What We’re Reading: Cybersecurity, Tablets in CUs and Consumer Spending

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 or Tweet @bankingdotcom.

 

  • Cybersecurity Should Not Come at Expense of Privacy: White House

American Banker

The White House says the nation needs new laws to reinforce its cyber defenses but that the push should not come at the cost of privacy. The House of Representatives on April 18 passed the Cyber Intelligence Sharing and Protection Act, or CISPA, which would encourage owners of financial networks, utility grids and other critical infrastructure to share information about digital threats with the government and one another. The White House has threatened to veto the bill, saying it lacks sufficient privacy protections. Civil liberties groups and other critics of the measure charge that it would allow companies to share people’s emails and text messages with U.S. intelligence agencies.

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  • Small Business Owners Big on Mobile Technology

American Banker

A survey of 1,305 small business owners conducted by Constant Contact in March found that 66% currently use a mobile device such as a smartphone or tablet in their work. Of the non-mobile users, 65% have no plans to use a mobile device in the future, many citing a lack of demand for mobile access from their customers. This segment is partial to Apple devices, according to the survey — 66% use iPhones, while 39% use Android phones. About 49% use iPads; only 15% use Android tablets.

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  • Keep Wal-Mart Out of Financial Services, Bankers Ask

BusinessWeek

A group of bankers advising the Federal Reserve urged U.S. regulators to consider preventing Wal-Mart Stores Inc. from offering some financial services. The Federal Advisory Council, a body of bankers that includes PNC Financial Services Group Inc. and BB&T Corp., said at a Dec. 19 meeting that Wal-Mart’s sales of prepaid cards warranted greater federal oversight. Minutes of the meeting were obtained yesterday under the Freedom of Information Act.

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  • Consumers spending nearly 10% more than in 2009

CNN Money

American consumers are spending nearly 10% more than they did four years ago when the country was reeling from the effects of the financial crisis, according to an analysis of the spending behaviors of millions of Mint.com account holders. In the first quarter of 2013, the average household spent roughly $4,220 per month — up from about $3,870 in the same period of 2009, according to the inflation-adjusted consumer spending index released Wednesday by Intuit, which owns personal finance site Mint.com.

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  • Why CUs Can’t Afford To Be Left Behind On Tablets

Credit Union Journal

It’s estimated that nearly half of the U.S. Internet population will be using tablets by 2014, which means increasing pressure on credit unions to adapt and conform to the trend. “The proliferation of tablet devices in the U.S alone is impacting everyone who manages their finances via a digital channel, including credit union members,” said Kenneth Hans, executive director of Blackstone Technology Group’s Financial Services Practice. “Much like banks, credit unions are looking for ways to cater to this latest form-factor that offers the power of a laptop in a much smaller and convenient size.” Among credit unions encouraging members to use tablets is the $5.3-billion Suncoast Schools FCU, which has 549,303 members that it has traditionally served via its 53 branches, but mobile devices such as tablets have changed that equation somewhat.

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  • Credit Cards – Game ON!

Gonzo Banker

Credit cards in circulation hit a peak in 2007 at 710 million cards, according to a 2013 Nilson Report. Then the crash of 2008 hit, the Card Act went into play in 2009, and consumer spending changed. From the low point in 2010, the number of cards increased by roughly 50 million in 2011 and continues to climb today, when we have 520 million cards in circulation. Credit card interchange has not been Durbin-damaged as of yet, and interchange is still high. In the United States, 10 issuers own 85.4% of the cards on the market (Source: The Nilson Report, February 2013).

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  • New Fed Report: U.S Mobile Payments Landscape – Two Years Later

Payments News

The Federal Reserve Bank of Boston in conjunction with the Federal Reserve Bank of Atlanta has just published a new report titled “U.S. Mobile Payments Landscape – Two Years Later.” Based upon ongoing meetings of the Mobile Payments Industry Workgroup (MPIW) convened by the Federal Reserve, the report updates an earlier paper from 2011. It examines changes in the evolution of mobile POS retail payments over the past two years, characterized by an expanding fragmented market environment and frequent technology innovations.

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Satisfaction With Social Media Interaction

Guest post by Karen Licker, Social Banker & Content Contributor (Independent) at J.D. Power and Associates

Social media, a non-traditional method of customer interaction is clearly becoming increasingly important for banks to understand.

It’s no longer just a vehicle for customers to vent about poor experiences, praise their bank for exceeding expectations, or read about other customers’ positive or negative experiences—it has now become a legitimate service channel!

Social media sites not only allow customers to interact with their bank, but also provide another medium to converse with representatives, get questions answered, and resolve problems. For example, data from our 2012 J.D. Power and Associates US Credit Card Customer Satisfaction Study shows that during the past 12 months, 5% of credit card customers have contacted their issuer through their social media site to ask a question, resolve a problem, or make a request.

Although many questions or problems may need to be handled outside of the social media site that was the initial contact, it is important for banks to show they are listening to their customers’ “pain points” by providing an actual response to the social media posting.

Did you know that only 60% of customers who contacted their credit card issuer via social media received a reply?

Needles to say, the impact of replying to a posting on overall satisfaction is profound, as Interaction satisfaction among customers who have received a reply to their social media contact is notably higher than among those who did not receive a reply (802 vs. 748, respectively). Findings from our recent study also revealed that optimizing customer satisfaction with their social media experience does not end at merely responding to the request, but that issuers should continue to focus on the following:

  • Resolving the initial issue at hand
  • Offering additional assistance
  • Thanking the customer for their business

When each of these best practices are met, Interaction satisfaction increases to 839, which is 91 points higher than when they are not met.

Source: J.D. Power and Associates 2012 US Credit Card Satisfaction StudySM    

The Bottom Line:
With the continued advancement of technology shifting the way customers interact with financial institutions, it is vital for banks to proactively respond to the changing demands of their self-service channels and understand the importance of being responsive to feedback posted on social media sites.

 

3 Wrong Notions about Credit Card Debt

The great depression, which the U.S witnessed in the 1930s, ruined a lot of families financially. The financial tsunami which hit America a couple of years back also affected millions of people. However, there is a basic difference between the two economic meltdowns. The plastic cards wrecked havoc on our finances during the recent financial recession. This was something our grandfathers did not witness during the previous depression.

The Americans have become too much addicted to spending these days. They are racking up debt to maintain a life style that is beyond their means. Therefore, it is not surprising that the total credit card debt in the U.S is $886 billion (as per data from the U.S census bureau). Do you know that an average card holder has $5100 in credit card debt?

There are certain myths associated with credit card debt. Many of them are quite baseless. Here are a few of those myths:

1) Consumers always managed everyday expenses with credit cards

A few retail chains such as Sears and Montgomery Ward had credit card system in the 1960s to buy goods from their stores. But it was not possible to use those cards anywhere else. So there was no option to use that card extensively. Moreover, Vista and Master cards were usually restricted to the upper-middle class and upper class families with high income. These cards were rather a status symbol. The trend changed in the late 1980s. So it cannot be claimed that our grandparents paid their grocery bills with credit cards like we do.

2) Responsible card holders suffer for unwise card holders

A lot of people believe that high default rate due to unwise use of credit cards has resulted in soaring interest rates. As a result even responsible card holders need to pay high interest rates. However, they overlook the fact that it is mortgage foreclosures and home-equity loan defaults that affect the banks the most.

On the eve of the financial depression, the banks made it easy to open new lines of credit. Therefore, more people got access to credit cards and consequently, credit card debt increased. The banks advised these debtors to refinance their mortgage. This move by the banks backfired as they could not sell the low quality assets during the recession. The banks had to increase the credit card interest rates to support themselves.

3) The CARD Act completely shields the consumers against unscrupulous practices

The CARD Act has banned malpractices like some retroactive interest rate increases, free credit card marketing to minors etc. Nonetheless, this bill is not going to work for people who are already in debt. The credit card companies have already pushed up the interest rates, hiked service fees and lessened the value of loyalty reward programs. As a result, the debtors are in the same mess. Also, the borrowing costs have already skyrocketed. This does not help the indebted people either.

The good news is that consumer debt, though quite high right now, is showing signs of decline. Statistics from the Federal Reserve reveals that consumer debt dipped by $155 in December last year. Perhaps the consumers are realizing that being wise with the plastic cards is a basic condition for a financially secure future.

Author Bio

Marc Brown is a content developer and a financial advisor. He writes on a wide range of money related topics with a special focus on credit card debt. 

Checking In? Ka-ching!

Credit card company American Express has teamed with location-based service Foursquare to allow users to win prizes and meet people by using their mobile devices to “check in” at their favorite places.

With Gen Y users showing noticeable interest in mobile applications, the partnership allows American Express to win over these younger consumers, and proves larger companies are starting to seriously consider entering the mobile space.

With Facebook and Twitter strongly cemented as the top two social services, Foursquare is looking to quickly close the gap.

Are your customers “checking in?” Have you considered offering incentives for those using Foursquare at branches? Let us know in the comments below.

IDC Poll: Financial Services Biggest Technology Breakthrough

IDC analyst Marc DeCastro recently asked readers, “Historically, what technological advancement in financial services do you feel is the industry’s biggest breakthrough?” The result: online banking and bill payment.
Here is the survey breakdown:
• 32 percent, Online Banking and Bill Payment
• 20 percent, ATM
• 20 percent, Debit Card
• 16 percent, Credit Card
• 10 percent, Mobile Banking

DeCastro’s poll also found that the older demographic was, the more they felt ATM’s were the biggest breakthrough, but the 25 – 34 age bracket chose mobile banking. This demographic breakdown demonstrates the ever-increasing challenge that financial institutions face to reach a broad range of customer preferences. Catering to customers’ needs is crucial during this era of rapidly-changing technology. To view the full survey results visit IDC.
What is your institution doing to reach different customer demographics? Leave us a comment below.

What Goes On Your Credit Score?

During a segment on Good Morning America, Mellody Hobson discusses what affects consumers’ credit card scores. While this is common knowledge for FI’s, are your customers informed about how their financial habits are affecting their credit scores? Providing brochures and online information about credit scores will help your customers and members become more educated about how their day-to-day actions can affect their credit score.

Below, Mellody offers tips to help consumer effectively manage their credit scores.