What We’re Reading This Week
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.
- A Year After Credit Card Reform, Warren Cites Improvements in Industry
A year after the credit card reform law was enacted, Elizabeth Warren, the administration’s official in charge with setting up the Consumer Financial Protection Bureau, said the industry has improved its practices and warned against over regulation of the card market. Warren is scheduled to host a conference on Tuesday marking the one-year anniversary of the CARD Act. According to text of her remarks, Warren said the reform legislation was helpful and plans to release a study showing improvements in practices during the last year.” I believe the CARD Act has pushed in the right direction. It has brought about significant reforms in both the pricing practices of card issuers and the information provided to consumers,” Warren said, according to her remarks. “Even so, substantial challenges remain.
- New B of A Check-Image Fee May Further Paperless Push
Bank of America Corp. is adding another fee that may lead some of its customers to shut off paper statements. This month, the company began charging customers a $3 monthly fee if they elect to receive images of their cancelled checks along with their statements. Though B of A is not the first to charge for check images, its move furthers an approach the Charlotte, N.C., bank adopted last year when it required customers with a new type of account to stop receiving mailed statements as a condition of waiving their monthly fee. Customers can avoid the new fee by choosing to access their check images online only or by shutting off paper statements entirely.
- First Look: New Authentication Guidance
A preliminary draft of new online authentication guidance from the Federal Financial Institutions Examination Council puts greater responsibility on the shoulders of financial institutions to enhance their security and prevent fraud. The FFIEC has yet to formally unveil its long-awaited update to 2005’s authentication guidance, but a December 2010 draft document entitled “Interagency Supplement to Authentication in an Internet Banking Environment” was reportedly distributed to the FFIEC’s member agencies — the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, National Credit Union Administration and Office of Thrift Supervision — for review and comment. Copies of this draft have circulated recently within the banking and security communities, and two were sent separately and anonymously to Information Security Media Group.
While it’s likely that this draft will be amended before the final release of the new guidance, the current document calls for five key areas of improvement.
- How to Unleash Payments Innovation in Banks?
Celent’s ‘Payments Innovation 2011 – The Global Jury Decides’, was published last week. The report focuses on understanding the challenges facing the payments industry and their impact on innovation in the next 12 months. The jury this year consisted of 22 panelists drawn from 14 countries across five continents and was chaired by John Chaplin, President of Ixaris, itself a very innovative payments company. The report has a number of interesting findings. For example, the jury expects that innovation in 2011 is most likely to come from Asia (a top region by clear margin) and North America, in low value and micro payments, and from improved product access (rather than the products themselves).
- Mobile Payments Take Hold Around the World
Transactions will total nearly $1 trillion by 2014. A sixfold increase in the volume of mobile payment transactions is on the way in the next four years, according to one research firm. A forecast from Yankee Group predicts the worldwide transaction value of mobile payments will total $984 billion by 2014, up from $162 billion last year. That includes transactions from mobile banking, international and domestic remittances, contactless cards, mobile coupons and near-field communications. According to an Accenture survey of “tech forwards”—web users who use several networked devices and internet services—there is widespread concern around the world with the safety of mobile payments. Even among this internet-savvy group, privacy and identity theft were serious worries.
- Bank Closings Tilt Toward Poor Areas
Until it closed its doors in December, the Ohio Savings Bank branch on North Moreland Boulevard was a neighborhood anchor in Cleveland, midway between the mansions of Shaker Heights and the ramshackle bungalows of the city’s east side. Now it sits boarded up, a victim not only of Cleveland’s economic troubles but also of a broader trend of bank branch closings that is falling more heavily on low- and moderate-income neighborhoods across the country. In 2010, for the first time in 15 years, more bank branches closed than opened across the United States. An analysis of government data shows, however, that even as banks shut branches in poorer areas, they continued to expand in wealthier ones, despite decades of government regulations requiring financial institutions to meet the credit needs of poor and middle-class neighborhoods.
- Tech Wave Lifts Some Venture Firms
Top venture-capital firms including Accel Partners and Kleiner Perkins Caufield & Byers are riding the frenzy around companies like Facebook Inc. and Groupon Inc. to raise billions of dollars in new funds, even as the rest of the venture industry struggles to gather money. The new funds stand out in what is a bleak environment for most venture firms. Hit by the financial crisis and poor returns over the past decade, just 119 new venture funds were raised in the U.S. last year, totaling $11.6 billion in assets, according to research firm VentureSource. That was down from 215 new venture funds totaling $40.1 billion in 2007. “Today’s fund-raising market is a have and have-not market,” said Christopher Douvos, co-head of private-equity investing for the Investment Fund for Foundations, an organization that invests in venture-capital funds on behalf of nonprofits.