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Discover Financial Services said Thursday that it has applied to convert to a bank holding company — a step that last month it said it was unlikely to take — and asked the Treasury Department for an infusion under the Capital Purchase Program.
December 19 -
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Many credit card issuers have delayed preparing for the strict new disclosure and pricing rules three federal agencies adopted yesterday (CardLine, 12/18), according to one analyst. "A lot of our clients were hoping there would be more time," Brian Shniderman, director of financial services for Deloitte Consulting LLP, tells CardLine. "I was surprised by how few had actually run models and looked at what they might change." Issuers have until July 1, 2010, before the new rules the Federal Reserve, Office of Thrift Supervision and National Credit Union Administration adopted go into effect. Among other changes, the regulations will limit when issuers may increase interest rates, require a minimum payment cycle of 21 days and require issuers to apply cardholders' payments first to their highest-interest balances. But issuers may face having to comply with new laws before the regulations go into effect. Rep. Carolyn Maloney (D-N.Y.), chair of the House Financial Service Committee's financial institutions subcommittee, said in a statement yesterday 18 months is too long to wait for changes in card-issuer practices, so she plans to "fill any gaps in protections" for consumers from the new regulations by introducing a new version of the Credit Cardholders' Bill of Rights early next year. Whether by regulation or law, issuers now should consider the stricter rules permanent additions to their card-issuing challenges and adjust their business models accordingly, says Shniderman. "We're going to see credit as something that is more a privilege than a right," he tells CardLine. "There are economic conditions that will cause voluntary and involuntary consumer migration away from credit cards to debit cards and (automated clearinghouse) payment instruments that haven't gotten any traction to this point."
December 19 -
Small-business owners represent the best opportunity for financial institutions to grow their mobile-banking services, concludes a report from Boston-based consulting firm Aite Group. "While it's not the most demanded product by small businesses, there has been enough of a shift" in recent years that banks can now market mobile-banking services to them, according to Aite research director Christine Barry. Consumers have not yet embraced mobile banking as a high-demand financial tool, the report states. This creates an opportunity for financial institutions to focus on another segment of their customers, Barry says. "Banks should not be afraid to take it to the next level" and offer mobile-banking services to small-business owners, he says. A survey conducted earlier this year of 200 small-business owners with less than $10 million in revenue found 34% were likely to check account balances on their phones, and 23% of respondents said they were likely to pay bills using their phones About 60% already bank online, and Aite predicts that percentage to increase to 72% by 2010. "Any service that saves time or increases convenience is appealing to [small-business owners]," Barry says.
December 19 -
