Weekly Term Accounts APY Spread and Index–Dec. 2

by tom 2. December 2013 16:42

American Banker and Market Rates Insight feature 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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Ally Bank Moves Closer to One-Stop Mobile Banking

by tom 29. November 2013 12:48

This week, Ally Bank of Utah announced that it has upgraded its Ally Mobile Banking app with new support for Fiserv’s Popmoney® person-to-person funds transfer services. And it has added scheduled, recurring funds transfers to the mobile app; previously the app could only support one-time transfers. image

Ally Bank has been offering Popmoney since 2011, but this is the first time the bank has extended it to mobile banking. It’s an ideal convenience service add-on for customers who want to use peer-to-peer payments for the babysitter or gardener. With this move, Ally Bank is one step closer to offering comprehensive mobile banking, that includes mobile deposit, mobile bill pay, finds transfers, including to non-Ally Bank accounts, and more.

In a press release issued by Ally Bank this week, Diane Morais, Ally Bank deposits and line of business integration executive, said:

"One of the recurring themes in the feedback we receive from consumers is how much they like the convenience of a direct bank, and these latest offerings are the result of our commitment to deliver customer-friendly products and features. We have seen phenomenal growth in customers using our award-winning Ally Mobile Banking app, and we're taking our cue to continue to build the functionality of mobile banking to respond to that demand."

Ally Bank is the latest financial institution to expand its mobile banking services, which are gaining popularity across the board with consumers. However, Ally is offering these services at no charge to consumers, and although they may be saving overhead costs in terms of transaction processing and in-branch visits, they are leaving money on the table.

Our latest consumer research report shows that mobile banking continues to be one of the most popular services with bank customers, and services for which they will gladly pay. Our newest “Growth and Revenue Potential from Emerging Financial Services” study shows that only 11.6 percent of consumers are currently using mobile deposit services, but 46.5 percent want such services. Similarly, 3.5 percent of consumers are using mobile photo bill pay, but 44.0 percent want such services. And they are willing to pay a monthly fee for what they want; on average  $2.63 per month for mobile deposits and $2.53 per month for mobile photo bill pay.

Peer to peer payment services are also in demand. Our consumer study shows that 19.6 percent of consumers currently have such services, but 50.9 percent would gladly add such services, and would pay up to $1.31 per month.

And they are willing to pay more for bundled services; as much as $12 per month for the right service bundle. Clearly the combination of mobile banking and services that offer greater banking convenience are a winning combination for consumers, and a combination that banks like Ally could readily use to build fee revenues at the same time they promote customer satisfaction.

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Weekly Term Accounts APY Spread and Index–Nov. 25

by tom 25. November 2013 16:19

American Banker and Market Rates Insight feature 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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APY | Market Research | National Pricing Indicator | CD Balances

Consumers Getting Heated over Too Much Friction in Money Transfers

by tom 21. November 2013 14:30

Big banks continue to rule our financial lives in unexpected ways. The latest trend reported in American Banker last week explains why it’s still faster to write a payment by check than using electronic payments, largely thanks to the big banks.

As reported by Kevin Wack, Nacha, the organization responsible for electronic payments, actually came up with a plan to update the electronic payment system last August, and the proposal was far more modest than other countries that transfer money in seconds, or at least the same business day. Rather than calling for a real-time payment system, Nacha proposed the Expedited Processing and Settlement plan where a payment submitted by 2:00 p.m. would clear 5:00 the same business day. However, a handful of large banks decided the change was too much for them and quashed the plan. As Wack writes:

“The episode, which happened mostly outside of public view, demonstrated the enormous power that a small number of large commercial banks wield over the U.S. payments system. Their interests prevailed over the wishes of many smaller banks, corporations, and consumers, all of whom would benefit from a faster, broadly accessible way to make electronic payments. And because Nacha's balloting process is shrouded in secrecy, these large banks didn't leave any fingerprints.”

Clearly there is a need for a faster automated clearing house (ACH) for businesses and consumers who need faster money transfers. Steven Cordray, project director at the Federal Reserve Bank of Atlanta's Retail Payments Office, estimates that 25 percent of all ACH payments would benefit from same-day settlements, and he estimates 70 percent of US banks are in favor of same-day payments. According to our research, among the consumers we surveyed, only 15.1 percent of those surveyed are currently using same-day bill pay services, although 58.7 percent said they wanted same-day payment services, and they are willing to pay as much as $4.47 per month for such services.image

Community banks in particular are in favor of faster payments since they can’t build their own proprietary systems to compete with the bigger banks. And there is more pressure thanks to new technologies such as PayPal. While ACH is a universally available system, new technologies are starting to look attractive to consumers and businesses that need to move money faster.

The naysayers argue that streamlining electronic payments could be costly at a time when all financial institutions are struggling. There are also arguments that there would be more loss due to fraud, and that west coast banks would be at a disadvantage if they had to post electronic funds transfers before 11:00 a.m. to meet the Nacha deadline. Those in favor of a new electronics payment system argue that fraudulent transactions would actually be detected sooner, and that all the other arguments are overblown.

No matter how this evolves, it’s clear that U.S. banks have a way to go to catch up with electronic funds practices around the world. And clearly consumers want to remove friction from funds transfer. If the banks can’t figure out a way to accommodate faster electronic payments, new technology and market solutions may lead the way instead. If consumers want such a service then someone will provide it, whether it’s through the banks or someone else.

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Banking Trends | Fees | Banking Technology | Regulations

Weekly Term Accounts APY Spread and Index–Nov. 18

by tom 18. November 2013 18:26

American Banker and Market Rates Insight feature 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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Building a Wireless Connection to Promote Customer Loyalty

by tom 14. November 2013 19:59

Increasing share of wallet hinges on increasing the perceived value of services for bank customers and credit unions members. Beyond providing a simple repository for their money, depositors are looking to financial institutions for assistance with money management, and mobile banking tools are a terrific way to engage with customers in a way that adds value and deepens the customer relationship.

In a recent blog post, bank marketing strategist Jim Marous wrote:

Beyond simple balance and transaction updates, alerts can provide the foundation for greater interaction with your customers, increasing engagement, lowering servicing costs and even providing potential revenue opportunities.

Mobile banks alerts have become an important component of money management. Smartphone-savvy consumers are relying on mobile alerts to provide instant feedback about their spending habits, alerting them to low balances and pending transactions. Customers expect banks to respond to them in real-time, just as they live the rest of their digital lives from moment to moment, which presents a new revenue opportunity for banks and credit unions.

As Jim notes, a Javelin Strategy and Research study indicates that only 34 percent of consumers currently receive bank alerts via email or text, and that number will only grow by about 4 percent through 2016. Javelin also indicatesFile:Android Smartphone with Money.jpg that text alerts are the fastest growing delivery channel, which shows consumers are looking for to supplement email with something more immediate. And more users are downloading mobile apps (about 50 percent) in addition to looking for push alerts. Clearly customers are looking for more from their mobile banking experience than alerts and balance verification.

Not surprisingly, the larger institutions are gaining more ground with mobile apps. Institutions like Bank of America and Chase are actively promoting mobile banking ,which helps instill greater consumer loyalty while promoting savings for the banks by reducing paper processes and branch visits. Community banks and credit unions are behind, and fewer offer the same level of mobile service or comprehensive mobile apps.

Which means there is more room for opportunity. Our research shows that a number of mobile alerts and services are valued by customers; that they want these services and are willing to pay for them. Identity theft alerts, for example, are in high demand with a growth potential of 70.8 percent. Low-balance alerts have a growth potential of 55.7 percent. Mobile photo bill pay could grow 48.8 percent. And mobile deposit services 46.0 percent. And each service is valued at an average of $3.30 and up, or when bundled in the right way, consumers indicate they are willing to pay $10 or more for these mobile services.

This is where the smaller institutions have an opportunity to compete more effectively. By offering the right mobile services in the right bundles, banks and credit unions can better serve their customers with tools that help them manage their money. At the same time, these services deepen the customer relationship and promote customer loyalty. And consumers are willing to pay for these services for added revenue.

Mobile banking services are growing in popularity and importance, and the institutions that figure out how to connect with customers with better mobile services are the ones who will be able to compete more effectively.

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Market Research | Mobile Banking | Banking Trends

Weekly Term Accounts APY Spread and Index–Nov. 11

by tom 11. November 2013 14:40

American Banker and Market Rates Insight feature 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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Citizen’s Bank Invites Customer to “Bank Better” Without Overdraft Fees

by tom 7. November 2013 19:35

Citizen’s Bank has just announced that it is eliminating overdraft fees for transactions of less than $5.00. Instead, they are implementing a flat free of $35.

This is part of the bank’s new “Bank Better” program to help customers manage their money more efficiently by simplifying confusing fee structures. In addition to changing the overdraft policies, the new Bank Better program changes posting orders for checking and MMA deposits and withdrawals, and presents easier to understand information about deposits and features.

This shift not only means that if you overdraft your account at Starbucks that cup of coffee will no longer cost $37 in overdraft fees. It also means that the bank can’t be accused of using predatory fees to generate revenue. In 2010, the Federal Reserve changed the regulations so consumers aren’t automatically enrolled in fee-generating programs, like overdraft protection.

This is a growing trend in an industry that has been accused of baffling customers with confusing bank fees. There is still room for revenue growth from fees without having to resort to hidden fees.

Our most recent study of “Growth and Revenue Potential from Emerging Financial Services” shows that consumers see value in overdraft protection services. According to our research, 42.9 percent of consumers surveyed currently have overdraft transfer protection, but an additional 43.9 percent would be interested in adding that service to protect their checking account. And they would be willing to pay more than $3.00 per month for the service.

Simplifying bank service fees while offering services that have real value for consumers is a trend that could help banks and credit unions attract more consumers and create new streams of revenue. Simplifying banking and working with consumers to help them better manage their money is a strategy that can only benefit everyone.

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Banking Trends | In The News | Fees | Market Rates Insight

Weekly Term Accounts APY Spread and Index–Nov. 4

by tom 4. November 2013 17:02

American Banker and Market Rates Insight feature 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:
image

Mobile Banking Levels the Playing Field for Customer Loyalty

by tom 31. October 2013 15:40

Consumers clearly demand more convenience from their banks and credit unions, and mobile banking is the one category where the smaller banks are challenging their big league competitors: 

When it comes to mobile banking, “There’s no one bank who really hit the ball out of the park,” said Dan Latimore, senior vice president in the banking group at research and consulting firm Celent. [as quoted in the current issue of Bank Director]

The majority of banks seem to be trying to woo new customers with the convenience factor, using free mobile banking as a draw. The plan is to use mobile banking to save on in-branch overhead, and the hope is that smartphone owners are a better class of banking customer.

But these days, the novelty of mobile banking has worn off. Banks of any size can offer convenient mobile banking services such as remote deposit, bill pay, and even peer-to-peer transactions, so basic mobile banking is no longer a market differentiator. Being able to check your balance, move money, and do basic banking from your phone are the just price of entry these days, What will distinguish the true innovators are extending mobile support to additional banking services, such as loan qualification.

In the same Bank Director article, Latimore notes that bankers have to remember that, branch or no branch, customers want service and banking is merely a means to an end. In the case of a loan, for example, consumers don’t want to have to necessarily execute a loan online, but they want a fast “thumbs up/thumbs down” decision ad to whether they qualify for a new car, a home improvement loan, or a mortgage. The banks that determine how to extend relationship banking to the smartphone will have a clear leg up on their competition, no matter how big they are. For example, the new “Chase My New Home” app allows users to search and rate home and calculate mortgage payments, and even though they can’t use the app to apply for a mortgage, Chase reports that one third of users are more likely to pursue a mortgage with Chase.

And while convenience may be a motivating factor in where people bank, the question remains, will consumers pay for mobile banking convenience? Can banks recoup their mobile banking costs and maybe even make a profit through fees? Although the consensus is that basic mobile banking, such as checking your bank balance, will probably remain free, there is an opportunity to charge more for services that customers consider value-added. U.S. Bank, for example, charges $0.50 per transaction for remote deposit. Our research shows that consumers will pay up to $2.60 per month for mobile deposit and on average $2.50 per month for mobile photo bill pay.

Where customer service is the name of the game, and consumers see more value in emerging services such as mobile banking and this is where community banks can take the lead. Quoting our own Senior Vice President, Dr. Dan Geller:

“For the first time in banking history smaller banks have the same opportunity to service their customers to the same degree that bigger banks do…”

Innovation that drives customer service will be the key to ongoing success, and no bank can corner the market on innovation.


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