Banks Lead Way On Student Lending
ATLANTA-Banks and other private student loan lenders should look to their own customers when marketing student loan products, according to a recent study by SYNERGISTICS RESEARCH CORP. titled, "The Changing Student Loan Market."
The consultancy said results reveal banks are the primary private student loan lender. Almost six in 10 (58%) private loan holders obtained their student loan from a bank. However, only three in 10 (29%) of these report having a previous relationship with the lender.
When asked to evaluate what selection features are important to them when choosing a student loan lender, only three in 10 of those who currently have a private student or are likely to get one in the next year say having a relationship with the lender is "very" important to them.
"Cross-selling and relationship building are key objectives driving all marketing strategies for financial accounts and services," said Gene Driskill, COO of SYNERGISTICS. "However, analysis of the private student loan market suggests providers are falling short in this regard. Perhaps it is a function of the 'structure' of the private student loan market-direct government loans receiving preference, the role of the financial aid office, and the aftermath of the credit crunch-that the provider relationship with a private lender does not appear to be of much importance. Although a significant obstacle to overcome, SYNERGISTICS contends that providers should focus more aggressively on database marketing and cross-selling to identify and target those households among their own customer bases with college age children. At a minimum, creating awareness of student loan options that might be available at their own financial institution should be a basic objective."
Money Anxiety Index On Rise
SAN FRANCISCO, Calif.-September's preliminary Money Anxiety Index rose to 99.8-an increase of 1.3 index points from last month, and 5.7 over the same month last year.
The index has been on the rise since October 2006, when it stood at 52.9-nearly half the current level. According to Dan Geller, Trend Forecaster at Money Anxiety Index, the gradual increase in the Money Anxiety Index in the past five years is another indication that, de facto, the Great Recession is not over yet even though it was declared over in July of 2009.
The increase in the Money Anxiety Index is reflected in the August retail sales released this week by the U.S. Department of Commerce. August retail and food service sales were $389.5 billion, practically unchanged from the previous month. The August figure is adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, which means that when adjusted for inflation, August figure reflects a slight decline compared to the previous month.
"Retailers and investors should take note of this trend," said Geller. "The link between the level of financial anxiety and retail sales is very strong and significant, which means that when the Money Anxiety rises, consumers are less likely to spend money in retail stores and food establishments."
The Money Anxiety Index measures various economic indicators and factors associated with consumers' level of financial worry and stress. MAI, which measured the level of financial anxiety for the past 50 years, fluctuated from a high of 136.0 during the early 1980s recession, and a low of 40.3 in the mid 1960s (January 1975 = 100). The Money Anxiety Index was developed using Structural Equation Modeling (SEM) with a large sample size of monthly economic indicators ranging from 1959 to 2010.
For info: www.moneyanxiety.com
Celent: Banks Still Struggle To Deliver PFM
BOSTON-Banks have been extremely slow to meet consumer demand for personal financial management tools and have had difficulty understanding how PFM fits into the online banking universe, financial research and consulting firm Celent said.
A number of banks offer solutions, but Celent said they do not hold a candle to the products offered directly to consumers. This is about to change, but consumer adoption will take some time to materialize, according to a new report, "Personal Financial Management: The Devil Is in the Details," from Celent and the Center for Financial Services Innovation (CFSI).
Celent said it firmly believes consumers should be taking care of their PFM needs at a financial institution. Celent estimates only 3.8% of all online banking users are active users of PFM solutions (at a bank or at a consumer-direct site on).
PFM, over the next three to five years, will become the cornerstone of online banking. Transactional features and functions will be built around the PFM dashboard.
Celent recommends financial institutions consider using the tablet as their best foot forward for online banking and PFM enhancements. Features, experiences and capabilities can be carried over to the traditional online environment as part of a larger online banking overhaul.
An ideal scenario would be for the bank to be able to house all of its electronic banking components in one place. Interchangeable modules (e.g., bill pay, money movement, PFM widgets, etc.) would be served up to the device, and modality would be selected by the consumer, along with a properly skinned front end. This represents the future of electronic banking, and it will take several years to get there. This shift clearly has implications for PFM and will contribute to it becoming the cornerstone of online banking.
For info: www.celent.com
Confidence In Financial Advisors Growing
ATLANTA-Increased confidence in financial advisors is reported in the wake of recent economic and market conditions by nearly four in 10 mass affluent consumers who use them, according to a recent survey by SYNERGISTICS Research.
The study titled, "Refocusing on the Mass Affluent, found three-quarters of Mass Affluent respondents who have investable assets of $100,000 to $1 million use some type of professional financial advisor. Those who use financial advisors were asked to indicate, on a five-point scale, how their degree of confidence in their advisors has been affected by economic and market conditions over the past 12 months. Overall, four in 10 are more confident in their advisor's expertise. This includes one in six who are much more confident and one-fifth who are somewhat more confident.
More than half (55%) have the same level of confidence that they always had. Only a small number (6%) express less confidence in their advisors.
William McCracken, CEO of SYNERGISTICS, said, "Some industry observers and commentators have expressed the view that although there may be ongoing negative perceptions among consumers toward the financial industry as a consequence of the implosion of the credit markets, one-on-one advisor-client relationships provide the opportunity to establish or rebuild goodwill. Usage of professional financial advisors by mass affluent consumers with investable assets of $100,000 to $1 million is widespread, and most of these say their confidence in their advisors has not diminished in light of recent economic turmoil. Furthermore, opportunities are strong for growing relationships with younger mass affluent investors who are more apt to report an increase in confidence."
For info: www.synergisticsresearch.com
International Transfers Make Progress
BOSTON-Cross-border money transfers recovered some of their 2009 losses last year, but Aite Group warned financial institutions not to expect dramatic growth in the space.
After declining 7.8% in 2009, Aite Group estimates cross-border consumer money transfers grew 2.9% in 2010. The consultancy expects the market to continue to grow 4.6% in 2011 and 5.1% in 2012, reaching $437 billion by 2012.
The report, an update to Aite Group's June 2010 report, "Money Transfers: The Tipping Point," is based on the firm's analysis of data reported by central banks, the International Monetary Fund (IMF), and the Inter-American Development Bank (IADB), as well as country-level data and insights from money transfer organizations.
"While growth has resumed after the dip in 2009, the days of double-digit-or even high single-digit-growth are over," said Gwenn Bézard, research director with Aite Group and author of the report. "Money transfer firms can no longer count on a rising tide to lift their boats."
For info: www.aitegroup.com
Study: Consumers Finally Spending Within Their Means
LONDON-A combination of consumer confidence, tightening of credit markets and regulatory directives is resulting in debit cards beginning to outnumber credit cards in key markets worldwide, according to financial and professional services information provider VRL.
The company's latest report, "Debit Cards As Profit Drivers," said the ratio of issued debit cards to credit cards has widened significantly since 2008. At the extreme, Germany stands out as a market where credit cards are almost totally absent, and where debit cards dominate: 4 million vs. 101 million respectively.
Even where credit cards are in the majority, there has been "supernormal" growth in debit related payment instruments. VRL said Canada is instructive, as the number of debit cards in circulation almost doubled between 2009 and 2010.
For info: info@vrlfinancialnews.com
29 BILLION Cards Manufactured
PRINCETON JUNCTION, N.J.-The card manufacturing industry continues to gain momentum, with 29.6 billion cards manufactured globally in 2010 according to a study by the International Card Manufacturers Association (ICMA), a global non-profit association for card manufacturers, personalizers, issuers and suppliers.
The ICMA said its Global Market Statistics Report examined 15 market segments-ranging from telephone scratch-off to access control. The report found the market remains strong with $15 billion in sales, which is driven by continued penetration of higher valued chip cards and increased Asia-Pacific volume.
Asia-Pacific leads the regions as the largest producer of cards, with more than 9.6 billion cards manufactured in 2010. North America was second with 8.4 billion units manufactured. Middle East/Africa (MEA) remained in the third position with 5.5 billion units manufactured, followed by Europe with 3.9 billion units manufactured and Latin America with 2 billion units manufactured.
For info: www.icma.com. Non-members can purchase the report for $1,500
Branch Closures Push Consumers Away
SYNERGISTICS: Consumers Will Switch if Branches Close
ATLANTA-Three in 10 consumers who use bank branches say they would switch financial institutions if the branch they use most often were to be permanently closed, according to a recent survey by SYNERGISTICS Research.
The study, "Branch Networks in Transition," asked branch users which of several actions they would be likely to take if their primary branch were to close permanently. More than four in 10 said they would start using a different branch of their current financial institution. However, three in 10 report they would switch to another financial institution with a more convenient branch. One in seven say they would use another method of handling financial matters such as ATMs, online banking, call centers, or mobile banking.
"Due to the current economic environment and the impact of increased regulation, some financial institutions are looking at branch closures as a means of cutting costs," said Bill McCracken, CEO of SYNERGISTICS. "Results from our survey show that branch networks continue to be very important for both account acquisition and retention. Those providers considering the closure of some branch locations should be prepared for a degree of account runoff as a result. While most would make some attempt to stay with their current provider, three in 10 indicate they would be likely to switch financial institutions if their primary branch was closed. Furthermore, younger consumers (18 to 49) are more likely to indicate that they would switch. FIs cannot afford to lose a significant portion of their customer base, particularly younger customers."
The study featured 1,000 Internet interviews with consumers age 18 or older.
For info: www.synergisticsresearch.com
Phishers Becoming Sophisticated Marketers of Fraud
TACOMA, Wash.-Phishers are becoming more sophisticated criminal marketers, according to Internet Identity, a provider of technology and services that help organizations secure their Internet presence.
The company said its Second Quarter eCrime Trends Report revealed a quarter that was a "watershed for data breaches," from unprecedented large-scale attacks at Sony and Epsilon, to penetrations against security companies themselves, and even assaults on small, non-traditional targets like a knitting community. Between recent direct attacks and exposures caused by password re-use, Internet Identity said industry leaders are calling for new, resilient security practices that assume network compromise has already occurred, so efforts be directed to detecting and containing them quickly.
To see how these events are shaping thoughts and planning within enterprise environments, IID surveyed its clients who are leading enterprises on the threats from spear phishing, a more highly targeted form of phishing. More than 85% of respondents acknowledged some concern about spear phishing, with 33% saying that they are "extremely concerned." Further, fully half of all respondents reported that their organizations had been victimized by spear phishing in the past year.
"Across the spectrum, there is a growing realization that criminals are becoming far more sophisticated in their targeting approaches, and that at the end of the day, organizations' networks will be compromised," said IID President and CTO Rod Rasmussen. "Our survey found that most people we talk with are already concerned, and our opinion is that if they aren't, they sure should be."
As an example of these more sophisticated marketing approaches to phishing, IID found that from April to June 2011 phishers increasingly used a technique called URL rewriting to target multiple legitimate domains simultaneously through compromised shared servers that host hundreds of unique URL's at a single IP address. Compromising thousands of legitimate domains with good reputations in their attacks allows phishers to bypass many anti-spam measures and increase deliverability of their lure messages.
IID found the overall phishing increase quarter to quarter was a "significant" 11%. Yet since IID only counts one compromised IP address per phishing attack in its overall statistics, the actual increase in overall attacks if URL rewriting was to be included would be dramatically higher (more than 80%).
For info: www.internetidentity.com/resources/trend-reports
Why CEOs Can't Sleep
GREENWICH, Conn.-A recent survey of more than 200 chief executives found third-party lawsuits and identity theft are the biggest areas of concern.
When asked by Chief Executive Group, which conducted the survey, what keeps them up at night, 37% of respondents said being sued by a third party was a "high" or "very high" area of concern, while 57% indicated identity theft as such.
The purpose of the survey was to ascertain senior executives' awareness of business and personal "invisible risks" and measure their risk preparedness. Survey results indicate that while most CEOs surveyed were aware of risks to "hard" assets-homes, cars, boats, jewelry, etc.-many were not aware of the extent of the personal liabilities they face as highly visible and frequently targeted individuals. Most had inadequate insurance protection against associated risks.
Other findings show that while significant majorities of CEOs were confident in the levels of insurance coverage obtained for automobiles (95%) and homes (97.5%), only 52.2% were confident that their companies provided them adequate Directors & Officers (D&O) Insurance liability coverage to protect them. A whopping 41% said they were not sure if the boards on which they serve even have adequate insurance coverage for them.
For info: www.chiefexecutive.net
Bank Deposits at Record High: Nearly $10 Trillion
SAN ANSELMO, Calif.-Total deposits in FDIC insured institutions continues to increase, reaching a historic record of $9.8 trillion at the end of June.
Analysis from Market Rates Insight found the record amount of deposits increased by $343 billion in the first half of this year. Most of the increase in deposits in the first half of this year (99%) occurred in domestic accounts.
The shift of money from CDs to liquid accounts (checking, savings and money market) continues, MRI said. In the first half of this year, balances of CDs, which require time commitment, decreased by $94 billion-from $1.978 billion to $1.884 billion, whereas balances of liquid accounts increased by $446 billion-from $5.895 billion to $6.341 billion.
Additionally, the shift of balances from business to retail consumer deposits continues. In the first half of this year, the amount of retail consumer deposits increased by $382 billion, whereas business deposit balances decreased by $29 billion. As of June, retail consumer balances made up 90.1% of total deposits, up from 89.2% in the beginning of the year.
"We projected this phenomenal growth in deposits and the shift from term to liquid accounts in the analysis we produced last year," said Dan Geller, Ph.D. Executive Vice President at Market Rates Insight. "The reason we are witnessing such growth and shift in deposits despite meager interest rates is because consumers are very fearful about the economy, and are fleeing to the safety and security of insured and liquid deposits."
For info: www.marketratesinsight.com
