The Rich Get Richer: Fallout From the Single Euro Payments Area
The directive for uniform pricing of cross-border payments among countries in the EU goes into effect in January. The idea is to make Europe a more competitive and equitable place in which to do business. How ready are the Continent's banks? The largest financial institutions actually seem excited by the notion of SEPA. To them, it doesn't mean a loss of a once-lucrative source of fee income, but rather an opportunity to expand their white-label payments businesses to other banks. It's the small banks that will sink or swim with SEPA, depending on the size of their budgets. SEPA requires much in the way of enhancements to banks' payments infrastructures -- not all institutions can handle the price tag, leading some to outsource that side of the business to their much larger counterparts and resulting in at least some bank consolidation in the EU.
Corporates represent another possible monkey wrench in the SEPA works. While they'll be affected by the new payments directive, many criticize the financial services industry for not providing enough information on how it will impact them. Ideally, businesses will be able to rationalize their cross-border banking relationships and whittle them down from several to one or two. Corporates are a big piece of the SEPA pie -- banks will have their hands full bringing them completely onboard with the initiative.
What's in Capital One EVP and CIO Robert Alexander's Wallet?
With the acquisition of North Fork Bancorp complete, Capital One enters the ranks of brick-and-mortar banking. But Robert Alexander, EVP, CIO and head of ECM, is going to have his work cut out for him.
North Fork itself was somewhat of an acquisition juggernaut, having stretched its reach in the New York metro area expansively through a long series of purchases. That means the bank has an IT infrastructure that's enough to keep most IT executives up at night. Capital One has inherited this jumble. How will Alexander handle things? What kind of effort will be required to bring North Fork's legacy infrastructure into a more unified, streamlined Capital One Bank operating environment? Like most projects of this nature, integrating North Fork's IT into Capital One's will not be for the faint of heart.
Will Small Banks' Voices Be Lost Amid the ACB and ABA Merger?
The merger between the American Bankers Association (ABA) and America's Community Bankers, two of the largest banking trade associations, goes into effect Dec. 1. The new organization will retain the ABA's name, and Ed Yingling will remain in his current role as president and CEO of the ABA, while Diane Casey-Landry, formerly president and CEO of ACB, will become EVP and COO of the combined entity. Ostensibly, ACB, the much smaller of the two groups, decided to merge with the ABA because of the shared vision between the two long-standing organizations. After all, trade associations' primary role is using the collective pull of their members to give banking a voice on The Hill via lobbying.
More than likely, however, the move also was a financial decision for ACB. With the number of FDIC-insured community banks shrinking from 14,351 in 1985 to 7,879 today, dues revenue, as well as conference revenue, was shrinking. What will this mean for its members? Will the needs of community banks be ignored in favor of larger financial institutions? Will they still have a voice? Will ACB's members make a mass exodus to the Independent Community Bankers of America? [Full disclosure: This reporter formerly was employed by ACB.]
Rx for Profits: Healthcare Providers Offer Market for Treasury Services
The shift to electronic payments may speed up banks' influence on an emerging market: healthcare providers. According to Celent, financial institutions that serve healthcare providers should see increased demand for cash management services that electronify providers' revenue-cycle management process. Financial institutions expect healthcare providers' use of checks to drop from 54 percent to 40 percent of total payments within two years, reports Celent, which predicts that growth in healthcare-related electronic data exchange, extended lockbox and remote deposit capture will be strong compared to other industries.
Many banks already have expanded their treasury solution offerings for the healthcare industry. Bank of New York Mellon was recognized by Celent as an early mover that will enable healthcare providers to more efficiently manage transactions, and Wachovia unveiled PatientPOS, an enterprise payment solution for healthcare providers. Banks also are offering payroll solutions for healthcare workers, many of whom are unbanked. For example, JPMorgan Chase provides a payroll card to electronify the Methodist Hospital System's unbanked workers' paychecks and cut check processing costs.
Lazaro Campos and SWIFT Target New Users With New Interface
Lazaro Campos has changes in store for SWIFT. Campos, who has been with SWIFT since 1987, took the organization's reins in April, replacing Leonard Schrank, who held the post for the previous 15 years. During the opening plenary session at Sibos in early October, he made sure to let the audience in on his plans.
Campos told the audience that his first priority is to lift the barriers to use of SWIFT. He said SWIFT is going to introduce a new "light" interface for connectivity in the next year to streamline the process and reduce costs for low-volume users. Campos expects the new interface to bring in thousands of new customers. SWIFT also announced a three-year, fixed-fee contract, which goes into effect Jan. 1, that is designed to hold down costs for users as messaging rates increase. The payments network also has approved a 15 percent rebate for its users, its sixth consecutive rebate in as many years. Will Campos' initiatives succeed in attracting more low-volume/low-value users