Desire For Deposits Stronger Than Gas
SAN ANSELMO, Calif.-Total deposits in FDIC insured institutions continue to grow despite substantial decrease in interest rates, according to Market Rates Insight.
Price elasticity analysis from MRI indicates that long-term (more than one year) elasticity of deposits is 0.22 (highly inelastic) compared to 0.58 for gasoline. The closer the elasticity figure to 0.00, the less sensitive demand is to changes in price. Short term (one year or less) elasticity for deposits is at par with gasoline, 0.28 and 0.26 respectively.
Total deposits reached an all-time-high of $10 trillion on Sept. 30, while interest rates for deposits reached a record low of 0.64% nationally. Since the beginning of the recession, in December 2007, total deposits increased by 18.8%, while interest rates on deposits decreased by 84.7%, making bank deposits twice as insensitive to interest rates as gasoline price to gasoline demand. Theoretically, demand for deposits should decrease when interest rates on deposits decrease mainly due to substitution.
"Bank deposits are more inelastic in the long term than gasoline because there is no substitution to insured deposits," said Dan Geller, EVP at Market Rates Insight. "When gasoline prices go up and stay high for a long time, consumers tend to buy more fuel efficient cars (hybrid or electric), drive less and/or use more public transportation. However, in the case of deposits, there is no substitution because there is no other way to ensure that the principle amount is 100% safe."
For info: www.marketratesinsight.com
'Immutable Laws Of ATM Security' Explored
LONDON-Keeping ATMs secure requires more than just a technology solution; it also requires taking a hard look at people and policies, according to a new white paper from the ATM Industry Association (ATMIA).
"No software patch by itself will ever protect ATMs from all forms of cyber attack," said Pat Telford, a Microsoft security consultant and co-author of the recently published "Ten Immutable Laws of ATM Security." "Security is a function of people and processes, in addition to technology. ATM deployers who keep in mind these 'Immutable Laws' and best practices described in the guide will reinforce the security of their ATM systems."
"ATMIA conducted a global online ATM fraud survey last month, which attracted responses from security and ATM managers in 37 countries, and cyber attacks were rated the third top threat facing the ATM industry," Mike Lee, CEO of ATMIA, stated. "This trend reinforces the need for an updated software security guidebook and the application of these core ten laws."
With a mass migration well advanced in the industry to the more open environment of Windows XP away from proprietary systems, the ATMIA said the need to defend against evolving software threats, from malware and Trojans to denial-of-service attacks, has increased. The second edition of the software security best practices includes significant updates as well as new material on preventing insider fraud and emerging cyber attacks.
For info: www.atmia.com
Credit Cards Making Comeback
SAN FRANCISCO-Changing market conditions and new regulations have led to credit cards regaining an increased share of consumers' wallets for online purchases, according to a study by Javelin Strategy and Research. From 2011 to 2016, assuming the Dodd-Frank Act's provision regulating debit card interchange stands, Javelin projects total payments volume for the online use of credit cards by U.S. consumers will climb 63%, while the total payments volume for debit cards is expected to rise 2% during that period. The study indicates a 16% increase in the U.S. online market as retail e-commerce sales continue to rise to $309 billion in 2011 and are forecast to climb further to an estimated $444 billion by 2016.
