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Share Loyalty Marketing Risks and Rewards With Competitive Cooperation
Friday, April 04, 2008 (1197 reads)

As the credit pendulum swings from high credit spending to a more balanced level of spending disposable income from current and saved income, the debit card is maturing as a product. Consider this: In 2006 alone, 26 billion debit card transactions resulted in a total of $1 trillion being spent. In fact, debit card use now accounts for two-thirds of Visa’s total transactions and half of its total dollar value.
In the past, banks relied on issuing credit to customers in their local markets to generate profits and gain value through obtaining information associated with these customers’ credit histories. Then, as certain banks experienced steady growth, they began acquiring other local banks to gain access to an even larger customer base. And, as larger banks created systems to track customers’ behaviors and to reward them for specific behaviors, these banks became even more valuable. The net result? A buying frenzy in the late 1990s and early 2000s that left 10 of the largest national retail banks possessing more than 90 percent of the credit card customers in the United States.

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Emergency Notification And Crisis Collaboration
Friday, April 04, 2008 (1748 reads)

In a crisis, companies need two things – a plan and a way to communicate. In the banking and financial community, being prepared for a crisis is mission-critical. Today, the threats to financial institutions are wide-ranging and volatile including cyber threats, organized crime units, intense weather conditions and regional power outages.
Beyond the actual emergency response, implementing a smooth recovery plan after a crisis is essential for the quick resumption of business operations. In order to ease business recovery, emergency notification is evolving from a new technology to become the cornerstone of crisis management.

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In a Tighter Credit Market, No More Volume for Volume’s Sake
Friday, April 04, 2008 (1303 reads)

The most recent Federal Reserve senior loan officer survey, released at the end of January, indicated further tightening of most standards for commercial lending. The extent of tightening was broad-based, while at the same time, the survey showed softer demand for most loan types. The Federal Reserve cited these conditions as part of their rationale for reducing the target federal funds rate so dramatically.
The percentage of banks tightening credit for C&I loans for large- and middle-market firms rose to 32.2 percent from 19.2 percent in October; the highest reading since 2002. The fraction tightening standards for small firms increased to 30.4 percent from 9.6 percent. For small firms, the net tightening remains below the peaks in 1990 (56.9 percent), 1998 (36.4 percent) and 2001 (59.7 percent).

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Customer Retention Strategies Evolve One-Size-Fits-All Reward Programs
Friday, April 04, 2008 (1909 reads)

Sign up today for a free checking account and receive a roadside assistance kit!
This example of an all-too-familiar marketing campaign is a go-to strategy for community banks around the country. To the delight of bank presidents across the nation, it attracts a variety of potential customers to the branch.
However, as the industry has gravitated to this customer acquisition approach, the value in these ubiquitous offers has been severely diluted. Banking executives have begun to question whether this approach to growth lends itself to building sustainable, long-term customer relationships or whether it is a short-term solution.

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Investing That’s Good For Business and Cities
Friday, April 04, 2008 (1066 reads)

A scan of recent headlines reveals much about the issues facing America’s cities over the years and for decades to come. Infrastructure, education, traffic congestion, climate change and housing affordability are just a few of the key challenges now facing our urban centers.
With cities so essential to the economic, social and cultural vitality of our country, it’s clear that we can’t sit idly by. We all have a stake in the health of our cities. And for the private sector, and especially banks, investing in cities not only makes good business sense, but is also an indispensable ingredient in efforts to strengthen urban communities and improve the lives of residents at all income levels.

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Model the Network Before You Kick the Dirt
Friday, April 04, 2008 (3041 reads)

Branch site selection is often thought of as a question of real estate. While real estate does play an important role, branch selection is first an analytical question for network planners. In other words: before you kick the dirt around at a proposed site, perform analysis to model the attractiveness of the location and how it impacts the entire branch network.
There are several approaches to modeling a proposed branch location. A screening model is a compare-and-contrast exercise. It allows you to compare a proposed site with the characteristics of your best branch to see how closely they match. A close match might mean a good site. However, a screening model doesn’t provide a sales estimate for the branch or assess the impact the new branch will have on the overall network.
Another approach, called a suitability model, adds demographic and market variables to the screening model to produce a sales estimate. The suitability model, like the screening model, does not account for the overall network or possible cannibalization of business from other branches. Using the screening or suitability model, you could end up choosing  a new branch location that performs well, but at the expense of other branches, creating little net gain or even a loss in overall deposits across the branch network.

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Predatory Lending Effects Addressed By DOD Regulation
Friday, April 04, 2008 (2139 reads)

The Department of Defense (DOD) has implemented a new regulation to address predatory lending practices and the effects of such practices on military members and their families. It requires creditors to provide additional disclosures on certain types of loans to military personnel, and imposes several substantive limitations on such loans, including a cap on the military annual percentage rate (MAPR).
Those affected under this regulation are referred to as “covered borrowers.” A covered borrower is a person who, at the time he or she becomes obligated on a consumer credit transaction, is a regular or reserve member of the Army, Navy, Marine Corps, Air Force or Coast Guard; serving on active duty for more than 30 days; such a member serving on Active Guard and Reserve duty; the member’s spouse or child; or an individual for whom the member provided more than half of the individual’s support for 180 days immediately preceding an extension of consumer credit covered by the regulation.

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State Fighting Feds In Flex of Banks’ Powers
Friday, April 04, 2008 (1960 reads)

Picture this: The country is in the midst of a nationwide financial crisis characterized by widespread foreclosures. A period of economic expansion and prosperity, fueled by imprudent financiers operating in a market that encouraged speculation and risky lending, has suddenly come to an end. Moreover, an attorney representing a state government is in federal court arguing that the federal status of a bank does not prevent the host state from enforcing otherwise generally applicable state law against a federally chartered institution.

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Reasons to Promote Web-Based Banking
Friday, April 04, 2008 (1918 reads)

With all the talk of identity theft and cyber threats, a banker promoting Internet banking might sound a little crazy. After all, roam the Internet are all the hackers – bad ones who trick bank customers into divulging personal information and then sell it to organized crime.
But if we peel back the concerns, we will find a number of false assumptions that could be holding your bank and its customers back from using a carefully protected and highly convenient banking channel.

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Mobile Devices: Friend or Foe?
Friday, April 04, 2008 (1539 reads)

With every new generation of cell phone or personal digital assistant (PDA), the technologies allowing these devices to connect to various networks become more common place. Along with these technologies, whether Bluetooth, WiFi or even IR, comes new ways of exploiting mobile devices – potentially opening your institution to possible attack.
These devices can easily connect to your infrastructure to access e-mail, share files or even print documents, making them easy targets for potential attackers. These days, almost every cell phone, regardless of price, comes standard with all or some of these methods for communicating and, in most cases, they are active by default. An attacker can easily gain access to your mobile device using tools that are freely accessible on the Internet. Once connected, a number of functions can be performed without the device owner’s knowledge. E-mails, contact lists and files can be retrieved remotely and the attacker can even turn a cell phone into a listening device by sending it commands to place an outbound call. With the proper equipment, Bluetooth can be accessed from up to a mile away and WiFi from even greater distances. An attacker doesn’t need to be close by to pose a major threat to the integrity of your personal and confidential information.



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Crackdown On Compliance
Friday, April 04, 2008 (1132 reads)

In November, new Federal Reserve Board rules for identity threat protection went into effect. Bankers now have less than a year to bring their institutions into compliance. The clock is ticking.
Those who fail to put adequate safeguards in place by November 2008 will find identity theft and other online fraud transformed from a mere public relations problem into a serious, and potentially costly, compliance matter.
It’s no wonder bankers are scrambling to develop or outsource identity theft prevention solutions. Unfortunately, many are finding identity theft protection tools are not created equal. Most of the available solutions only address a subset of the Fed’s regulations.
For example, while the Fed’s rules require banks to protect all their customers, many ID theft protection solutions can only enroll and notify participants who bank online. That leaves an estimated 29 percent of bank customers disenfranchised.
Likewise, credit monitoring services can detect potential criminal-borrowing patterns, but can’t flag when non-credit records, such as drivers’ licenses and medical records, are being tampered with. Here’s what bankers need to know to get their institutions into compliance with new guidelines.

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A Ray of Light Through the Subprime Clouds
Friday, April 04, 2008 (1619 reads)

As we find ourselves in the midst of the subprime loan crises, with another year of market pain and personal tragedy forecasted, any positive news would be a welcomed reprieve – like the first robin of spring after a long winter. That robin may, in fact, have arrived: new research on the foreclosure crisis indicates that the Community Reinvestment Act (CRA) is at least one positive takeaway.
The CRA was passed in 1977 by the government to encourage federally insured banking institutions to help meet the credit needs of lower-income communities. It was enacted in response to concerns that banking institutions were, in some situations, failing to adequately meet the credit needs of viable lending prospects in all sections of their communities. CRA influences the behavior of banking institutions primarily by an examination and ratings system, and in the formation of public opinion.
While the intentions of the CRA are clear, there have been arguments against it since its inception. Those discussions mainly lie in the areas that competition and market forces should regulate lending and access to credit, not the government. Other arguments are that regulated lending to higher-risk borrowers would raise overall costs and lead to higher default levels.

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Community National: Small Bank With Big Plans
Friday, April 04, 2008 (1533 reads)

For any bank, opening four new branches in a year is significant, but for a small community bank, it is a noteworthy achievement.
The corporate office of Long Island-based Community National Bank (CNB) opened its doors in Great Neck in 2005. One year later, the independent commercial bank received approval from the Office of the Comptroller of the Currency to open branches in Garden City and Woodbury.
The rapidly growing network of branches expanded in late December 2007 to Oceanside and is set to continue this year with new locations slated to open in Huntington and New Hyde Park in March, and Rockville Center later in the year.
“With four branches opening within a year time-span, we’re pretty busy around here,” said Stuart H. Lubow, chairman and chief executive officer.

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