Under the Microscope
Monthly Bill Payments Down
COSTA MESA, Calif.-Consumers are paying less on monthly payments than three years ago, according to a new study from Experian.
Of the top 25 metropolitan areas, Washington, D.C., residents are paying the most each month, while Pittsburghers are paying the least, said Experian. The study found that nationally consumers are paying $903 per month on their bills, which could include a combination of credit cards, auto loans and leases, and mortgages, a decrease of 2% in the last three years.
The study also found Washington, Seattle and Baltimore top the list with the highest average monthly payments with Washington coming in at 42% higher than the national average. Cities with the lowest payments include Cleveland, Tampa and Pittsburgh.
For info: www.experian.com
Home Prices Up 3.6%, But Decline Expected
BROOKFIELD, Wis.-In the second quarter of 2010, U.S. single-family home prices rose an average of 3.6% over the year-ago quarter.
That's according to an analysis of home price trends in more than 375 U.S. markets based on the Fiserv Case-Shiller Indexes. The indexes are owned and generated by Fiserv, a provider of financial services technology solutions, and data from the Federal Housing Finance Agency.
The increase was driven by strong price increases in relatively high-priced markets, such as San Diego, Washington and the San Francisco Bay Area. But despite the gain in the national average, prices actually fell in 70% of the 384 metro areas, compared to the 2009 second quarter. Many markets experienced double-digit drops, including Detroit; Boise, Idaho; Reno, Nev. and many smaller markets in Florida and Oregon.
Factors weighing on the housing market include chronic high unemployment, the expiration of the homebuyer tax credit and the large number of distressed properties that remain in markets such as Florida, Arizona and Nevada.
Other observations from the second quarter 2010 data included:
* Much of the sustained activity in the first half of the year was due to the first-time homebuyer tax credit that expired in June. Since then, home sales activity has plummeted.
* Fiserv and Moody's Economy.com expect that home prices will drop over the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011.
"Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases," said David Stiff, chief economist, Fiserv. "This is because the homebuyer tax credit delayed the correction in home prices that is necessary to return housing affordability to its pre-bubble levels."
For example, prices in Phoenix increased by 5.5% from the 2009 second quarter to the 2010 second quarter, but are expected to fall by 16% over the next four quarters ending in second quarter 2011. With few exceptions, the first, and most significant declines, occurred between the peak of the housing bubble and the summer of 2009, with tax credit induced bounces happening between the summers of 2009 and 2010.
Fiserv Case-Shiller expects the second double-dip declines will continue through the rest of this year until the end of next summer.
"Many of the metro areas that were fortunate enough to have a spring and summer bounce will experience double-dip price declines. If there are no downside surprises for the economy or the housing and mortgage markets, home prices should start to stabilize at the end of 2011," said Stiff.
For info: www.fiserv.com
Small Biz Online Banking 'Ripe With Opportunity'
NEW YORK-The small business online banking space is fraught with confusion, according to Celent.
The financial research and consulting firm said banks are still struggling to understand if small business customers should be offered consumer online solutions, dedicated small business solutions, or even corporate cash management offerings, according to a new report, "Evaluating the Vendors of Small Business Online Banking Solutions."
Key findings of the report include:
Today, the majority of small business online banking users are running on retail solutions. The small business online banking landscape is "ripe with opportunity," Celent said. Small businesses require services that are tailored to their needs and their level of comfort with financial services.
Banks have not invested enough in small business specific online banking services and need to take several steps, including: 1) A thorough segmentation exercise that will determine where the small business customer fits. This is easier said than done; there is no simple and straightforward segmentation formula (e.g., split by revenue, number of employees, etc.). 2) Invest in a small business solution that provides dedicated small business features and a customized experience. Small businesses required tailored services and an experience that takes into account their banking needs and comfort levels.
The opportunity exists for one or more vendors or banks to build out a comprehensive solution. This solution will be made up of several key components, including: 1) A comprehensive dashboard anchored by a robust cash flow management / PFM tool. 2) A payments hub (back and front end) that does away with technical terminology (e.g., ACH, PPD, CCD, etc.) and that can satisfy domestic and international requirements. 3) Fully integrated small business specific payment and productivity tools. 4) Rich mobile banking applications.
Online banking needs to catch up to the ways of the Web, and there is a lot of ground that needs to be made up. It will take several years before we reach the stage of a fully integrated next-generation offering with these features. There will also be a number of nonbanks that will provide compelling one-off solutions to satisfy a handful of these requirements. Some of these financial technology startups are already popping up in the PFM space with dedicated small business tools to help manage cash flow (e.g., in Dinero).
For info: www.celent.com
Remote Deposit Capture Growing Despite Risk
BOSTON-The financial crisis, a poor economy, and the FFIEC Guidance on RDC risk conspired to dampen the growth of remote deposit capture in 2009.
However, in 2010, industrywide client base growth is 49% according to a new report, "State of Remote Deposit Capture 2010: Unintended Consequences," from Celent, a financial research and consulting firm.
Key findings of the report include:
The unintended consequence of the FFIEC Guidance on RDC Risk was to bring new RDC product initiatives and sales drives to a halt while risk assessments and internal compliance reviews consumed the bulk of available organizational bandwidth. But Celent said it appears most FIs are done with their risk assessments and intend to return to the business of providing value to clients.
Beyond compliance, the past year has been difficult for financial services firms, and one in which capital spending was only modestly above the previous year. This climate slowed the growth of remote deposit capture. Financial institutions that had existing RDC products kept promoting them (at reduced levels in some cases), but the climate delayed significant product launch activities planned in many banks.
Approximately 950 late adopter financial institutions entered the RDC fray over the past year. Celent estimates that by year end 2010, nearly 7,500 U.S. financial institutions-75% of all U.S. banks-will have adopted RDC. The resulting client adoption returned to a decent growth rate, after a hiatus of activity and slowly improving business conditions. Celent estimates an aggregate 697,500 commercial RDC users/scanners by year-end 2010, a 49% year-over-year growth.
The bulk of RDC client growth has been at the hands of financial institutions, with average deployments growing from 72 to 94 scanners per FI. Alongside FI initiatives, additional bank-neutral solutions launched, and others will appear before year end. These solutions are sold and supported by third parties without direct financial institution involvement.
Mobile RDC will "slowly accelerate," Celent concluded, driven by consumer demand. It will be offered alongside desktop RDC options free of charge to selected account holders meeting gradually less stringent criteria as the fear, uncertainty, and doubt surrounding RDC risk subsides. Its use will be heavily weighted to consumer market segments, however, with little traction among highly mobile commercial niche markets.
For info: www.celent.com
Less Monitoring Of Finances=Improving Economy?
SAN FRANCISCO-In what might be another sign the economy is improving, a new survey finds that consumers are monitoring their personal finances less frequently than one year ago.
The survey, Javelin Strategy & Research, found that nearly one-in-five (19%) of consumers currently do not monitor or manage their personal finances. That's more than double the 8% who didn't manage their finances last year, the company said in the study, titled, "Personal Finance Management (Part 1): What Consumers Really Want from PFM."
"The prolonged economic downturn has made money tight in millions of American households and caused the rise of a nation of 'cautious consumers,'" said James Van Dyke, president/founder of Javelin. "But contrary to what many may think, millions of consumers are monitoring their finances less--not more," he said. "What you can't see CAN hurt you, and Americans need to pull their heads out of the sand."
Among the findings:
* The percentage of consumers who say they sometimes manage their finances by logging on to checking account balances slipped--to 46% in 2010 from 59% in 2009.
* Online banking suffered as many consumers switched back to paper and pen to track their finances.
* Consumers say their number-one need is to be able to see all their account balances and transactions in one place.
"Consumers want to be able to access multiple accounts in one view, in real-time, and on the go," said Mark Schwanhausser, senior analyst, multi-channel financial services.
He said financial institutions "must seize this opportunity to redefine online and mobile banking and install PFM at the heart of the user experience so that consumers feel empowered, not overwhelmed, when it comes to managing their finances."