to trade at higher volumes without overwhelming their back-office staffs. Perhaps surprisingly, banks have been slow to come around. So far, only a third of the banks Accenture surveyed said they had reduced internal inefficiencies in their collateral management over the past three years, and roughly a quarter said they've reduced external costs. In our view, though, the benefits of a collateral program are clear. What's more, better collateral management would also help banks lessen the fallout from any future crises. Bob Gach is a global managing director in Accenture's financial services group; Owen Jelf is managing director, <a href=http://www.accenture.com/us-en/Pages/service-capital-markets-core-trading-services-list-summary.aspx>Accenture Core Trading and Settlement Services</a>. 2011-12-15T12:46:00Zhttp://www.banktech.com/articles/232300590Mind the Security Gap: Protecting Customer Data Stored on Retired ElectronicsHere are six questions financial institutions must ask when navigating the process of selecting a recycler for end-of-life electronics.Data security breaches have the potential to cripple a financial institution. The average U.S. breach cost companies $214 per compromised record, resulting in an average total cost of $7.2 million per incident, according to the <a href=http://www.ponemon.org/index.php>Ponemon Institute</a>, a privacy think tank. Compounding these numbers are notification and legal defense expenses, lost revenue from customer defections and the incalculable cost of restoring a battered reputation. That's why companies rightly allocate substantial resources to fortify their IT perimeters against hacker attacks, malware intrusions and phishing schemes. They cannot afford to place at risk the vast amounts of personal identifying information, proprietary research and other sensitive corporate and customer data that is collected, stored and transferred via their technology. Yet many financial institutions are unaware of a gap in data security even as they invest heavily in preventing and detecting malicious attacks. Without realizing it, these same companies can compromise that sensitive data during routine IT equipment refresh cycles. They assume, incorrectly, that once old electronics are laid to rest, the data on them are, too. Yet the data live on -- not just on computer and server hard drives, but across a wide range of devices, including printers, copiers, scanners and fax machines. Copier and printer hard drives, for example, contain readily obtainable data. Printable copies of bank checks and scans of Social Security cards and drivers' licenses still can be found on end-of-life copiers and printers. Old cell phones, PDAs and other smart mobile communication devices also retain confidential information. Even basic network equipment, like switches and routers, can hold network-specific information, such as static IP addresses, that can potentially expose a company's network to attack. Most companies don't realize the damage that can ensue or the corporate disasters that can arise from a lack of due diligence in properly disposing of end-of-life electronics. The gray market -- where information and goods are sold outside of authorized channels -- is evolving and becoming more sophisticated. Discarded machines that were once prized by thieves for the commodities they contained -- aluminum, copper, gold -- are now tempting targets for those same thieves because of the confidential data unwittingly left behind by institutions conducting routine equipment upgrades. Symantec Corporation's year-long study of the online underground economy revealed that the potential value of total advertised goods was in excess of $276 million. Credit card and bank account data were among the most popular goods routinely bought and sold by cybercriminals. Theft of such data can prove especially worrisome for financial institutions that are subject to the data protection provisions of the Fair and Accurate Credit Transactions Act (FACTA) and the Gramm-Leach-Bliley Act (GLBA) and for whom trust is at the core of the relationships with their customers. Last September, the Federal Deposit Insurance Corporation issued guidance that advised financial institutions under its supervision to adopt written policies and procedures that ensure sensitive and confidential customer information stored on the hard drives or flash memory of photocopiers, fax machines and printers is erased, encrypted or destroyed before disposal. And in its 2010 privacy trust study of retail banking, which measures consumer perceptions of trustworthiness, the Ponemon Institute discovered that notification of a data breach was the second-most cited factor contributing to a negative perception of a bank. These serious compliance issues explain why 74 percent of the businesses participating in an International Association of IT Asset Managers 2010 survey ranked data security and privacy as extremely important to their IT asset disposal (ITAD) programs. The survey also found that 69 percent of these organizations outsource their IT asset disposal programs. Among those who do so, 76 percent indicated that data security is either extremely or very important when choosing an electronics reuse and recycling vendor. Yet, like every other industry, all reuse and recycling companies are not created equal. Therefore, it is vital that financial institutions ask the right questions when considering and selecting a reliable and reputable vendor to remarket or recycle end-of-life electronics. Their fiscal health and reputations depend on making an informed choice. Reputable Recycling Here are important questions to ask when navigating the selection process: 1.Does the recycler "own the lifecycle" or rely on subcontractors? A recycler offering a complete range of remarketing and recycling services internally will eliminate reliance on subcontractors to process your redundant electronics. Selecting a recycler that manages every step of the process internally improves accountability, increases security and streamlines reporting. 2.Can the recycler ensure data security? Look for a recycler that offers NIST-compliant data destruction and validation of that destruction, especially if IT assets will be resold. Depending on your company's requirements, you may want to locate a recycler that can provide on-site degaussing and hard drive destruction, hard drive shredding, witnessed destruction and certificates of data and physical destruction. 3.Is the recycler certified? A certified recycler is committed to not only operating in accordance with recycling industry best practices that govern environmental, health, and safety management systems (R2, e-Stewards, ISO 14001, OHSAS 18001), but is also implementing the latest standards that regulate information destruction (NAID) and the secure handling, warehousing and transportation of equipment (TAPA). 4.Does the recycler have the financial heft to protect customers from potential liability? A good indicator of a recycler's ability to do this is evidence of general and excess liability insurance as well as pollution liability and cyber security insurance. An insured recycler is able to protect customers from and manage the potential financial risks associated with recycling electronics. 5.Where does the recycler do business? A recycler operating a network of strategically located facilities will be able to process and recycle your company's obsolete electronics no matter where your company does business. This will also minimize freight costs, reduce greenhouse gas emissions and simplify logistics. 6.Does the recycler allow tours? Even if a potential recycler meets all the above criteria, conduct a site visit to see the facility size, examine the recycling equipment and evaluate the physical security measures in place. Determine if employees are background screened and drug tested. Request a list of current customers and contact them. Remember that your organization will continue to be held accountable for the data in your technology even after retirement. That is why it's imperative for your company to reach informed decisions about the way it disposes of retired electronics. When seeking recycling services, look for a recycler that has the global reach, expertise and infrastructure to guarantee that your data is secure, your electronic equipment is processed in an environmentally responsible manner, your reputation is protected and your compliance risks are eliminated. Steve Skurnac is the president of <a href=http://us.simsrecycling.com/>Sims Recycling Solutions</a>, a global provider of electronics reuse and recycling services. 2011-11-28T11:20:00Zhttp://www.banktech.com/articles/232200245What Is Barney Frank's Legacy?The Dodd-Frank co-author and advocate of tougher bank regulation, who is expected to announce he will not seek reelection to Congress in 2012, will leave mixed legacy for the financial services industry.Opponents of tougher financial services regulation are likely celebrating (and supporters of the same probably are mourning) the news that Massachusetts Democrat Barney Frank will <a href=http://www.nytimes.com/reuters/2011/11/28/us/news-us-usa-politics-frank.html?_r=1&hp>announce his planned retirement</a> from the House of Representatives this afternoon. Frank, who has represented Massachusetts' Fourth Congressional District since 1981, is of course co-author of one of the most important pieces of financial services legislation in the past 80 years, the <a href=http://banktech.com/dodd-frank/>Dodd-Frank Wall Street Reform and Consumer Protection Act</a>. Only the outspoken Frank will be able to explain the specific reasons for his decision, but it is likely due to a combination of factors, not to mention the current sour environment in Washington, D.C. He reportedly was pessimistic about his prospects for reelection to the House in what would be a new district incorporating a more conservative community. His was reelected to his current seat in 2010 only after a very difficult race in which he ultimately won over Republican Sean Bielat, 53 percent to 43 percent. Following the Republicans regaining control of the House in the 2010 elections, Frank became the House's Financial Services Committee's top-ranking minority member, after serving as chairman of the committee. Although Frank's liberal politics and outspoken representation of the Democratic party policy gained him both fans and detractors, his advocacy of financial services industry reform was challenged in part because of the active role he had played in support of Fannie Mae and Freddie Mac -- agencies whose role in lending to unqualified homebuyers contributed to the subprime mortgage and subsequent global financial crisis. <div style="float:right;width:250px;margin:3px 0px 3px 7px;padding:6px;border:1px solid #000000;"> BS&T's Top 11 Stories of 2011 <ol> <li><a href="http://www.banktech.com/payments-cards/229700049?cid=box_top2011">Google Reinvents the Wallet</a></li> <li><a href="http://www.banktech.com/regulation-compliance/232200245?cid=box_top2011">What is Barney Frank's Legacy?</a></li> <li><a href="http://www.banktech.com/blogs/231001791?cid=box_top2011">5 Best Practices in Automated Disaster Recovery</a></li> <li><a href="http://www.banktech.com/business-intelligence/229402725?cid=box_top2011">Banks Mining Social Networks with Analytics Tools</a></li> <li><a href="http://www.banktech.com/channels/232200684?cid=box_top2011">Rolling Out the Welcome Mat for Online Banking Customers</a></li> <li><a href="http://www.banktech.com/articles/229700152?cid=box_top2011">Regulatory Enforcement of IT Security: Slap on the Wrist vs. Padlock on the Door</a></li> <li><a href="http://www.banktech.com/blogs/231001242?cid=box_top2011">Man Arrested for Depsoiting Chase-Issued check at Local Chase Branch</a></li> <li><a href="http://www.banktech.com/slideshows/management-strategies/231700089?cid=box_top2011">Meet Bank Systems & Technology's 2011 Elite Honorees</a></li> <li><a href="http://www.banktech.com/slideshows/channels/232200214?cid=box_top2011"> Inside the Citibank.com Redesign</a></li> <li><a href="http://www.banktech.com/channels/229400176?cid=box_top2011"> Why the Retail Store Bank Branch Is Making a Comeback </a></li> <li><a href="http://www.banktech.com/blog/231002566?cid=box_top2011">The Perfect Storm: 10 Ways to Ruin the Customer Experience</a></li> </ol> </div> However, critic or supporter, there is no question that Frank has driven significant change and innovation within the financial services industry. In identifying him earlier this year as one of banking's <A HREF="http://banktech.com/top-innovators/2011/Barney-Frank"target="_blank">Top 10 Innovators of the Decade</A>, our colleague Justin Grant suggested that "if the nearly 70 years it took for the industry to effectively overturn the Glass-Steagall Act serve as any indication, Frank's influence undoubtedly will be felt throughout the industry for decades to come." He also quoted Frank as saying, "The bad mortgages, risky securitizations -- I can't tell you that it's going to prevent new problems. But if you look at all the causes of problems in the past, we made them much less likely to occur." It's unlikely that Frank will fade into the woodwork after he leaves Congress, but the debate in Washington about how the financial services industry should be regulated certainly will take on a different tone following his departure.2011-11-14T11:16:00Zhttp://www.banktech.com/articles/231902949Social Media "Not Just a Shiny Tool" at Wells FargoThe bank is piloting a variety of internal social networking technologies and emphasizing business-use-cases.Since the explosion of social media, banks, like many other businesses, have been trying to figure out the best way to harness social networks as a channel to engage with customers. But it's just as important for financial institutions to have internal social media guidelines, writes our colleague at InformationWeek, Debra Donston-Miller. She recently spoke with a member of Wells Fargo's newly formed social strategy team Kelli Carlson-Jagersma, who said the bank is looking at what business value social media can bring by way of internal collaboration tools. "Our goal is to round up all of the social networks in the company that people have snuck in, brought in, turned on, and settle on an approach and the appropriate tool or tools to add business value," Carlson-Jagersma tells InformationWeek. Interesting stuff. To read the rest of the article, <a href="http://www.informationweek.com/thebrainyard/news/social_networking_private_platforms/231902849/wells-fargo-weighs-internal-social-network-strategy" target="_blank">please click here.</a>2011-11-14T10:13:00Zhttp://www.banktech.com/articles/231902925Between Rocks and Hard Places: The Revenue Dilemma Facing BanksBanks' sources of revenue have changed, and they have to shift from an environment dominated by products, transactions, departments and short-term profit, to one driven by customers, customer experience, enterprise-level information, and delivering value-added information through integrated channels.Banks have a big problem. They need to restart their revenue engines, which have been stalled for several years, held back by the forces of recession, financial crisis, massive credit losses, and restrictive new regulations. In addition to these problems, however, which are very visible and well known, banks are caught in a tight convergence of several less-visible, more fundamental, but equally potent forces that have been building momentum for about two decades and are now converging (more accurately, colliding) with current events to bring about an operational transformation in the banking industry. These long-term forces are more than the ordinary industry trends that come and go; they will be very disruptive to the existing modus operandi of banks, and their convergence with present market forces will serve only to make the revenue challenge facing banks that much more difficult. The "usual" answers to boost revenue that have worked for banks in the past -- raise fees and add a few new ones -- will be unable to provide sustainable growth and profitability as the new operating environment emerges. There will be no return to business as usual in banking. As the industry and the economy emerge finally from the worst recession in 80 years, the drivers, differentiators and success factors for banking are all changing. The bar has been raised, the industry is on the cusp of wholesale and permanent evolution, and the environment will require new models and new revenue sources in order to adapt. For about 20 years, give or take, a number of forces have been slowly developing strength at a more fundamental level in banking, far below the radar screens of everyday activity and driven by events and trends that would appear to have little in common. But it now appears that spurred by the convergence with the many and severe current crises in banking, these forces will break through like volcanoes to disrupt and reform the landscape even sooner. First, consider the industry consolidation that has been steadily reducing the number of banks in the U.S. Bank consolidation began in earnest 25 years ago, when state legislatures began repealing laws that prohibited or restricted interstate banking. Once those barriers were removed, consolidation has been proceeding steadily with no signs yet of slowing down. For practical, everyday purposes, the most persistent and pernicious effect of this ongoing consolidation has been an intense competitive pressure on pricing, as banks constantly seek more customers, at the expense obviously of another institution. This pricing pressure has had a profound impact on another long-term force, namely, the steady erosion of net interest margins. Across the banking industry, in every asset category, net interest margins have been sliding consistently downward, with only a few upward blips, for 20 years. Although net interest margins remain the single largest contributor to revenue at banks, this dramatic slide has taken about 100 basis points (measured as a percentage of earning assets) out of their revenue stream. At today's level of banking assets, that means about $120 billion annually in "lost" revenue. Non-interest income, the other large element of banking revenue, has likewise stalled. As margins have dropped, banks have increasingly relied upon non-interest income to supplement their revenue, but here, too, revenue has hit a plateau. After increasing their proportion of non-interest income enormously in the 1980s, banks have been unable in the past 20 years to continue that growth. In 1982 banks in total derived 23 percent of their operating revenue from non-interest income. By 1992 that percentage was 33 percent, but now stands at only 36 percent in aggregate. Finally, consider what is perhaps the most challenging operational trend for banks to deal with -- the inability to improve their efficiency ratio. One might expect, thanks to the rapid improvements in technology over the years, that banks would show a continuous improvement in operating efficiency, as automation displaces manual processes and ratchets up productivity. This improvement should likewise enable additional revenue growth in the form of new products and services. However, banks seem to have become unable to break through a barrier to continuous improvement. In 20 years they have barely improved, and in most cases have recently worsened, their efficiency components. The financial services industry is in the midst of a massive transition. Unlike earlier industry changes this transition is not an incremental one, in which organizations, processes and technologies evolve in linear fashion into more "advanced" but still familiar models. This transition will be a much more radical one, essentially realigning the industry's basic business model. These changes will require institutions to adopt flexibility, speed and transparency across all of their operations. They will require a technology orientation that is fundamentally based on "horizontal" integration of information and processes spanning multiple business lines, as opposed to "vertical" integration of products within a single business line. Banking is not just about banking anymore. Its strategic focus has changed, its operating orientation has changed, and its sources of revenue therefore need to change. Unfortunately, banks have not made nearly enough progress in transforming their operating models and technology to be able to exploit and support this new reality. They remain fixed in an operating and technology environment dominated by products, transactions, departments and short-term profit, when they need to move to an environment driven by customers, the customer experience, enterprise-level information, and delivering value-added information through integrated channels. Revenue will not grow significantly or (more important) sustainably until banks invest in a near-total reorientation of their technology in order to develop new sources. The new revenue streams of the future must and will come from this new environment. Revenue increases that come from the "old" environment, such as product fee increases, will likely show a short-term effect, but will in many or most cases be either inimical to the longer-term interests of a bank or unsustainable. The sooner banks make that commitment to the future, the sooner they will see their revenues grow again. Lee A. Kidder is a Practice Group Manager and Senior Consultant at <a href=http://www.ccg-catalyst.com/about-us/about-catalyst>CCG Catalyst Consulting Group</a>. This article is a summary of a full-length <a href=http://www.ccg-catalyst.com/publications/white-papers/141-rocks-and-hard-places-the-revenue-dilemma-facing-banks->whitepaper</a>. 2011-11-11T11:23:00Zhttp://www.banktech.com/articles/231902860Mo' Money, Mo' Problems for Credit Unions?With an influx of new customers due to consumer angst with big banks also comes a new set of concerns. Much has been made already of Bank Transfer Day, a social media campaign by a California woman urging consumers to take their money out of big banks and put it into credit unions by Nov. 5, Guy Fawkes Day. The movement received a significant amount of press attention and could be termed a success for credit unions: According the Credit Union National Association (CUNA), the nation's largest credit union advocacy group, credit unions added 40,000 new members on Nov. 5 alone, and 650,000 during the month leading up to Bank Transfer Day. But where do credit unions go from here? Can they expect a continued influx of new customers if consumer sentiment against big banks remains high? And if so, how will they handle it? I got some interesting insight on this recently from Javelin Strategy & Research analyst Mark Schwanhausser, who I was interviewing for another story about online account opening. He said the current climate offers a great opportunity, and also a challenge, to credit unions and small banks. "I think it's one of the most fascinating moments in the history of consumer banking," remarked Schwanhausser. "There's this backlash against fees, and people have all the reasons in the world not to stay with their bank." The challenge for credit unions, said Schwanhausser, is to provide an easy and user-friendly account-opening process, especially online. He said the rate of online account opening abandonment for credit unions is "shockingly high," and that is one factor that could hinder their growth, even in a climate where bank consumers might be more inclined to move to credit unions than ever before. Another aspect to note amidst the wave of consumers switching to credit unions is increased security and fraud concerns, added Julie Conroy McNelley, an Aite Group analyst. During an interview on e-banking security, Conroy McNelley noted that fraudsters may have seen Bank Transfer Day as an opportunity to find new targets. "I guarantee the bad guys were aware of Bank Transfer Day and that there were fraudulent applications made that they hoped would not get noticed and fall through the cracks," she said. Conroy Mcnelley added that with an increased profile, credit unions will more likely be targeted more by fraudsters and should be duly prepared. Related Articles: <a href="http://www.banktech.com/blogs/231902378" target="_blank">Bank Transfer Day is Here</a>, <a href="http://http://www.banktech.com/business-intelligence/231902649"target="_blank">Survey: Bank Transfer Day Nets 40,000 New Customers for Credit Unions</a>2011-11-05T09:00:00Zhttp://www.banktech.com/articles/231902378Bank Transfer Day is HereWhile the much-publicized event has garnered a lot of press, will it lead to a mass exodus from big banks to credit unions? Today is Bank Transfer Day. While the event has been much hyped, with a Facebook page dedicated to it garnering more than 50,000 friends and it's very own <a href="http://en.wikipedia.org/wiki/Bank_Transfer_Day" target="_blank">Wikipedia page,</a> it's hard to predict how successful it will end up being. Though it shares similar values, Bank Transfer Day is not orchestrated by the Occupy Wall Street crowd, but started as a social media campaign by a California woman urging consumers to take their money out of big banks and put it into credit unions by Nov. 5, Guy Fawkes Day. The movement gained steam when several big banks announced they would institute fees for using debit cards as a way to make up for lost revenue due to the Durbin Amendment capping interchange fees. Bank of America's infamous $5 debit fee, <a href="http://www.banktech.com/payments-cards/231902044" target="_blank">which they've since scrapped</a>, was the target of much of the consumer backlash. But other banks, including Chase and Wells Fargo, also announced plans for debit fees, which have since been scrapped as well. It remains to be seen how successful the Bank Transfer Day movement, given that big banks have decided not to go forward with these fees. Maybe disaffected BofA customers who were doing research on credit unions in their area will now just decide to stick with the bank out of convenience. Either way, credit unions definitely gained at least some customers they wouldn't have had before due to this initiative.