Free Checking May Become a Luxury of the Past

Due to recent changes in debit and credit card fees from the Dodd-Frank bill and the CARD Act respectively, banks are looking to replace traditional sources of fee income. Some banks and credit unions are beginning to charge for checking accounts that, in recent years, were provided to customers for free.

According to recent reports from the Wall Street Journal and New Jersey’s Star-Ledger, Bank of America will begin testing $6 a month fees and J.P. Morgan Chase and Wells Fargo will begin phasing out free checking in New Jersey.

While these fees may keep banks out of the red, a recent survey by BAI & Finacle Index of Bank Sentiment suggests that consumers are not ready for this change. Some of the key findings from the survey are below:

• 85 percent of consumers surveyed do not expect to pay fees for a checking account.
• 44 percent of respondents state that fees charged by banks are reasonable but 42 percent remain neutral about the fairness of fees.
• Only 45 percent of respondents say they are saving money for the future, which is down 6 percent from the February 2010 index.
• They still don’t trust the financial industry as a whole. About 37 percent of respondents indicate they see banks as trustworthy; this is up from 33 percent six months ago but remains a low number.
• They’re trying to reduce their debt. 55 percent of respondents to the most-recent index say they intend to pay off some or all of their credit cards.

Detailed information on the survey is available here.

What are your thoughts on implementing fees for checking accounts? Let us know in the comments section below.

FI Spotlight: The Coastal Bank

The Coastal Bank Paves the Way with Text Message Banking

The Coastal Bank, headquartered in Savannah, is the first locally-owned financial institution to offer Text Message Banking. Using state of the art text message banking, customers can now receive account notifications and complete money management tasks on the go.  James LaHaise, Executive Vice President and Chief Banking Officer comments:

“Technology continues to transform the way our customers can manage their money. Our mobile banking offerings are the latest addition to our robust menu of services. We’re delighted to provide our customers with a simple, secure way to bank that puts their account information at their fingertips 24/7.”

You can read the full article here.

How are you using advanced technology to help your customers manage their finances? Let us know in the comments section below.

Financial Fun and Games

Celent Banking Blog recently posted an article about a new startup, Payoff.com. The site, which “makes money management fun,” targets users by blending games with finances. For an introduction to the service, watch the video below.

Payoff.com from Payoff.com on Vimeo.

Celent’s Jacob Jegher believes the service provokes interest with its “fun and games,” but once you delve into the site, the components are confusing. One of Jegher’s main concerns is security. After the recent mishaps with Blippy and Rudder, Jegher believes Payoff.com does not have enough security for the depth of information it asks its users to provide.

Jegher writes,

“Is financial planning a game? Certainly not. Can it be fun? Absolutely, but there has to be some knowledge transfer and education involved. Firms that will be successful in the PFM space have to find simple ways of providing financial education to their customers.  This is especially important for younger users as they are at a stage in their lives where financial literacy is crucial.”

What are your thoughts on combining games with financial planning? Let us know in the comments section 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.

 

  • Gates Foundation, USAID Give Prize for Haiti Help

ABC News

A $2.5 million prize to get Haitians buying, selling and banking with their mobile phones didn’t push the winner into the mobile banking business, but the Gates Foundation’s incentive did make the company move much faster. “It was a real gruesome race,” Digicel CEO Maarten Boute after the Bill & Melinda Gates Foundation announced Monday that his company had won the money for being first to establish cell phone banking in Haiti in less than six months. The Haitian mobile banking prize was announced in June as a way to push the marketplace toward change. Besides death and destruction, the Jan. 12, 2010, earthquake in Haiti also devastated the country’s financial system.

Read more

  • How One Bank Is Counterattacking the Zeus Threat

American Banker

Tompkins Financial Corp. of Ithaca, N.Y., is one of many financial institutions that have been attacked by the sophisticated malware known as Zeus. Now it’s fighting back — with sticks. To protect the funds of its largest commercial clients, which use its services to transfer up to $18 million at a time, Tompkins offered them a free USB stick. The device creates a secure connection to the bank, encrypting all instructions as they are typed. The technology appears to have successfully blocked Zeus attacks, and the $3 billion-asset Tompkins now plans to try to sell the sticks to smaller business customers. Tompkins is taking an unusual approach to a common problem. Zeus has caused hundreds of millions of dollars of fraud losses since it was identified.

Read more

  • How Much Better Will 2011 Be Than 2010 — and for Whom?

Banktech.com

Don’t you just cringe when the answer to a question like the one in the headline starts “it depends?” For many industry players, both institutions and bank technology firms, the answer will depend on their circumstances — just like every year, when you think about it. But then there are other interested parties, like investors, who are also interested in some answers, such as:  -How much will U.S. bank and credit union IT spending increase? -Which solution categories are going to grow the fastest? -Which companies are going to do better than their peers and why? In conversations with institutions, bank technology vendors, and investors, intractable differences in their objectives lead to a range of possible answers to the headline question. The rest of the column explores what 2011 will look like for these three groups.

Read more

  • Connect With a Web 2.0 Audience

Bank Systems & Technology

The one area for improvement for the majority of banks is social media. Most financial institutions that are doing something with social media are simply dabbling with it. They’re not tying it to a business goal — they’re looking at social media as the business goal. That’s a mistake. Social media is probably the largest opportunity today. Unfortunately, banks don’t understand or don’t know how to approach social media. The entire gamut of social media activities still is misunderstood or ignored. The banks that don’t invest in social media are missing two big opportunities: first, the ability to listen — knowing what’s going on and what customers and the market are saying; and second, the ability to actively engage customers.

Read more

  • Get Ready for new U.S. bank IT Security Guidance from the FFIEC

Gartner

Gartner’s Avivah Litan participated in a meeting of the FFIEC IT Subcommittee the week of January 10th. Like the rest of the FFIEC, this subcommittee has key representatives from all of  the agencies regulating U.S. banks and credit unions – the Federal Reserve Board, FDIC, OCC, NCUA, and OTS, and was the body that issued the last FFIEC guidance on secure electronic banking “Authentication in an Internet Banking Environment” in 2005.  According to Litan, “not all financial institutions have kept up with the spirit of the 2005 guidance. The threats and associated risk levels have clearly moved ahead of the safeguards many banks and credit unions, and their service providers have in place today.

Read more

 

  • Your Mobile Is Now Your Bank

Wall Street Journal

Of the 600,000 villages in India, only approximately 50,000 have access to formal finance however on average, 6 out of 10 Indians have mobile connections. Will the mobile revolution that has enabled million of Indians to talk at rock-bottom prices now help usher in a banking revolution? The first step was taken Wednesday when two of India’s largest banks entered into tie-ups with two of the country’s largest mobile operators to offer banking and financial services over mobile phones. The ventures, if successful, may help banking reach millions who still don’t have bank accounts but have access to mobile telephones. They’re also probably one of the fastest reactions to a central bank move to foster a more democratic financial system.

Read more

FI Spotlight: Katahdin Trust Company

Katahdin Trust Company Ups the Ante with Mobile and Text Message Banking in 2011

In a recent press release, Katahdin Trust Company outlined their decision to provide mobile- and text message-based banking for customers in the new year.

Katahdin Trust Company senior vice president Vicki Smith noted, “Life today is largely lived on the go, so to speak, and keeping with that lifestyle Katahdin Trust Company has developed a comprehensive series of technologies which will be rolled out in 2011. Mobile Banking and Text Banking are simply the first conveniences in the series.”

You can read the full release here.

What tools are you offering to better serve customers?  Is mobile banking a goal in 2011? Let us know what your plans are this year by leaving a comment below.

Financial Resolutions

As consumers and businesses optimistically begin 2011, hopes are high that this year will lead to a stable economy and financial growth. GonzoBanker’s Terence Roche believes that the payments arena will change quickly over the next two years and details four key resolutions for banks:

  • Re-aim the free checking strategy
  • Re-aim the rewards strategy
  • Look at bill payment in light of the overall payments picture
  • Create a P&L report for payments and manage it as though it is a line of business

Roche notes that these issues need to be addressed by upper management in financial institutions. While some changes may be unwelcomed, the opportunity for banks to benefit is always available.

For details on each resolution, visit GonzoBanker.

Has your institution made any resolutions for 2011? Leave us a comment below.

Are you planning a game change?

Technology has always been a game-changer, however it is how you utilize game-changing technology that shapes your business – or in this case, your financial institution. Bank Systems & Technologyoutlined several predictions of the hot technologies that will be banking game-changers in the year ahead.

Importantly, both mobile banking and social media made the cut. According to a fall forecast from IDC, 269.6 million mobile devices shipped in 2010 — a 55 percent increase over 2009. For financial institutions, this means more opportunities to put sophisticated banking services in the palms of customers’ hands. Also, Aite analysts say 90 percent of banks will have a dedicated social media budget by 2012. Financial institutions will increasingly join conversations and become active in social media – whether it is through Twitter, Facebook, YouTube or FourSquare.

Additional predictions can be read at Bank Systems & Technology. Meanwhile, how do you plan on implementing game-changing technology in 2011? Let us know in the comments section below.

Social Media Statistics: By-the-Numbers, January 2011

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

  • $50 billion is the latest valuation for Facebook, which has reportedly seen new investments from Goldman Sachs and others (Source: Bloomberg)
  • 73% of Americans read their local newspaper at least once per week, 78 percent claim to read ‘most or all’ of the local newspaper (Source: National Newspaper Association)
  • 71% of U.S. web users have Facebook accounts (Source: iStrategyLabs)
  • 66% of Americans cite television as their most widely used source for national and international news, down from 74 percent in 2008 and 82 percent in 2002 (Source: Pew Research)
  • 65% of Internet users have paid to download or access some kind of online content from the Internet, with music, software and apps being the most popular (Source: Pew Internet)
  • 41% of Americans say they get most of their news about national and international events from the Internet (Source: Pew Research)

Curious to know which states use Twitter the most? You’re in luck, here’s an infographic with the details.

Resolution #1? Help Your Customers Reach their Resolutions

With the first week of 2011 coming to a close, many consumers are still in the midst of creating resolutions and plans for the New Year. While weight loss continually tops the list year after year, financial institutions should keep in mind many Americans also make it a goal to get out of debt and become financially fit as well.

In fact, a recent study conducted by the Chase Slate-U.S. News Consumer Monitor found that Americans are generally more optimistic in terms of financial planning heading into the New Year. Over half of the respondents had little to no anxiety about their finances in 2011, 6 in 10 believing that the economy was improving.

Gen Y shows the highest levels of optimism, mentioning they would work toward saving money and managing finances better. The survey found that planning translates into confidence – 18-34 year olds are more likely to believe that both the economy and their personal finances are getting better than other age groups.

The beginning of the year is the perfect time to re-evaluate the tools you have in place to help all of your customers reach their goals. Specifically, take a look at how you reach different segments of customers. What are your resolutions for reaching Gen Y? Women? Boomers?

Leave a comment below to offer insight on your 2011 plans!

Smartphone Mania

Smartphone adoption has skyrocketed in the past year; analyst firm IDC reported that 269.6 million smartphones were sold globally in 2010, up from 173.5 million units in 2009.  There is even market speculation  smartphones will surpass traditional computers within the next year.

With the increasing adoption of smartphones, financial institutions need to focus on their mobile platforms to enhance their portfolio of offerings to banking customers. As customers begin to visit banks less frequently and use smartphones for financial tasks, mobile banking solutions must become a fundamental offering for financial institutions.

What does your institution offer customers and members? Let us know in the comments section below.