Actionable Insights From APT's Retail Practice

A Playbook to Survive Overdraft Regulation

June 21st, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on A Playbook to Survive Overdraft Regulation)

Also featured in American Banker

The new overdraft regulation will go into effect soon and will cost banks millions of dollars in lost revenue.  Many banks are still scrambling to get as many customers as possible to opt-in, and many haven’t announced a broader change in overdraft policy.  Simply complying with regulation is not enough to protect fee revenue.  Banks need to develop a forward looking strategy to maintain profitability in this new regulatory environment.   

Some like Bank of America and JP Morgan made sweeping changes to overdraft policy well before the new regulation took effect.  While changing overdraft strategy is vital, their approach of modifying policy for all customers is not the best one.  By changing policy quickly and uniformly there is no way to tell what impact it will have.  The changes may significantly hurt profitability, and it will be very difficult to roll these changes back. (more…)

Using ATMs to Drive Innovation

May 24th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Using ATMs to Drive Innovation)

A recent article in Bank Systems Technology highlights how much ATMs have changed since they were first introduced back in 1966.

ATMs originally provided a quick, easy way to get cash. In recent years, banks have started greatly expanding what a customer can do at the ATM. Many have introduced remote check imaging that allows customers to deposit checks at the ATM.

Now retail banks are pushing ATM innovation even further. This article mentions some banks have started using video conferencing at the ATM that allows customers to talk to a call center representative after hours. While this type of innovation has the potential to improve performance and customer satisfaction, banks need to make sure they are investing in a targeted, smart way and need to understand the best cross-channel strategy to make this innovation successful. (more…)

Citi Spends Big on Branch Remodels

May 20th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Citi Spends Big on Branch Remodels)

Citi has big plans for branch remodels. US Banker wrote about Citi’s major investment in its branches and how it plans to change the ways customers use the branch: “The company wants to transform its retail outlets to let customers handle much of their banking needs on their own, using self-service processes that have been perfected online.”

This broad effort will include enlarging the lobby, investing in new technology, and merging different channels to make banking more seamless.

Branch remodels are an important part of doing business to maintain the brand, stay competitive, and adapt to new ways of doing business. However, remodels require a huge investment, and banks often don’t understand the return on that investment and how to best target spend. (more…)

Too Little, Too Late: Missing the Boat on Overdraft Regulation

April 29th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Too Little, Too Late: Missing the Boat on Overdraft Regulation)

Overdraft regulation is a sweeping change that puts a significant part of revenue at risk.  It is therefore shocking that a Moebs survey cited in American Banker found that only 1 in 9 of banks have started preparing for this change.

The majority of banks will find themselves unprepared when regulation changes take effect on July 1st.  Banks need to act immediately to determine how they will respond to this regulation. (more…)

The Battle with Online Banks Heats Up

April 26th, 2010 | Posted by retailblogadmin in Financial Services | Uncategorized - (Comments Off on The Battle with Online Banks Heats Up)

Consumers are primarily looking for three things in their bank – convenience, competitive rates, and low fees.  As discussed in a recent Wall Street Journal article, online banks are winning customers over with their low fees and are making strides in becoming more convenient and offering attractive interest rates.  Traditional banks should be worried.

 The main appeal of online banks has historically been their customer-friendly fee structure.  Most have no monthly fees, pay ATM fees for customers, and have low or no overdraft fees.  As a result, many were enticed to switch to online banks and “could trim hundreds of dollars a year in fees.” (more…)

Intelligent ATMs Blur the Lines between Channels

March 23rd, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Intelligent ATMs Blur the Lines between Channels)

New ATMs can now do more than just withdraw cash. Many ATMs take deposits, often without requiring an envelope. This increasing range of services is blurring the line between tellers and ATMs.

Now leading banks are taking it even further: American Banker predicts, “Integrating bank machines more closely with other channels – including the branch, call centers, online, and mobile – may be the next step in further broadening use of ATMs.” (more…)

Bank of America's Shocking Announcement

March 18th, 2010 | Posted by retailblogadmin in Financial Services | Uncategorized - (Comments Off on Bank of America's Shocking Announcement)

Many banks have acted in anticipation of overdraft legislation that takes effect on July 1st, but Bank of America’s response was the most dramatic yet. Bank of America announced that it would eliminate overdraft fees for purchases made with debit cards. The New York Times highlighted that this “could cost the bank tens of millions a year in revenue and put pressure on other banks to do the same.”

Will this strategy improve customer satisfaction and, more importantly, will this translate to increased retention, balances, and spread revenue? Bank of America will need to determine if these benefits outweigh the lost fee revenue. (more…)

Chase tries to get back on consumers' good side, but at what cost?

February 19th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Chase tries to get back on consumers' good side, but at what cost?)

A recent article in the Washington Post discussed how credit card issuers are not just trying to comply with new regulation but “are trying to change their image as well by aligning themselves on the side of consumers with new programs to help them manage their money.”

Chase recently made its Blueprint program available to 20 million of its cardholders. Customers who enroll in Blueprint can “choose a list of everyday expenses such as groceries or medications to pay in full each month. In return, Chase waives the interest on those charges – even if the customer carries a balance from other purchases”. (more…)

Avoid Citi's Big Mistake

February 15th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Avoid Citi's Big Mistake)

Citibank recently announced it was planning to begin charging a monthly service fee for about 1 million accounts that previously had free checking. Not so fast, said New York Attorney General Andrew Cuomo. Citigroup now has to delay its plans until 2011 since “Mr. Cuomo’s office didn’t believe Citigroup provided customers with adequate notice about the new fee.”

Citi should thank Mr. Cuomo. What would have happened if he didn’t block their decision? The answer is that nobody really knows. It’s possible that most customers wouldn’t have noticed or wouldn’t react negatively. It’s also possible that attrition would have skyrocketed.

It is clear that retail banks need a new strategy for free checking. A recent article in the New York Times details the rise of free checking in the 90s. It helped bring customers in the door and eventually “became a commodity.” However, the fees that propped this product up and made it profitable are now disappearing.

The challenge is that customers have become used to free checking and now expect this service from their bank. How will they react when it goes away? Banks need to be very smart and targeted in how they approach free checking in the future. (more…)

Prepare for the Future of Branch Staffing

January 25th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Prepare for the Future of Branch Staffing)

Branch staffing needs and the options available to meet those needs are changing dramatically. In a recent article, US Banker highlights several key trends that all banks need to be aware of.

First, the workforce has become more flexible, and branches have more options in how they can hire to meet their needs: “Managing part-timers and non-traditional full-timers is not an exception, but the rule.” Each branch needs to understand both the right overall staffing level as well as the right mix of full, part, and peak time employees.

Everyone has staffing models, but they often fail to account for the unique needs of each branch as well as changes in staffing needs. For example, as ATMs are able to handle more types of transactions, staffing needs may change as a result. Some leading banks are testing new staffing levels on a limited basis to better understand how each branch should be staffed. This approach has allowed them to improve upon existing staffing models and increase profit by millions of dollars. (more…)