|
|
The ongoing financial services crisis is still too close for us to have a view of its full impact, but as we near the mid-point of 2009, consumers, banks, legislators, and lenders are responding to the changes that have taken place in the economy and we are now able to observe some of the short-term trends and implications, as well as the challenges and opportunities, facing financial institutions.
In this issue of On Financial Services, we discuss the recently-passed Credit Card Accountability, Responsibility and Disclosure Act (the Credit CARD Act) and the implications of its provisions for credit card issuers. We also share the results of a research addendum to our 2008 Study of Consumer Payment Preferences, which looks at the impact of the economic downturn on consumer payment behavior. And lastly we look at how the current market is creating opportunity for banks in wealth management, and how they can best position themselves to win in this space.
To sign up for an email subscription to On Financial Services, please click here.
|
|
|
On Banking
Preparing for S.414:
Understanding the Implications of the Credit CARD Act of 2009
By George Simotas
On March 31, 2009, the Senate Banking, Housing and Urban Affairs Committee narrowly passed, by a 12 to 11 vote, S. 414, legislation to regulate and reform credit card policies. The Credit Card Accountability, Responsibility and Disclosure Act (the Credit CARD Act), introduced by Senator Christopher Dodd (D-CT), intends to protect consumers from certain practices followed by credit card companies. Although modifications to its current form may be required to gain passage by Congress, banks that have not yet begun to plan for the implications of the passage of the Credit CARD Act may face challenges meeting imposed requirements and implementation deadlines.
This article provides an over of the Credit CARD Act and discusses its implications to issuers. To view the full article, click here.
|
|
On Payments
Litmus Test Results:
How the Economic Downturn is Impacting Consumer Payments
By Chris Allen
The economic downturn, coupled with the ongoing financial crisis, has impacted virtually every consumer in the United States. Many consumers have lost jobs or have seen the value of their homes or investments decline sharply (and in some cases, both). As a result, consumers are changing their spending behaviors — not just how much money they’re spending, but the payment methods they’re using to spend it.
This is a key finding from a study we recently conducted as a follow-on to our 2008 Study of Consumer Payment Preferences. Sponsored by First Data and its STAR Network, MasterCard, Metavante, and PULSE, the 2008 Study of Consumer Payment Preferences is the fifth in a series of studies that have been conducted since 1999 that track consumer payment behaviors across the three primary payment venues: in stores, online, and bill paying. The Study shows the continuation of long-term changes we’ve seen take place in the payments landscape: the migration from paper to electronic payment methods; the rise of debit and online bill payment; consumers’ preference for PIN debit over signature — all trends that continue to be relevant and applicable in today’s environment.
But that research was conducted in June 2008. Before the financial markets collapsed. Before the bankruptcy of Lehman Brothers. Before the federal takeover of Fannie Mae and Freddie Mac. Before the AIG bailout. Before things got so bad that the government introduced a Troubled Asset Relief Program.
Given the unprecedented events that took place in the latter half of 2008, we conducted a quick-turn “addendum” to the 2008 Study in an effort to gain some insight into the impact that the economic environment might be having on consumers’ payments behavior. In February of 2009 we surveyed a panel of 2,200 consumers to ask how their in-store spending behaviors had changed in the prior six months as a result of the economy and how it impacted their use of credit, debit, and prepaid cards, as well as cash and checks. It was designed to serve as a litmus test, if you will, to give us a directional indicator of how consumers’ wallets were responding to the downturn.
This article discusses the findings from this research as well as some of the short-term impacts associated with the changes in consumer spending. To view the full article, click here.
|
|
On Wealth Management
Best Time for Wealth Management?
By Jim Neckopulos
While the past year certainly has been one of the most difficult in the financial services industry, this may be the best time for many banks to enhance and expand their wealth management business.
For most banks, the prospect of a new or growing source of fee income is particularly welcome given the current economic and financial environment. With margins compressed and good lending opportunities limited, banks are even more focused on non-interest income to shore up earnings and provide an increased cushion for balance sheets. Wealth management represents a rich opportunity to increase income, and many banks have excellent prospects among existing customers, particularly business customers, to provide wealth management services.
Two factors make this an ideal time for banks to focus on wealth management: market demographics and the uncertain economy. An aging Baby Boomer population, combined with a widespread need for increased stability, is creating an opportunity for community, commercial, and private banks to expand the breadth and depth of their customer relationships and to provide value-added services that benefit the bank’s bottom line.
In this article, we will discuss the drivers of this opportunity, as well as some of the key enablers that will help banks to further enhance their wealth management business. To view the full article, click here.
|
|
Hitachi Consulting is a recognized leader in delivering proven business and IT strategies and solutions. From business strategy development through application deployment, we leverage decades of business process, vertical industry, and technology experience to understand each company's unique needs and to achieve sustainable ROI. Inspiring your
next success!®
Our national Financial Services team is the result of significant investments the firm has made in this space over the past few years. In August 2005, we acquired Dove Consulting, a Boston-based strategy and organization consulting firm specializing in payments strategy and research. In March 2008, we acquired JMN Associates, a leading provider of consulting services to the financial services, real estate and insurance industries based in San Francisco. Together, our team brings valuable expertise and practical, proven solutions to clients in the areas of business and technology strategy, process improvement, market research, project management, and industry and regulatory compliance.
Visit us at: http://www.hitachiconsulting.com, or send feedback to: onfinancialservices@hitachiconsulting.com.
To sign up for an online subscription to this newsletter, please click here. To unsubscribe click here.
© Copyright 2009 Hitachi Consulting. Contents in this newsletter may be reprinted with proper attribution to Hitachi Consulting. |
|
|
|