- Decoding New Rules for Banks
Big U.S. banks are bigger than before the financial crisis. In 2001, the assets of the five largest U.S. bank holding companies accounted for 25% of all U.S. bank assets. Last year their share was 53%. In other countries, the size of big banks, relative to their economies, is even larger—though the U.K. and Switzerland are trying to shrink theirs. Dodd-Frank and global standards negotiated in Basel, where bank supervisors from around the world convene, did more about too-big-to-fail than public debate often suggests: In the U.S., there now is a mechanism, albeit untested, for the government to take over and liquidate any financial institution, even one like Lehman Brothers that isn’t legally organized as a bank. There is a limit on how much banks can borrow. There are bans on some 2008-style bailouts. And firms deemed “systemically important financial institutions” will have to set aside more capital than smaller banks.
- Banking Trends Offer Clues To The Real Business Cycle
Recent banking trends offer subtle clues about the business cycle. The financial crisis which burst across world markets in 2008 stemmed from explosive monetary policy during the preceding period. An old banking adage holds that the worst loans fund in the best of times. Greenspan’s Put and Bush’s deficits injected cortisone after the tech bubble dislocated markets and 9/11 hit. Instead of allowing the recession’s curative surgery, intrinsic weaknesses were perpetuated. From artificially low interest rates and devalued dollars to fiscal deficits rewarding idleness, federal policies prodded us from savers to borrowers and from producers to consumers. Nothing can be borrowed which isn’t first saved; nothing purchased which isn’t produced. With interest rates low and inflation high, Americans consumed all they made and more. Household wealth and personal income spiked, but debt climbed faster peaking at 359 percent of GDP before the crash.
- Tech Companies Bring Gaming to Debt Collectors’ Training
San Diego-based BankersLab introduced Tuesday CollectionLab, a training product that uses simulation and games to help bank participants improve their collection approaches and better understand what variables drive good decisions when collecting delinquent debt. The course, which is targeted toward middle management and senior professional bankers, takes place in person but relies on software to train students. Participating students break off into smaller teams that compete against one another in interacting with data and interpreting trends in hopes of operating the most profitable virtual bank while also gaining the most satisfied customers. CollectionLab, which runs for several days, focuses on collection management, including topics like staffing, resource allocation, economic stress and product growth. To put it simply: It’s like a flight simulator but for bankers.
- Apple’s iPod Touch is fast becoming the new cash register
By 2015, the traditional cash register may be gone from whole swaths of the market, relegated to grocery stores where the sheer volume of items per basket requires a table to set them on. Many small stores will keep their counters but dump the large cash register in favor of the mobile payment terminal, one that very likely will have an iPod Touch at the core. The use of a sled around the iPod Touch means that the clerks can swipe credit and debit cards — no need to worry about proprietary technologies such as Square’s or haphazardly adopted advances such as near-field communications (NFC). Plus, if those other payment methods get traction, a merchant need just replace the sled with a new one that supports the technology — much cheaper than replacing today’s point-of-sales terminals.
- Regulators raise bar on US data privacy
- Checking fees can add up to hundreds
About 9% of consumers pay more than $10 a month in banking fees overall, according to an annual survey of 1,000 adults conducted by Ipsos Public Affairs for the American Bankers Association in August. And 59% said they did not spend anything each month on fees. The fee for bouncing a check — or using a debit card to make a purchase without enough cash — has been trending upward. The average overdraft fee is $31.26 vs. $30.83 a year ago, Bankrate.com says. “Most people aren’t paying anything in fees. Some people are going to pay a whole lot,” says Greg McBride, senior financial analyst at Bankrate.com. Consumer watchdogs point out that it can be easier to cause an overdraft because there are more ways to access a checking account besides just writing a check — online bill pay, debit cards, ATMs.