1 / 79

Impact of Recent Regulatory Changes on Bank Pricing, Services, and Trends

Impact of Recent Regulatory Changes on Bank Pricing, Services, and Trends. Agenda. Introduction Summary of regulatory changes Product Impact and Industry Trends Products and Services Analysis Rate Environment Fee Environment Final Thoughts Recommendations for 2012

doane
Download Presentation

Impact of Recent Regulatory Changes on Bank Pricing, Services, and Trends

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Impact of Recent Regulatory Changes on Bank Pricing, Services, and Trends

  2. Agenda • Introduction • Summary of regulatory changes • Product Impact and Industry Trends • Products and Services Analysis • Rate Environment • Fee Environment • Final Thoughts • Recommendations for 2012 • Projections for 2013 and beyond • Contact Information

  3. Summary of Regulatory Changes & Product Impact and Industry Trends

  4. Regulatory & Technological Changes • Regulatory Changes • Repeal of Regulation Q • Durbin Amendment • FDIC Changes • Technological Changes • Web Portals • Security Devices • Mobile Banking

  5. Earnings Credit Rates

  6. 5 Year ECR Historical Data compiled from institutions with an asset size of $100 Billion+ as of April 2012.

  7. 5 Year T-Bill & Fed Funds Historical

  8. 5 Year Historical Trend Fed Fund 5.25% T-Bill Rate 4.76% Fed Fund 3.00% T-Bill Rate 2.25% Fed Fund 1.00% T-Bill Rate 0.355% Fed Fund 0.00% - 0.25% T-Bill Rate 0.025%

  9. Hybrid Commercial Checking Accounts

  10. Do you offer or plan to offer a hybrid option that both offsets fees and pays interest on excess balances? • Many institutions have not changed their perspective on offering the hybrid product from 2010 to 2011. • 2011 Regulation Q Study (overall) • 79% will offer the hybrid product • 21% will not offer the hybrid product • 2010 Regulation Q Study (overall) • 76% are planning to offer the hybrid product • 24% are not planning to offer the hybrid product Source: Informa Research Services 2011 Impact of Regulation Q Study

  11. Which of the following reasons prevented your financial institution from introducing a hybrid product? • Reasons for not offering the hybrid product: • 42% is product strategy • 17% indicated there was a lack of interest from clients • 8% indicated that there were system limitations • 33% of those who responded had a different reason for not offering the hybrid product: • Core vendor cannot support the product • Other priorities limit focus at this time • Clients wish to leverage 100% FDIC coverage Source: Informa Research Services 2011 Impact of Regulation Q Study

  12. Which of the following methodologies would define how your Hybrid product will work? • Traditional Hybrid Option: • Overall 87% indicated that the hybrid product offered will have an ECR rate to offset the fees and an interest rate earned on the excess balances • Non Traditional Hybrid Option: • Overall 2% indicating they will offer a product that does not have an ECR, but the interest earned is first used to offset the fees and if there is excess interest earned, the customer is paid interest. • Traditional and Non-Traditional: • Overall 11% of those that responded indicate they will offer both hybrid options.

  13. Commercial Interest Checking Accounts

  14. Do you currently offer a commercial interest checking account? Source: Informa Research Services 2011 Impact of Regulation Q Study • There was a slight downward trend in the percentages on offering a commercial interest checking product from 2010 to 2011. • 2011 Regulation Q Study (overall) • 70% will offer a commercial interest checking product • 30% will not offer a commercial interest checking product • 2010 Regulation Q Study (overall) • 85% are planning to offer a commercial interest checking product • 15% are not planning to offer a commercial interest checking product

  15. FDIC Fees

  16. On which of the following segments will your financial institution be passing a standard FDIC fee on to a Non-interest DDA? • 2011 Regulation Q Study (overall) • Overall, the majority of respondents indicated that an FDIC fee would be passed onto a non-interest DDA. • 84% indicated they would pass an FDIC to the middle market/large corporate segment . • 32% will pass on an FDIC fee to the small business segment. • 2010 Regulation Q Study (overall) • 62% of respondents stated that they are not planning to pass on the FDIC charge to their non-analyzed account holders . • 21% of respondents are planning to pass on the FDIC fee to the small business customer segment

  17. Do you currently charge or anticipate charging an FDIC fee on the following products? Products assessed an FDIC Fee: 65% - will pass FDIC fee on commercial checking 70 % - will pass FDIC fee on a hybrid checking 11% - do not offer any of those products

  18. ECR, Hybrid and Commercial Interest Checking Strategies

  19. ECR and Hybrid Rates Comparison Data compiled from institutions with an asset size of $100 Billion+ as of April 2012.

  20. Commercial Interest Rates Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  21. Checking Accounts Statistical Data • 60% - 15 out of the top 25 institutions currently offer a Commercial Hybrid Checking product • 60% of the top 25 institutions currently offer both an Analyzed ECR product & Commercial Hybrid Checking product. • 68% - 17 out of the top 25 institutions offer a Commercial Interest Checking Product • 56% - 14 out of the top 25 institutions are currently offering both a Commercial Hybrid and a Commercial Interest Checking Product. • 56% - 14 out of the top 25 institutions are currently offering an Analyzed ECR, Commercial Hybrid, and a Commercial Interest Checking Product Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  22. FDIC Insured Sweeps

  23. Do you anticipate making any rate changes to the commercial money market/savings or sweep product options you offer as a result of the repeal of Regulation Q? Source: Informa Research Services 2011 Impact of Regulation Q Study

  24. After the Repeal of Regulation Q, did you create or are Did you create, or are you planning to create a commercial DDA product that includes an investment sweep into a bank Money Market Deposit Account? Source: Informa Research Services 2011 Impact of Regulation Q Study

  25. FDIC Insured Sweep Examples

  26. Investment Sweeps Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  27. Credit & Dual Sweeps Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  28. Commercial Checking Account Fees

  29. If you anticipate offering an interest-bearing checking product for commercial customers, will your Cash Management fee structure be identical to or different from commercial checking accounts with earnings credit? Source: Informa Research Services 2011 Impact of Regulation Q Study

  30. Commercial Account Fees Data compiled from institutions with asset size of $100 Billion+ as of April 2012

  31. Commercial Checking Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  32. Deposited Item Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  33. Virtual Banking

  34. Information Reporting Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  35. ACH Monthly Fee Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  36. ACH Transaction Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  37. Domestic Outgoing Wires - Web Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  38. International Outgoing Wire - Web Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  39. Remote Deposit Highlights Remote deposit capture (RDC) has become a convenient service for business customers and now even retail clients. RDC has grown 13% over the past two years, mainly due to the expansion to the consumer market. The benefits of RDC greatly outweigh the cost of processing paper checks. Smart phones will increase the number of users.

  40. Lockbox Monthly Fee Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  41. Remote Deposit Monthly Fee Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  42. Key Trends • Commercial Business Segment: • Overall lower service fees in 2011 compared to 2010 - 2009 averages. • Monthly fees can be based on number of accounts, locations, or check scanner equipment. • 62% of financial institutions only offer one RDC solution for all business clients regardless of business size. • Small Business Segment: • Growing market with specific remote deposit capture and mobile banking solutions. • Lower monthly fees for remote deposit packages available for analyzed and non-analyzed clients. • The further development of small business mobile remote deposit will help make RDC more affordable. • Two most common services thought after by new clients – remote deposit capture and mobile banking www.wellsfargo.com

  43. Key Trends • Retail Segment: • Remote deposit capture has expanded to the personal account level where checks can be scanned and deposited via web connection by taking a picture with a mobile phone or using a check scanner. • The remote deposit service and mobile banking are generally free with certain deposit limitations, such as total daily and monthly deposit limits, to reduce incidence of check fraud and liability. www.chase.com

  44. Card & Cash Transaction Processing

  45. Credit and Prepaid Card Trends • Shift from Debit to Credit • Regulations • Durbin Amendment • Overdraft Protection • Reversed Trend • Credit Card vs. Debit Card Rewards • Payroll Cards • Cost • Convenience

  46. Payroll Card Fees Data compiled from the top 25 Banks and Thrifts with the Most Deposits in the American Banker as of April 2012

  47. Merchant Card Processing • Interchange Rate • Alternative Providers • Rise of the quasi-merchant

  48. Virtual Cash Processing • Security • Convenience • Daily Credit • Information Reporting Source: www.brinks.com

  49. Final Thoughts • Conclusions • Where are we now? • What is going to happen? • Product Recommendations • Industry Focus • Sophistication & Simplicity • Projections for 2013 and beyond • Rate Environment • Fee Environment • Questions There are so many men who can figure costs, and so few who can measure values.

  50. Contact Information Randy Rosen, CTP Zoya Lieberman, CTP Product Manager Commercial Services Informa Research Services, Inc. 818.961.8627 zlieberman@informars.com Manager Deposit Research Informa Research Services, Inc. 818.871.2262 rrosen@informars.com

More Related