DRIVERS FOR CONSUMER LENDERS IDENTIFIED
NEEDHAM, Mass.–There still may be developing negative ramifications from the meltdown in the subprime mortgage meltdown, according to a new study. TowerGroup stated that “Market volatility will remain a fact of life among U.S. consumer lenders in 2008,” and it urged credit unions and other lenders to remain alert to the threats, but suggested that there may also be opportunities for those institutions that do an effective job of planning.
Among the other business drivers for consumer lenders in 2008 as identified by TowerGroup:
* Topline metrics (lending volume, revenue, profits, home sales, home prices, auto sales and college costs) will all decline.
* Lenders will face increasing regulatory burdens and will need the right information technology systems to adjust rapidly. Technology, especially core lending systems, will have a major role in enabling consumer lenders to remain viable.
* Institutions will need a broad credit reformation encompassing product, service and channel innovation; improved risk assessment and loss mitigation; and increased focus on the member/customer.
* Fundamental business actions by lenders will include: integrated systems to understand better households, with a holistic view of their relationship with the financial institution; better use of data to develop successful products, and automation to engage in these activities consistently, compliantly and cost effectively.
* Innovation, integration, transformation, automation and optimization are no longer buzz words, but represent key initiatives supporting credit reformation.
* A potential wildcard: any new crises in other types of highly leveraged credit instruments that would exacerbate consumer credit market volatility globally and again reshuffle lenders’ strategic responses.
For info: www.towergroup.com.
STUDY: MANY ALREADY ‘BANK’ AT WAL-MART
ATLANTA–A new survey indicates that one-third of Hispanic consumers say they would be likely to use the kinds of financial services being introduced by retailers such as Wal-Mart.
The survey, part of the Hispanic Market Monitor from Synergistics Research Corp., said it found that one-tenth of Hispanic consumers report that they have already get services such as check cashing, money transfers, bill payment, and money orders from Wal-Mart. Of concern for credit unions is that that further analysis revealed that three-in-10 of the Hispanic consumers who have financial accounts with a bank or savings institution say they would be likely to use the money services provided by Wal-Mart, with one-tenth of these Hispanic bank customers saying they have already done so. “Traditional providers should seriously evaluate the competitive threat of Wal-Mart, particularly with regard to the Hispanic market,” said Synergistics CEO William H. McCracken. “Not only do the money services being offered at Wal-Mart stores erode the ability of banks to earn revenue from these types of services, it reduces the contact banks have with these consumers which could lead to new relationships.”
For info: www.synergisticsresearch.com.
