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FIs Are About To Be Blindsided…Again

May 13, 2010 5 comments


I’m not sure if you heard, but this little tech company out in California has a couple of neat devices called the iPhone and iPad.  So far, banks and credit unions have been holding back from jumping into the mobile banking space.  But I believe momentum will grow exponentially over the next two years.

The problem is it might just be too late.  One of the main reason FIs haven’t jumped into the mobile space is because there is no clear ROI.  Instead, they mostly hear about the cost savings in other areas like the call center.  No one is charging for mobile banking in the United States.  And until Bank of America, Wells Fargo or Citibank does, I don’t think anyone will.

One idea I have heard floated for income is charging commercial customers.  The reason being companies are typically charged for using cash management services.  Another one is getting transaction income from mobile payments. Make no mistake, mobile is the biggest growth area for financial services.  I believe that within five years, customers will access their account information mostly from a mobile device.  The iPad and other “tablet” computers will only accelerate this growth.

Fiserv’s iPad demo at Finovate Spring 2010 is just a sample of what’s to come.  But what no one is noticing are the companies that are going around banks and credit unions.  Square’s apps for the iPhone and iPad will take away from those lucrative merchant accounts that customers normally get through their FI.

The biggest threat is the new Transaction app that Apple is working on.  Basically, Apple will turn your iPhone into a credit card by using NFC.  So just like PayPal became the standard for online transactions, it looks like Apple could become the standard for mobile transactions.  And if everything is going mobile, where exactly does that leave your FI?

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If You Lend It, Maybe They Will Come

February 20, 2009 Leave a comment

Lately there has been a lot of angst about banks not lending their new found TARP funds.  Admittedly, I haven’t really been paying close attention to who these loans are supposed to go to.  But I’ve heard discussions about increasing the amount of consumer loans.

Now maybe it’s just me, but it seems that most people have drastically cut back on their spending habits; even more so when it comes to big ticket items.  I mean, the Super Bowl was at the beginning of the month, so there’s no reason to go out and buy that 72 inch plasma now.

Most people are worried about keeping their jobs and homes.  They aren’t going to take out an EAL or ACR just to spend it.  They’re going to hold on to it for emergencies, not go on a spending spree.   What banks have been seeing is a lot of refinancing.  I imagine that people are using the cash they receive to pay off bills or put into savings.

So if consumers aren’t spending money, who is?  My guess is the thousands of small and medium businesses out there.  SMBs don’t necessarily need a million dollars to execute their business plan.  Actually, loans for less than $50K can do wonders for them.  Also, if you look at the news, the big companies seem to be having layoffs while the SMBs are hiring.

Maybe we need to do all we can to help out small business so that they can keep hiring and producing, which will help put money back into the economy.  Making loans just for EALs and refinancing just allows people to have a cushion.  Lending to profitable businesses will have an exponential effect on all of us.  It will certainly help more in the long term.

Categories: Lending, Small Business, TARP

Now Open: BankingKismet SMB Lending

March 28, 2008 2 comments

Entrepreneurs have found a new source for startup funds…Prosper. No more pesky loan applications and dealing with that clueless lender who looks down his nose at your million dollar business idea and refuses to lend you anything because you’re a startup and you need less than $100K, which is too small of a deal for him.

However, entrepreneurs seem to be paying a premium for these funds. It’s not unusual to see rates from 11% to 35%. One has to wonder if they tried to find cheaper funds elsewhere. Surely a smaller bank or credit union would extend a business line of credit.

But I must admit, tapping the old EAL for 7% and lending for 25% sounds pretty tempting. I wonder if I need a business license? Nevermind, my employer may have something to say about my new venture.

Categories: Prosper, Small Business

Want SMB Clients? Get ‘Em While They’re Young

July 27, 2007 1 comment

Umpqua Bank has recently launched Lemonaire, a campaign aimed in helping kids start their own lemonade stand. I think this is a wonderful idea. This helps introduce kids to entrepreneurship and builds a lot of community interest. Also, Umpqua helps establish themselves as being helpful to small businesses. I wonder if they’ll finance a Kool-Aid stand… More info can be found here.

Categories: Small Business