Small Business Lending to Finally See Improvement in 2011?

If you asked small business owners 18 months ago how challenging it was to secure a loan through a financial institution, a majority would respond it was nearly impossible. However, those sentiments are starting to change.

A recent National Federation of Independent Businesses survey found that the total number of small business respondents who said they faced challenges with their financial institution in obtaining loans was the lowest since September 2008.  Some in the industry see this as a small win, while others feel there is still a long road ahead before small business lending is back to usual. Financial institutions have made great strides to get to this point, by addressing challenges in the market to better serve their small business customers and create a lending environment they can trust.

For as long as one can remember, lending has largely been the basis of a relationship established between a financial institution and small business owner. In 2011, it will be no different, continuing to be a barometer for successful relations between the two parties. But, it will also open doors of new opportunities for financial institutions to become more strategic partners in the success of small businesses.

What are you seeing in your local markets when it comes to small business lending? Let us know by leaving a comment below.

What We’re Reading This Week

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.

  • Facebook, Twitter Become Online Banking Attractions

American Banker

The social media landscape is still a jungle for many financial institutions, but a few have cut a clear path for themselves. Vantage Credit Union in St. Louis, for example, said it has improved customer engagement markedly by allowing members to access Facebook and Twitter from within online banking; those customers who do so spend twice as much time on the credit union’s website as the users who do not. The much larger SunTrust Banks Inc. started its own social media program about a year ago. Since then, SunTrust said, it has had conversations with about 15,000 customers on Facebook and 1,500 on Twitter. (SunTrust has 5 million customers.) A survey Fiserv Inc. released in November shows the potential of a strong social media strategy. It polled 3,000 online consumers and found 84% were using social media, and 11% connected to their financial institutions this way.

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  • 2011 Bank Technology Outlook: Major Projects, Bigger Budgets in Store for Bank CIOs

Bank Systems & Technology

Bank CIOs will be charged with pursuing major tech projects — including compliance, core systems and mobile banking initiatives — in 2011, members of BS&T’s Reader Advisory Board report. The good news is, they’re likely to have more money to complete them. Banks have big things in store for their technology in 2011. After several years of reactionary cost containment, the industry is looking forward to better times, and many financial services firms are prepared to increase their investments in IT in the year ahead. In fact, based on insight from members of Bank Systems & Technology’s newly formed Reader Advisory Board, most banks will undertake major systems upgrades in the next 12 months.

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  • The 12 Days of Mobile Banking

NetBanker

In the holiday spirit, NetBanker’s Jim Bruene thought he’d lay out the perfect mobile banking/payments app for 2011. Security: Option to log in with 4-digit PIN only; Authorize unusual and/or declined card transactions and unusual checks presented for payment. Bank account management: Banking data presented in order of importance with new transactions in bold; Quick view of current balance with predicted balance going forward based on known upcoming transactions. Paper management: Deposit paper checks via camera (remote deposit); Pay bills by taking a picture of the billing statement (photo bill pay); Scan-and-store paper receipts and statements. Alerts & calculators: Receive important alerts via push messages to the phone’s main screen; Take action or adjust alert sensitivity by responding to messages via text messaging or within the app; Key financial calculators, such as loan/mortgage payments.

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  • Creating the Right Mobile Banking Ecosystem

TMCnet

  • Mobile network providers are feeling the crunch as consumers are demanding more applications, richer content and value-added services. A recent Alcatel-Lucent study determined that consumers have an ever-growing appetite for social networking, entertainment and information, all delivered over the mobile network. When you add mobile banking to the mix, the pressure is intense. The explosive growth in demand has helped to create an environment that is dominated by third-party application and content providers (ACPs), as captured in this report. According to Alcatel-Lucent officials, ACPs are delivering more than the applications and content that are generating the significant increase in traffic; they are also benefitting from the revenue associated with the value they deliver.

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Millennials vs. Boomers: A Banking Divide

It’s no secret that the millennial generation is adopting technology at rate that surpasses the Baby Boomers, leaving a technology gap in our society. Whether it’s the difference between texting and calling or Facebook messaging and e-mailing, millennials are among the first to try new technologies. The banking industry is no different. In order for financial institutions to reach the millennial generation, they need to embrace new technologies to retain clients who are just starting out on their financial journey.

James Van Dyke of Javelin Research has long been an advocate of banks recognizing the difference in behaviors between the younger and older generations. In a recent blog post, he wrote:

“We all know the examples of how millenials are different in terms of everyday communication with other people, but are we grasping how this translates to payments, online financial services, security or mobile? I see an unmet need, and future potential changes such as reduced interchange for debit the implications could portend even greater significance.”

Additionally, Van Dyke referenced a November survey where more than 5,000 US consumer’s payment preferences that asked respondents what value they found in alerts (e-mail or text/SMS). After honing in on this question, he wrote:

“What the data told me is that younger people are significantly more likely to value particular electronic updates from their bank that fall within the ‘everyday’ category ‘b’, while older Americans place significantly higher value in just the opposite “a” or security updates.”

Are you catering to the needs of millennials? Let us know in the comments section below.

FI Spotlight: Bank Atlantic

BankAtlantic shares tips and tricks to help customers protect themselves from identity theft.

Tis the Season to Be Jolly and Manage Your Finances

According to the National Retail Federation the average consumer will spend $688.87 on holiday-related shopping. With your customers in full swing with their holiday shopping sprees, here are some online banking tips to share with them:

  • Look at your full financial picture to ensure you’re staying in the black — Intuit Financial Services’ October 2010 survey found that 84 percent of U.S. consumers felt the most important aspect of online banking tools is the ability to pay and manage bills and finances all in one place. With everything in one place, consumers have a clear picture of their financial situation which can help them make smarter purchasing decisions.
  • Check the accuracy of your transactions, so when you go from retailer to retailer, you’re not in the red — 57 percent of consumers use online banking tools to check the accuracy of their purchases.
  • If you’re always on the go, take advantage of mobile banking tools.  Close to 20 percent of survey respondents said they’re already using mobile banking applications to track their finances.

What We’re Reading This Week

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.

  • PNC Virtual Wallet Adds More Vivid Picture for Joint Account Holders

American Banker

The promise of personal financial management is to provide account data in a single view — but not all viewers are single. PNC Financial Services Group now allows joint account holders to get a more detailed view of each other’s spending in its Virtual Wallet account, an online product that borrows themes from PFM systems and presents most financial data in a calendar view. “This is a good starting point, but ultimately consumers are telling us in our surveys that they want to have a single place to see everything,” said Mark Schwanhausser, a senior analyst for multichannel financial services at Javelin Strategy and Research in Pleasanton, Calif. He said one of the drawbacks of the Virtual Wallet is that it only lets consumers see information about accounts held at PNC. Many PFM providers let consumers view accounts from multiple banks. “What would really benefit consumers would be being able to view not just the joint accounts at PNC, but elsewhere,” Schwanhausser said. In that scenario, PNC would become more of a financial portal supporting a total picture of family finances.

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  • Wells Fargo Consolidates Its PFM Tools into a Single Kit

American Banker

Wells Fargo & Co. aims to help consumers navigate their finances more easily with its My Money Map personal financial management system… The new service provides a dashboard view of a consumer’s financial picture using data from Wells accounts… Ron Shevlin, a senior analyst at Aite Group in Boston, said that “from a functionality perspective,” Wells isn’t “leapfrogging,” it’s “just catching up” by adding unity to its PFM tools. Third-party vendors’ products such as Intuit’s Mint are still far more robust, and banks have to play catch-up to interest consumers in their own PFM products, Shevlin said. Third-party PFM vendors said centralizing information in an easy-to-read format was critical, and it would help provide a closer relationship between banks and their customers. “If a bank helps a customer see and act on all their financial information in one place, regardless of the source, the bank is in a strong position to deliver relevant and meaningful insights that help customers make better financial decisions,” said Albert Ko, senior vice president of consumer solutions for Intuit’s Financial Servicesunit. Solidifying and consolidating financial relationships creates “more opportunities for cross-sell and, ultimately, improved profit per customer,” Ko said.

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  • WikiLeaks, Amazon & You: Will Banks Hesitate in the Cloud?

Bank Technology News

Forgetting for now the political fallout, the WikiLeaks affair has evolved into one with major business implications for the financial services industry.  First, and covered elsewhere in today’s American Banker, is the ‘information war’ that’s erupted, with WikiLeaks’ guerrilla supporters inflicting collateral damage on enemies like MasterCard, Visa and PayPal.  Second, and with longer-term ramifications for innovation and efficiency in financial services technology, are the risks raised in Amazon’s—reportedly Sen. Lieberman-induced—decision to cut off WikiLeak’s access to Amazon’s cloud-based servers…  Until now, most large-bank CIOs have been skittish about taking advantage of the cheap and vast computing powers that reside in the cloud, testing the waters first with software development functions and non-core systems like HR. Smaller banks have taken the leap much more readily, as they’re increasingly reliant on outsourced applications and vendors.

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  • Strings attached to ‘free’ checking

Los Angeles Times

The days of free checking accounts in America are waning. New laws that reduce overdraft fees and the charges that banks impose on merchants for handling transactions are cutting deep into bank revenues, prompting many financial institutions to add charges or extra conditions on their checking accounts. The portion of checking accounts offered by banks for “free,” with no monthly service charge or minimum balance, fell from 76% last year to 65% this year, according to a new national study of big banks by the website Bankrate.com. That means customers will have to shop more carefully — and figure out what their financial needs and habits really are — to get checking-related services free or at low cost, consumer advocates say.

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  • Big Citi thinks small New NYC branch goes for community bank feel Includes high-tech lounge, concierge desk

Newsday

Citibank’s newest branch in Manhattan offers a bit of razzle and a bunch of dazzle to customers at the south end of Union Square, but the philosophy behind it isn’t much different from that of smaller community banks that have siphoned customers away from large banks since the financial collapse two years ago. Behind the snazzy new branch’s iPad-like touch screens, its Wi-Fi-equipped lounge, its media wall and its video link to customer service is a conscious effort to create the feel of a community bank, said Billy Cho, manager of the new branch and a Citibank senior vice president. ” Read more

 

  • More consumers using cell phones to manage money

Pittsburgh Tribune-Review

Cathy Majka of North Huntington hasn’t been inside a bank branch in at least eight months — not because she detests her bank or has no money to manage. “I use my smartphone at least once a day to do some kind of banking,” said Majka, 38, who made the rare visit to USAA Federal Savings Bank just to ask about an investment. “If I want to transfer funds from my money market account to my checking, I just get on my iPhone and do it. As soon as I get a bill, I get on the phone and pay it.” Majka is one of a growing number of consumers turning to mobile banking, or banking by smartphone. It enables customers to access their bank accounts by either downloading software applications into their smartphones, using them to visit the bank’s website or using their smartphones to access accounts by texting. Mobile banking is the latest in a decades-long succession of industry innovations meant to make banking more convenient.

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  • Top 10 SMB Tech Tools of 2010

ReadWriteWeb

In 2010, it felt like the flurry of new startups and Web tools only accelerated, with more and more products popping up every week. For business owners, it’s not always easy to stay on top of it all, let alone take each of these new offerings for a spin to see if they’re worth using. As 2011 approaches, ReadWriteWeb takes a look back at 10 of the last year’s most useful or promising Web tools for small and medium-sized businesses, including InDinero, launched in early July and is a real-time financial dashboard for companies. The Y Combinator-backed startup is led by 20-year-old Jessica Mah, who got the idea for InDinero while she was selling items on eBay in middle school. InDinero is free for up to 50 transactions per month, $29.95 for up to 500, and $99.95 for an unlimited number of monthly transactions.

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Customer Loyalty

A small gesture of gratitude can go a long way, especially when it comes to recognizing customer and members. Rewarding customers for their loyalty is common practice in the retail industry, but should not be a forgotten practice in the financial services industry. Bank and credit union customers have ample choices when it comes to choosing a financial institution, so it’s important to remind them why they’re an integral part of your institution.

Jim Bruene at NetBanker suggests that financial institutions take time to recognize their loyal customers.

“In the pre-Internet days, it was expensive to create custom marketing programs for specific segments. But today, with the cost of communicating to online customers essentially zero, you should be sending messages to your customers at least once each year thanking them for their continued business. And on the bigger milestones, 5 years, 10 years, and so on, send a something a little extra. It doesn’t have to be expensive. Find a special perk and offer an “upgrade” on their anniversary.”

To read Bruene’s full post, visit NetBanker.

Do you reward your customers and members? Let us know how you recognize your loyal customers in the comments section below.

Social Media Statistics: By-the-Numbers, December 2010 (Part II)

Below are interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section.

  • 80% of blog readers consume content in the morning, compared to just under 40% who do so at night (Source: HubSpot)
  • 79% of all U.S. moms with children under age 18 are active on social media (Source: Social Times)
  • 44.81% of people say they unfollow others who over-communicate or over share on social media (Source: SmartBlog)
  • 38% of Internet users use Google to login to Websites and social networks, making it the most popular social media login tool on the Web (Source: Janrain)
  • 4pm ET is the best time of day to publish blog posts if you’re looking to maximize Re-Tweets (Source: ProBlogger)
  • 4 times as many people 74 years old and older use social media in 2010 compared to 2008 (Source: Pew Internet)

Also, be sure to check the the following 2010 year in review sites from Facebook, Twitter, YouTube, LinkedIn and Google.

What We’re Reading This Week

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.

Banks Improve Customer-Satisfaction Scores
MarketWatch
Banks’ approval numbers are rising, according to the American Customer Satisfaction Index, but it is because the customers with the biggest complaints have already gone elsewhere. The latest ACSI index of customers’ satisfaction with their checking, savings and personal loans at big banks, released Tuesday, climbed by 1.3 percentage points to 76. Credit unions and smaller banks have significantly higher customer satisfactions levels than the big banks, both scoring 80, though credit unions dropped five points from the previous reading.
Read more

Mobile Payments Moving Beyond Economic Problems
American Banker
Economic fears that stalled investments in mobile payments technology are fading, but the potential for new entrants to disrupt the market still has some players on edge. The recession slowed development over the past 18 months, but that trend is reversing, according to payments industry players. For example, manufacturers report that orders for contactless technology, including near-field communication-based cards and terminals, are on the rise. New security concerns also have emerged, but these could create opportunities for payments industry players to battle the threats and increase consumer awareness of mobile payments for overall market growth, panelists said Dec. 7 at the Cartes & Identification conference.
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2010 Saw 40-Fold Growth in the Number of Financial Institution iPhone Apps
NetBanker
Last year at this time only 30 financial institutions had apps in the U.S. iTunes App Store. And that was a full 18 months after Apple’s phone had opened its OS to third-party programs. A few in the industry still questioned whether smaller banks and credit unions would ever need a native iPhone app. That question has been answered: In the past 12 months, the total financial institution app-count has rocketed upwards of more than 1,200, a 40-fold increase. That’s 100 new apps per month for the past 12 months. In raw numbers, the past seven days have been relatively unremarkable with just 17 new FI apps.
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Fed policy on buying Treasury bonds stays on track
Washington Post
Interest rates are marching upward, making it more expensive to take out a mortgage or get a loan to expand a business, and diluting efforts by Congress and the Federal Reserve to strengthen the economy. The rise is partly because of good news: The outlook for growth has improved, putting less pressure on investors to keep their money in ultra-safe bonds. When there’s less demand for bonds, their interest rates – or yield – go up to attract more investors. And the better economic outlook could allow the Fed to pull back sooner than expected on the extraordinary steps it’s taking to keep rates low.
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The 25 Best Apps for iPads, iPhones, and Droids
U.S. News & World Report
As the list of smartphone applications just keeps getting longer, Apple’s slogan—”There’s an app for that”—is gaining the ring of truth. U.S. News staffers shared picks that make their own lives easier or more fun.
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Mobile Context and Experience

Omar Green, Intuit’s director of strategic mobile initiatives recently spoke at the GigaOm Net:Work event where he provided a thought leadership presentation on “Mobile Context and Experience.” Omar’s speech addressed how Intuit sees the nature of work changing and how we are looking to cash in through connected services that adapt to users’ context and experiences.

Watch live streaming video from gigaomtv at livestream.com

Has your FI adopted mobile? Let us know in the comments section below.