Weekly Term Accounts APY Spread and Premium Index - Sep 19

by Tom 19. September 2016 16:36

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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Building Deposits | CD rates | Deposit Products

Is Wells Fargo Only the First to Get Caught on Illegal Sales Practices?

by Tom 19. September 2016 16:10

By now, you have no doubt hear that Wells Fargo Bank recently fired 5,300 employees following an investigation by the various government agencies that revealed that hundreds of thousands of unauthorized deposit accounts were opened by Wells Fargo employees, including tens of thousands of credit cards. The bank also was hit with $185 million in fines.

The Consumer Financial Protection Bureau (CFPB) reports that more than 1.5 million Wells Fargo deposit accounts may not have been authorized. According to the Los Angeles City Attorney’s Office, new accounts were created without authorization using cash from existing customer accounts to meet sales goals under an aggressive incentive-compensation program.

After the initial news, new stories are emerging that reveal that the sales culture inside Wells Fargo put incredible pressure on employees. During the time of the unauthorized account creation, from 2011 to 2015, employees report they were responsible for unrealistic sales goals with up to four daily meetings to review sales targets. For example, “pinning” became a common practice where the banks would issue unauthorized ATM cards and PINs. At the same time, managers ignored ethical and legal misconduct. One employee reported to CNN:

"I had managers in my face yelling at me. They wanted you to open up dual checking accounts for people that couldn't even manage their original checking account."

Given the tough economic climate in recent years you have to wonder whether Wells Fargo’s illicit sales practices are an anomaly or more widespread. Has the industry as a whole turned a blind eye to unethical practices that increase revenue at the expense of the customer. As the industry “tisk tisks” Wells Fargo for malfeasance, I keep thinking of Claude Rains in Casablanca proclaiming “I’m shocked - shocked to find that gambling is going on in here!” as he pockets his night’s winnings.

A recent podcast posted by the Wharton Business School questions the entire fees-based profit model for banking. The whole practice of cross-selling bank products is ripe for abuse. This kind of relationship banking is common practice, but in the case of the current Wells Fargo scandal, it seems likely that the bank will lost customers to credit unions and smaller institutions that put more emphasis on customer service based on trust. Consider the trend among black consumers who are seeking out black-owned banks.

Wells Fargo may be the first to be caught with a hand in the fees cookie jar, but chances are it won’t be the last. The CFPB is scrutinizing Wells Fargo and CEO John Stumpf is going to testify this week before the Senate Banking Committee. Senate Democrats have already signed a letter urging strong action against Wells Fargo, but Wells may only be the first to feel Senatorial wrath.

Times continue to be tough for banks. We are all holding our breath, waiting for the Federal Reserve to move and interest rates to rise. However, there are always new sources of income available for creative financial institutions. Cracking the whip and demanding more revenue from a consumer market that remains reticent and feels tapped out can only lead to abuses to meet unrealistic sales goals.

In these uncertain times with an erratic economic climate fueled by the uncertainty of the upcoming election, financial institutions continue to struggle to maintain profitability. Putting more pressure on employees and customers to build more fee revenue is not the answer. Consider other ways to build revenue and business. Banks need to think back to the days before the deposit bubble burst and consider revenue approaches they may not have revisited for a while. Focusing more attention on customer service, for example, can have a positive impact on revenue; if you build a better service model, customers will come. What about new types of loan packages? We maintain a database of new product ideas that goes back decades and many of those ideas have little or nothing to do with generating fee revenue. It’s time to get back to basics and focus on delivering products consumers want and providing better customer service to build business.

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Banking Trends | Deposit Products | Fees | In The News

Weekly Term Accounts APY Spread and Premium Index - Sep. 12

by Tom 12. September 2016 15:52

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

 

 

 

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CD rates | Deposit rates | National Pricing Indicator

Weekly Term Accounts APY Spread and Premium Index–Aug 29

by tom 29. August 2016 12:51

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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National Pricing Indicator | Market Research | CD rates

Fed Rate Rise Seems On Hold–Welcome to the Business As Usual

by tom 26. August 2016 20:30

It’s too early to start betting on the outcome of the World Series so who is placing bets on whether the Fed will raise federal benchmark interest  rates at their meeting in mid-September? Fed Chair Janet Yellen isn’t dropping any useful hints one way or the other, so it seems that banks and credit unions will have to wait to see if there is any change in the Fed’s feelings about raising interest rates.

Yellen was speaking today at Grand Teton National Park and hinted that a rate rise is in the offing, but was unclear about the timing for a rate hike. In her remarks she stated:Image result for janet yellen

“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”

The timing is even less specific than in May, when Yellen predicted a rate hike over the summer months. The reasons that experts cite for the delay in action by the Fed are many. First, there is the employment market. The employment figures have been disappointing, and unless the August job numbers look considerably better the Fed will likely delay any rate hike.

The coming presidential election throws another unknown into the mix. The outcome of the election may affect business confidence one way or another. Similarly, the Fed decided not to make a decision on rates until after the United Kingdom made its Brexit decision to leave the European Union.

There are any number of variables that could delay a Fed decision, whether those variables are well-reasoned or not. In the meantime, the banking community waits, hoping that the Fed will act and raise rates in order to relieve the drought of interest revenue. However, most bankers are waiting for a rainmaker; they continue to pursue more reliable sources of revenue such as service fees.

This is the new normal. Today there are many bankers working today who have never experienced a “normal” rate climate. Rates have been low for so long that bankers have forgotten what it’s like to have robust deposit rates. That’s why more banks are getting creative and conservative about fees. For example, fewer banks and credit unions are offering unlimited ATM transaction rebates as a means to improve fee revenue without offending customers. More banks are looking to implement new fees for consumers and business customers in order to fill the vacuum of deposit rates. And since banks and credit unions have been tightening their belts for so long, waiting for a Fed rate hike, many are making an art out of  service fess as a business necessity.

So it’s business as usual and the future is still uncertain, at least as far as the Fed is concerned. As Benjamin Franklin said, “In this world, nothing can be said to be certain expect death and taxes.” That certainly rings true when trying to trying to predict what the Fed has planned for interest rates.

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Fees | Deposit rates | In The News

Weekly Term Accounts APY Spread and Premium Index–Aug 22

by tom 22. August 2016 12:56

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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CD rates | Building Deposits | National Pricing Indicator

Citizens’ New Head of Explains How Technology Changes the Game

by tom 21. August 2016 18:57

If you have been reading this blog for some time you know we love mobile and online banking. Progressive banks and credit unions are investing more money and resources in developing their digital banking solutions to delight their customers and pave the way toward the future. One of the financial institutions that has been striving to take a lead in banking technology is Citizen’s Financial Group of Providence, Rhode Island. American Banker interviewed the newly appointed head of digital for Citizens,image Lamont Young, who had some interesting insights about the future of digital banking, many of which we have been observing for a while now:

1. Convergence of digital banking channels – Mobile banking has been the market buzz for some time now banks and credit unions compete to make the most of the popularity of the smartphone. Research from Javelin Strategy shows that, for the first time, mobile banking is outpacing branch banking. And there are a number of customers who do most of their banking at home via the web. Young, like so many others, see mobile and online converging into a single digital banking channel.

Today’s consumers are interested in convenience, and whether that’s using their smartphone, their tablet, or their laptop, they are all in favor of any initiative that saves them a trip to the bank. Citizens already has 85 percent of its banking services available online, and the digital channels are going to blur so that customers will get a similar experience online of via mobile device, although banks are going to lead with mobile access first for the foreseeable future.

2. New financial technology startups offer new opportunities – We have written about financial tech companies in the past and the potential threat that Apple Pay, Google Wallet, PayPal, and others pose to banks and credit unions. New fintech companies seem to hit the market every day, and banking pundits are divided on their impact on the industry.

Young sees these fintech challengers as a positive influence on banking, As he says:

“I'm actually more excited than most about the advent of fintechs, particularly some of the new startups, because I see them less as threats for traditional financial institutions and more of an opportunity — an opportunity for us in some cases to partner, an opportunity for us in other cases to acquire, and in some cases just an opportunity to learn.”

One thing is for sure, new financial transaction models driven by technology are going to continue to emerge, and banking can learn by their example. One thing that startups bring that banks do not is a willingness to try new things. Start-ups are particularly adept at adapting to customer needs, adopting to the theory that it’s better to “fail fast” and adjust your strategy based on feedback; something banks should try.

3. Banks need more than better products to compete – One thing that Young has learned at Citizens is that banks can no longer compete using products alone. Today’s consumers tend to be more concerned about the banking experience than the products themselves. As Young notes:

“We have found that brand experiences in many cases mean more to the customer than the actual products and services of the brand itself. We have done a ton of work around experience-mapping and taking a look at where we are as part of the customer life cycle, what those touch points are, whether they engage with us in a digital channel or within our branch network or over the phone.”

Of course, that doesn’t mean that banks and credit unions can stop offering superior financial products. It’s still essential to be competitive with product offerings and rates. However, consumers are shopping for both products and brand experience. You may offer the best rates around, but it’s ease of use and technology-driven product access that will keep customers coming back.

You are going to see more financial institutions creating roles such as “head of digital banking.” Technology is changing too fast and becoming too important to leave in the hands of marketing or sales executives who have other concerns. Digital banking has come into its own, and smart banks and credit unions are getting smarter about how they harness digital to improve customer satisfaction.

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Weekly Term Accounts APY Spread and Premium Index–Aug 15

by tom 15. August 2016 12:37

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums

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Weekly Term Accounts APY Spread and Premium Index–Aug 8

by tom 8. August 2016 17:36

Market Rates Insight features a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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National Pricing Indicator | CD rates | Building Deposits

Protest Deposits Fueling Growth for Minority-Owned Banks

by tom 8. August 2016 17:25

With civil unrest on the rise and movements such as “Black Lives Matter” gaining momentum, minority banks are seeing a surge in new money. Minorities are started to protest with their pocketbooks, taking their money and depositing it in minority-owned financial institutions as a way to show solidarity with their community.

imageSome reports say the trend began in early July on an MTV News and BET News Town Hall event when Atlanta rapper Killer Mike encouraged blacks to start putting their money in black-operated banks. The call to protest with cash followed the protests over the shooting of black men in Louisiana and Minnesota. “We can’t go out in the street and start bombing, shooting, and killing,” said the rapper. “I encourage none of us to engage in acts of violence. I encourage to take our warfare to financial institutions.”

The result has been very positive for minority-owned banks. Citizen’s Trust, a black-owned banking network with branches applications through Georgia, received applications for 8,000 new deposit accounts in less than a week. This is an important trend for minority banks and black-owned banks in particular. According to the Atlanta Black Star, there were 130 black-owned banks between 1888 and 1934; today there are 22.

“There has been a decline in banks in general,” Teri Williams, President and Chief Operating Officer of OneUnited Bank, told the Atlanta Black Star. “There also has been a decline in community banks that were the size of a lot of the Black banks that went out of business.”

National Bankers Association president Michael A. Grant asserts that while this new initiative isn’t an all-out boycott of majority banks, it’s still important that African-Americans support their own institutions and diversify how they handle their assets.

“I think it’s a very positive effort to get the community to step up and say look, nobody is going to support us if we don’t support ourselves,” said Michael A. Grant, president of the National Bankers Association. “Let’s start giving support to our own institutions, let’s support our historically Black colleges, let’s support our businesses, let’s support our banks… if we’re going to be considered first-class citizens and respected in this country, we’re going to have to take control of our economic destiny.”

Many see this trend to bank locally and bank black as a resurgence in community pride as much as an economic protest. Grant and others see the migration of dollars to regional and community banks as a positive move. Citizens Trust Bank’s Frederick Daniels Jr., Executive Vice President, told USA Today, “If we can bring together our economics collectively, we can help businesses grow, we can help people obtain home loans. That brings them closer to the American dream. We’re providing a tangible solution for those who want action."

We shouldn’t need to mount a reason to protest to improve awareness and interest in community banks. While the black community may have more incentive to support black banking institutions at the moment, every community can benefit by keeping their money closer to home. Perhaps community banks across the country can learn from the renewed interest in minority banking. Everyone has a reason to think globally but bank locally.

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Building Deposits | In The News


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