The people have spoken "Bricks not Clicks"™ to open a new bank account!
62.5% would rather open a new bank account at the branch with a person!
The Deposit & GO InstaDebit™ Terminal may be installed anywhere and everywhere!
Why Remaining Demographic Agnostic Is Vital For Fintech In Payments Convergence
Shai Stern Forbes Councils Member
July 26, 2019
Despite mobile payments providers and credit cards, my mother and other members of the Silent Generation will continue to pay by check. Paper check remains the most common method of paying rent, even among millennials and Gen Z. Many medical bills, utility bills, taxes and nonprofit donations are also still made by check. On the business side, companies continue to pay vendors by check and accept check payments, alongside electronic methods.
Some financial technology (fintech) businesses have ignored check payments, focusing instead on card and mobile payment processing, and card companies that ignore cash and check are only touching a portion of payments. The most successful fintech providers are able to remain demographic agnostic and adapt to payments convergence by aligning their business to these three pillars: checks, Automated Clearing House/electronic and cards. To ensure these pillars function together, fintech companies should consider both integrated receivables and integrated payables to assist with all aspects of a payment from start to finish.
The Federal Reserve Payments Study: 2018 Annual Supplement
Check use up 7.5%
Debit card use up 10.4%
Prepaid up 10.5% which makes you ask...
Wouldn’t Debit be up 21.1% if people had access to a basic bank account?
INSTEAD of EXPENSIVE prepaid cards that were a grass roots payment solution BECAUSE
there wasn’t any other choice AND Deposit & GO wasn’t available at time of study...
This brief provides 2017 national estimates and 2016 to 2017 growth rates for card payments. These estimates are based on survey data from a census of general-purpose card networks, payment processors, and issuers of private-label cards. The surveys covered four types of debit cards (non-prepaid, general-purpose prepaid, private-label prepaid, and electronic benefits transfer (EBT) supporting certain government assistance programs) and two types of credit cards (general purpose and private label).
This brief also provides new estimates of 2016 to 2017 growth rates for ACH and check payments as well as ATM withdrawals.
Click here to load the PDF.
Why We Still Need Bank Branches!
By Chris Skinner
December 1, 2017
One, it supports a community and specifically the business community in the area. Businesses have different needs to consumers, and do often need access to a human. People forget that.
Two, money isn't the same as a Facebook update. If you lose a post saying what a nice time you're having, it's not the same as losing a deposit of $10,000. In fact, I often state that if you woke up today and find your bank app confirms the balance you expected, then you're happy. But how do you feel if the balance is -$10,000 short of what you expected? You're just going to sit and ignore it? Of course not – you'll call the bank or go to the branch to eyeball someone. This is because money is different; it's far more emotional than other parts of our life, because it's the controlling factor in our lives.
Three, I think a lot of pundits forget what it's like to get your first job, first relationship, first car and first home. These are big moments in a young person's life, and to imagine they would all be dealt with through an app is a little bit strange.
Four, building on the last point, money is serious, critical and central to most people's lives, and needs a human interface. Sure, you can build the human interfaces into a Skype call, and we will, but removing the humanity and the human physical access from a service so fundamental to our lives is stupid. It demeans the role of the bank and banking, and is undermining the role this service has in people's lives.
[Need three more?]
Roberto Ferrari of digital bank startup CheBanca! in Italy articulated it most succinctly for me. When visiting his branch in Milan, I wondered why a digital bank had branches. He told me that it was for three reasons. The third is services, the second is trust, but the most important reason he gave me is marketing. His branch network was for marketing purposes.
Wow, that's a surprise, but I can see why. He told me that where the bank had a physical presence, they received two-and-a-half times more deposits and assets than where they did not. In other words, the bank that has a branch has far more chances of getting people's trust and money than those who do not.
Raddon Reseach (a FiServ Company)
August 30, 2017
Mobile Bankers STILL want Branch Convenience!
The #1 Reason People Select a Financial Institution is Because of BRANCH Convenience!
78% of Mobile Bankers Live Near a Branch that's Convenient!
Mobile Banking Creates "Stickiness" Even if the Person Moves!
Find Out More. Watch the Video!
Bank Branches: Is The Writing On The Wall?
June 22, 2017
[Or... Mobile Bankings Rush to Fill the Bank Desert Void? Not so Fast! At Least Here in Traditional America...]
In a counter to sluggish interest rates, ever more complicated and taxing compliance regulation, and a weakened consumer market segment, bank executives across North America and Europe are taking the ax to "superfluous" brick-and-mortar bank branches. And while macro-economic factors, most of which represent the residue of the 2008 financial crisis, certainly led banks to water, a meaningful transition to digital channels requires a critical mass of customers willing to migrate to mobile or desktop banking in lieu of more traditional means.
Facts On The Ground
The last few years have bore witness to a somewhat jarring pace of bank branch closures, and the process has morphed from 'pruning' excess to deep cuts in infrastructure. Since 2012, JPMorgan Chase has trimmed national network coverage by 9 percent, while Bank of America has pursued a more aggressive strategy, shuttering the equivalent of 15 percent of its brick-and-mortar posts.
Even Wells Fargo, which had been a last stand of sorts and resisted the urge to shrink network footprint, intends to close shop at 400 bank branches by 2018, on top of the 68 locations deemed redundant and unnecessary in 2016. And while the company claims this is a calculated move that merely reflects surging demand for online banking, Wall Street analysts have quipped doubts, and speculated that the fake account scandal may have forced the bank's hand.
Knock Knock. Who's There?
Children jokes aside, a little bit of due diligence can shed light on consumer behaviors and expectations - a first step in evaluating the life expectancy of branch banking. In the United States, alone, opinion has shifted from an openness to dabble in digital channels to an active embrace of it over the course of the last five years. Users are nearly twice as likely to engage financial institutions from wholly digital mediums now - whether that be mobile, desktop, or a combination of the two - than they were in 2012.
However, banks must not be so hasty to conclude, then, that it is open season on branch networks. Within that very same PwC survey, another nugget of information reflected the nuanced nature of consumer psychology. A majoritarian 62 percent believed that a grass-root, local presence was still necessary.
When overlaid with age, race, or socioeconomic distribution data, bank branch closures in the United States, too, become fraught with ethical asterisks. Indeed, network reductions disproportionately impact the elderly, poor and minority communities. The abandonment by banks of less affluent consumer segments has, in part, helped ignite the firestorm of predatory payday lending, which often relies on storefronts in under-served neighborhoods.
Ironically, while brick-and-mortar is more likely to be the banking vehicle of the poverty-stricken in North America and Europe, in Africa, Asia and beyond, it is through digital finance (or to be more precise, usually mobile money) that most are thrown a line to financial services.
Across the board, receptivity to - or at least consideration of - a variety of mobile-based transactions is far more entrenched in Africa, Asia-Pacific and Latin America. With the exception of the use of mobile payments in bars, restaurants or retail, European and North American respondents were much more resistant to mobile payment use cases than their African, Asian and Latin American counterparts - exemplified by the larger percentage of "not likely" segments. These mentalities, then, would presumably extend or bleed into comfort levels on mobile-only banking. If a user is amenable to conducting other sorts of financial activity digitally, it seems reasonable that banking would not be singled out as an exception.
This intuition appears to be reinforced by the data. The percentage of survey participants that fall into the "somewhat likely" or "highly likely" category, and would debate enrollment with a mobile-only bank, teeters around the 75 percent mark for Africa and Latin America, and topples the 80 percent mark in Asia-Pacific. North America, conversely, is just shy of 50 percent, and the plurality is not keen on the concept of a mobile-only bank. Europe, while marginally better, still barely exceeds 50 percent.
Moving Forward Is Not A Straight Line
Although most emerging markets are still in the midst of a slow, gradual brick-and-mortar bank branch build-up, over the long-term, the conditions seem more favorable to side-step physical networks. Consumers in these markets have had consistent doses of digitized financial services, which in many cases, was the first exposure to formal banking.
The same does not quite hold true in North America and Europe. Digital finance may be an unintentional culprit in further isolating vulnerable pockets of people from reputable financial institutions. Therefore, if branch closures are to continue unencumbered, digital finance needs to better involve those on the margins of finance - it cannot be a mechanism that simply filters them out.
On top of that, there are still roadblocks to consumer acceptance. Perhaps banks need to better advertise benefits or design incentive systems to help motivate a proverbial "toe-in-the-water" moment for digital banking. Some possible premiums or points of emphasis might include lower fees on investment products, discounts on lifestyle activities through retail partnerships, higher deposit interest rates, lower lending rates, or exponentially quicker turnaround time on transactions.
Even with an uptick in digital banking, though, the brick-and-mortar branch will probably evolve before it evaporates. Already, there are precedents of banks leveraging parallel networks to 'fill-in' and offer basic, popular in-person services. In 2012, most banks in the United Kingdom had opted into an agreement with the Post Office, which allowed customers to deposit and withdraw funds at the 11,500 post office locations nationwide, in addition to cursory checking of account balance.
So, are we entering the dark days for branch banking? Dark days is too extreme, and dog days might be a better description. While brick-and-mortar banking is certainly at a crossroads, and its utility is becoming hazier or even lethargic and without innovation, its existence - in totality - is not really up on the chopping block.
© Mondato 2017
Banks could lose 60% of retail profit to tech startups: study
Globe & Mail
David Berman, BANKING REPORTER
March 25, 2017 September 29, 2015
Banks could lose up to 60 per cent of their retail profits to nimble fintech firms within the next decade, according to global consultancy McKinsey & Co., offering a particularly alarming outlook as new financial technology players nibble away at some of the more vulnerable areas of traditional banking.
The consultancy said that altogether banks are producing profit of some $1-trillion (U.S.) globally, providing a powerful incentive for startups to grab even a thin slice of that business with cheaper or more convenient services. Given that the number of startups is now estimated at 12,000, these slices can add up to a major threat.
Adults Don't Use Mobile Banking
While mobile banking app use took off in 2015, with member adoption of credit union apps growing by 35 percent on average, nearly 88 percent of U.S. adults did not use mobile banking because they felt their needs were being met without it.1
Bank Failures Since 2009
There are bank closures... and then to make matters worse... there are bank failures...
|Year||Bank failure cost to DIF||Number of bank failures
|2016 (estimated)||$9.6 million||1|
|2015 (estimated)||$894 million||8|
|2014 (estimated)||$398.8 million||18|
|2013 (estimated)||$1.165 billion||24|
|2012 (estimated)||$2.785 billion||51|
|2011 (official)||$7.945 billion||92|
|2010 (official)||$22.904 billion||157|
|2009 (official)||$38.732 billion||140|
August 23, 2016
Trend is consistent with Mercator Advisory Group Banking Channels research, which has found that customers and members strongly desire the option of having face-to-face contact at a branch -- when and where desired. This access to subject matter experts, even if only agree occasionally, can be an important driver of customer satisfaction and increased product deepending and long-term loyalty.
Bank executives argue, however, that branches remain crucial for acquiring new customers and doing more business with new ones. Closures, they say, would hurt revenue more than help reduce costs.
“Our customers still want to visit us,” Jonathan Velline, Wells Fargo's head of ATM and store strategy, told Reuters in an interview. “They're still coming to our stores and our ATMs at pretty consistent rates.”
Washington Post: Say goodbye to your neighborhood bank branch
Former Barclays chief executive Antony Jenkins laid it out in particularly stark terms in a speech last fall: The global industry, under pressure to meet customer demands for automation and cheaper services, will slash employment and branches by 20 percent to 50 percent over the next decade, he estimated.
“I have no doubt that the financial industry will face a series of Uber moments,” he said in the late-November speech in London, referring to the way that Uber and other ride-hailing companies have rapidly unsettled the taxi industry.
And that's not just the opinion of one well-informed man.
Francisco Gonzalez, CEO of BBVA Bank, said about “In 10 years, only 100 banks will have survived the digital wave.”
Realize these figures and representations are indicative of the "banked market" who have the education and unlimited access to online banking technology and therefore need not frequent a bank branch as a "bank challenged" person would have the need to. As proof of that, Check Cashers "thrive" in "Bank Desert" regions. Growing at a rate of 11% in 2014.
Life in a Banking Desert
Without access to basic financial services, poor and minority communities are more likely to use dangerous, high-cost options.
A neighborhood saturated with fast-food restaurants and bodegas but lacking a grocery store would make it difficult to stick to a healthy diet. It would be similarly hard to manage finances and build wealth without a bank branch nearby. Unfortunately, that is exactly what an increasing percentage of U.S. households are being told to do: manage their finances and build wealth without access to a nearby mainstream bank branch.
This does not mean, however, that the evidence couldn’t be used to draw mixed conclusions. The New York Fed reports that lower-income communities and communities of color have been less affected than higher-income and majority-white communities by bank branch closings that occurred in the shadow of the Great Recession. However, these communities had less to lose to begin with. Lower-income communities and communities of color have been experiencing a shuttering of bank branches for nearly two decades—devolving into “banking deserts” for quite some time.
Federal deregulation in the 1990s allowed banks to pivot from primarily serving local communities to serving larger and more profitable geographic regions. Banks withdrew from local communities, closing their less-profitable branches that were often in lower-income communities and communities of color. High-cost alternative financial services began to occupy the communities once served by mainstream banking services, expanding at a rate of 15 percent per year since the 1990s.
When alternative financial services like payday lenders and check-cashing stores—the equivalent of fast-food chains and convenience stores in this scenario—swoop into neighborhoods left behind by mainstream banks, residents pay a steep price to meet their financial needs: The average borrower spends over $500 a year in interest just on payday loans. Residents end up diverting money that could have otherwise been used to pay for irregular expenses or to build wealth, instead paying to use the basic financial products that they so desperately need to manage their financial lives. Because like convenience stores in food deserts that don’t sell nutritious food that promotes good physical health, alternative financial services don’t sell products that build long-term financial health.
Technology like mobile banking and fintech innovations help close the geographic distance between households and brick-and-mortar bank branches, thereby increasing access to basic financial products. Yet technology alone cannot repair the negative impact that bank branch closures have had on mortgages and small business lending. Simply put, brick-and-mortar bank branches still matter for accessing credit to build wealth. Without a bank branch in their community, households have limited access to safer and more affordable products, like a savings account that could be used to pay for irregular expenses, or to invest in the future. And, as the New York Fed’s study indicates, residents lose access to small business loans and mortgages when bank branches close, hindering the investment and entrepreneurship needed to drive local economic growth.
Biz Journal: More than 1,600 bank branch closures in the U.S. last year
Overall, there are 1,614 fewer bank branches in the United States today than there were a year earlier . Banking companies of all sizes continue to close offices as more consumers turn to digital banking and as a means to trim expenses. [Note many low income people do not have access to the digital world. They may be older, not trained or, according to AARP studies, just not be able to afford PC's, lap tops and smart phones. Having said that, to be fair and balanced, we have witnessed many homeless people with state of the art smart phones!]
Wall Street Journal: The number of U.S. bank branches has fallen to the lowest level since 2005
The number of branches in the U.S. dropped to 94,725 as of June 30, , down 1,614, or 1.7%, from a year earlier and down 4,825 from the peak in 2009, according to the FDIC data.
NY Times: Criticism Grows as Check-Cashing Stores Expand in Poorer Areas
By WINNIE HU AUG. 5, 2012
Many of New York City's poorest residents do not have bank accounts, so these window transactions, repeated hundreds of times every day, are their primary contact with the financial system. Check cashers are as familiar to them as corner bodegas, and as reliable.
But an industry built on mutual convenience has come under increased scrutiny over the past decade as its stores have continued to become full financial centers, improving services like electronic bill payment, wire transfers and prepaid debit cards.
The expansion has spurred renewed criticism from advocates for poor residents and from bank officials, who say the check-cashing industry takes advantage of those who have no other options, and it has prompted more calls for consumer protections. Many of the industry's leaders say that they have been unfairly tarnished, that they provide needed services and that they are making improvements to their operations.