Posted by Mark Brousseau
As the world closes in on the three-year mark of the beginning of the global financial crisis, one expert believes that it’s not enough to rely on new regulations to prevent future disasters — a fundamental change in mindset is required.
Rex Ghosh, a Harvard PhD economist who has worked in the financial markets for more than 20 years, currently with the International Monetary Fund, believes that the very culture of the financial sector needs to shift back to basics as the economy limps out of recession.
“The global financial crisis, marked by the bankruptcy of Lehman Brothers in September 2008, has taken an enormous economic, financial, and social toll,” said Ghosh. “Both in the United States and abroad, regulations, laws, and practices are being changed to help ensure that such crises do not recur. But these regulations — running to the thousands of pages — are enormously complex. It may be years before they are all adopted and absorbed into the daily lives of those in the financial sector. The real prevention rests in the notion that leaders need to work toward changing the very culture of the sector to rely on more fundamental and basic practices based in prudence and responsibility.”
Ghosh would like to see the financial sector learn the following lessons in 2011:
... For the Federal Reserve -- Central banks such as the Fed should not only look at goods price inflation, but also at important asset prices, such as the stock market and housing sectors. It also needs to be more mindful of lending and credit booms, especially in the face of weakening credit standards. That’s what paved the road to hell three years ago. We do not want to repeat that option again. Traditional monetary policy tools (like the Fed’s interest rate) may need to be bolstered by counter-cyclical capital requirements (requiring banks to hold more capital in “boom” times).
... For Banks -- Boring is good. Banks should get used to being a much smaller proportion of the economy, like it was before the 1990s. Bankers should also be aware of credit and counterparty risks. They need to know who they’re doing business with, know to whom they are lending and not rely solely on credit ratings.
... For Regulators – They need to watch the kids and the cookie jar. They should not count on banks to manage their risks prudently. They should think seriously about “tail risks” — just because something has not happened before, such as a nation-wide decline in house prices, doesn’t mean it cannot happen in the future.
“These are not incredibly difficult precepts,” Ghosh added. “The short answer is that the Fed needs to broaden its view of what constitutes inflation, banks need to look past the paperwork and avoid risk, and regulators need to realize their jobs don’t end with the passage of new rules. For every regulation created, there are 50 new ways created to get around it. We need to realize that the practices of the past won’t go away until we match the letter of the regulations with the culture of the financial sector.”
What do you think?
Showing posts with label bankers banks. Show all posts
Showing posts with label bankers banks. Show all posts
Thursday, February 17, 2011
Monday, November 15, 2010
AFP Conference Attendees Ready to Buy
Posted by Mark Brousseau
After years of being relegated to the sidelines as a result of the economic downturn, attendees at this week's AFP Annual Conference at the Henry B. Gonzalez Convention Center in San Antonio, Texas, appeared to be back in the buying game, reports Mario Villarreal (mvillarreal@usdataworks.com), president and COO of Houston-based US Dataworks, Inc. (www.usdataworks.com). As evidence, Villarreal pointed to the advertised 30 percent bump in attendance, better booth traffic, and the more substantive conversations with prospects compared to last year.
"After several years of sitting through vendor presentations and strategizing internally about enterprise payments, many of the organizations at AFP appeared ready to buy," Villarreal said. "Based on the conversations we had at AFP, I think we will see a significant number of enterprise payments deals close next year." Villarreal said banks, in particular, appeared interested in enterprise payments.
Two key factors are driving the demand for enterprise payments, Villarreal said. First, operations have reached the breaking point in terms of effectively managing their existing payment silos. By consolidating all of their paper-based and electronic payment channels onto a single platform, organizations can reduce cost, eliminate redundant systems and processes, improve availability, gain better visibility into their payments, and apply consistent controls across their payment streams.
Second, organizations are more confident that they will have the budget necessary next year to kick-off an enterprise payments initiative. Furthermore, banks may be looking to make internal investments that deliver a reasonable rate of return rather than parking their cash and earning a measly 25 basis points, Villarreal said. "By no means are operations flush with cash, but IT budget dollars are loosening up for projects with a clear ROI, and enterprise payments fit that bill," he said.
What do you think?
After years of being relegated to the sidelines as a result of the economic downturn, attendees at this week's AFP Annual Conference at the Henry B. Gonzalez Convention Center in San Antonio, Texas, appeared to be back in the buying game, reports Mario Villarreal (mvillarreal@usdataworks.com), president and COO of Houston-based US Dataworks, Inc. (www.usdataworks.com). As evidence, Villarreal pointed to the advertised 30 percent bump in attendance, better booth traffic, and the more substantive conversations with prospects compared to last year.
"After several years of sitting through vendor presentations and strategizing internally about enterprise payments, many of the organizations at AFP appeared ready to buy," Villarreal said. "Based on the conversations we had at AFP, I think we will see a significant number of enterprise payments deals close next year." Villarreal said banks, in particular, appeared interested in enterprise payments.
Two key factors are driving the demand for enterprise payments, Villarreal said. First, operations have reached the breaking point in terms of effectively managing their existing payment silos. By consolidating all of their paper-based and electronic payment channels onto a single platform, organizations can reduce cost, eliminate redundant systems and processes, improve availability, gain better visibility into their payments, and apply consistent controls across their payment streams.
Second, organizations are more confident that they will have the budget necessary next year to kick-off an enterprise payments initiative. Furthermore, banks may be looking to make internal investments that deliver a reasonable rate of return rather than parking their cash and earning a measly 25 basis points, Villarreal said. "By no means are operations flush with cash, but IT budget dollars are loosening up for projects with a clear ROI, and enterprise payments fit that bill," he said.
What do you think?
Sunday, November 7, 2010
A Growing Opportunity for Banks in Healthcare?
Posted by Mark Brousseau
The banking industry has been an integral part of the healthcare world for decades, providing back-end financial administration services to health plans, ranging from processing premium payments and the financial part of the claims payments through medical lockbox services.
For banks, growing opportunities exist in the healthcare market, and revenue potential is apparent, according to Aite Group. To this end, banks are developing new products and services by applying business rules from existing products and services to cater to the healthcare space. With increased consumerism in the healthcare space since the beginning of the consumer-directed healthcare (CDH) movement, banks have been leaning on the core strengths and capabilities they have mastered in the retail environment in order to develop new product strategies, Aite Group says.
“Banks are in the unique position to be able to leverage their existing relationships with various stakeholders, including health plans, clearinghouses, healthcare providers, and healthcare vendors,” says Kunal Pandya, senior analyst with Aite Group. “Although banks’ overall focus in targeting the healthcare market is similar across the board, their approach to targeting specific areas varies widely based on their understanding of the space, relationships in the space, and overall corporate strategy.”
What do you think?
The banking industry has been an integral part of the healthcare world for decades, providing back-end financial administration services to health plans, ranging from processing premium payments and the financial part of the claims payments through medical lockbox services.
For banks, growing opportunities exist in the healthcare market, and revenue potential is apparent, according to Aite Group. To this end, banks are developing new products and services by applying business rules from existing products and services to cater to the healthcare space. With increased consumerism in the healthcare space since the beginning of the consumer-directed healthcare (CDH) movement, banks have been leaning on the core strengths and capabilities they have mastered in the retail environment in order to develop new product strategies, Aite Group says.
“Banks are in the unique position to be able to leverage their existing relationships with various stakeholders, including health plans, clearinghouses, healthcare providers, and healthcare vendors,” says Kunal Pandya, senior analyst with Aite Group. “Although banks’ overall focus in targeting the healthcare market is similar across the board, their approach to targeting specific areas varies widely based on their understanding of the space, relationships in the space, and overall corporate strategy.”
What do you think?
Wednesday, September 22, 2010
Growing Opportunity for Banks in Healthcare
Posted by Mark Brousseau
The opportunity for banks in the healthcare market is growing, Aaron McPherson, practice director, Payments and Security, Financial Insights, told attendees yesterday afternoon at the Healthcare Payments Automation Summit (HPAS) in Boston. “In the short run, healthcare reform hurt bank sales as providers were waiting to see what would happen. Now, patient payments, in particular, are an underdeveloped segment of the market that will become a key focus for banks,” McPherson said.
McPherson told attendees that several provisions of the healthcare reform legislation will provide a “big boost” to banks that are marketing payments processing services to healthcare providers:
… Greater operations complexity: Healthcare reform will create many more plans for healthcare providers to “deal with” -- each with different deductibles and co-pays.
… Electronic health records: The federal mandates for healthcare providers to implement electronic health records will sap limited resources for payments processing initiatives.
… Cost cutting: “Steep reductions in Medicare payments will force cost-cutting,” McPherson said, adding that this will drive some providers to partner with banks on payments processing.
… Higher patient payments volumes: “Healthcare reform will result in an increase in patient payment volumes, which, in turn, will stress the systems at many providers,” McPherson said.
But if banks are to take advantage of the growing opportunity in the healthcare market, McPherson said they should heed the lessons learned by their peers that were among the pioneers in the space.
Dedicated focus is critical: Three out of four banks that McPherson spoke with before the conference had a dedicated sales force for their healthcare remittance offerings.
Partners are important: “The banks I spoke with said their partners were critical to their success,” McPherson said. “Most banks will want to partner with a processor or specialty service provider. Experience and integration with clearinghouses, payers and such are important differentiators in the healthcare market. One bank bought their partner after a successful year-long collaboration. Another bank only found success in the healthcare space on their third partner.”
Prepare for sales challenges: “All of the banks I spoke with said the healthcare sales cycle was long and required significant subject matter expertise on the part of their salespeople,” McPherson said. “Banks can’t rely on their existing sales staff. They need people who understand the product and the market. Banks also should look for ways to leverage their existing relationships with providers.”
Patience and persistence do pay off: “The banks I spoke with have been at this for years,” he said.
The opportunity for banks in the healthcare market is growing, Aaron McPherson, practice director, Payments and Security, Financial Insights, told attendees yesterday afternoon at the Healthcare Payments Automation Summit (HPAS) in Boston. “In the short run, healthcare reform hurt bank sales as providers were waiting to see what would happen. Now, patient payments, in particular, are an underdeveloped segment of the market that will become a key focus for banks,” McPherson said.
McPherson told attendees that several provisions of the healthcare reform legislation will provide a “big boost” to banks that are marketing payments processing services to healthcare providers:
… Greater operations complexity: Healthcare reform will create many more plans for healthcare providers to “deal with” -- each with different deductibles and co-pays.
… Electronic health records: The federal mandates for healthcare providers to implement electronic health records will sap limited resources for payments processing initiatives.
… Cost cutting: “Steep reductions in Medicare payments will force cost-cutting,” McPherson said, adding that this will drive some providers to partner with banks on payments processing.
… Higher patient payments volumes: “Healthcare reform will result in an increase in patient payment volumes, which, in turn, will stress the systems at many providers,” McPherson said.
But if banks are to take advantage of the growing opportunity in the healthcare market, McPherson said they should heed the lessons learned by their peers that were among the pioneers in the space.
Dedicated focus is critical: Three out of four banks that McPherson spoke with before the conference had a dedicated sales force for their healthcare remittance offerings.
Partners are important: “The banks I spoke with said their partners were critical to their success,” McPherson said. “Most banks will want to partner with a processor or specialty service provider. Experience and integration with clearinghouses, payers and such are important differentiators in the healthcare market. One bank bought their partner after a successful year-long collaboration. Another bank only found success in the healthcare space on their third partner.”
Prepare for sales challenges: “All of the banks I spoke with said the healthcare sales cycle was long and required significant subject matter expertise on the part of their salespeople,” McPherson said. “Banks can’t rely on their existing sales staff. They need people who understand the product and the market. Banks also should look for ways to leverage their existing relationships with providers.”
Patience and persistence do pay off: “The banks I spoke with have been at this for years,” he said.
Friday, February 19, 2010
The Image Clearing Opportunity
Posted by Mark Brousseau
Image clearing networks provide an opportunity for bankers banks to grow their revenues and attract new customers. US Dataworks President and COO Mario Villarreal (mvillarreal@usdataworks.com) explains:
At a time when paper cash letter volumes are rapidly declining, and the banking industry approaches the "last mile" in its migration toward electronic clearing, forward-thinking banks are leveraging Check 21 and their existing IT infrastructure to offer new image clearing services to community banks. If there is one thing that bankers have learned from the credit crisis, it is that focusing on their core services can provide a huge payoff.
Bankers banks provide valuable services to community banks, allowing them to compete with their larger counterparts. Bankers banks that have invested in the best technology to clear image exchange items also can offer this as a value-priced service to other bankers banks, extending their ability to service additional community banks, reduce costs, and expand their clearing network for improved funds availability and returns processing.
The Business Case
Prior to Check 21, check clearing was an extremely labor and capital-intensive process. For this reason, most bankers banks provided only settlement services: most community banks deposited paper cash letters at their nearby Federal Reserve Bank, while community banks that weren't members of the Federal Reserve settled their items through a bankers bank.
With the adoption of image clearing reaching more financial institutions, and advances in technology eliminating the need for bankers banks to print substitute checks in order to clear all of their items, more bankers banks are discovering that they can offer check clearing services to their customers with a much smaller investment in staff and equipment than in the past.
The goal for these bankers banks is to provide a lower-cost clearing option for their community bank customers or members, while generating non-interest income through clearing fees. By establishing a regional clearinghouse for in-network financial institutions, bankers banks can help their customers achieve lower costs through direct exchanges, as well as additional discounts through the bankers banks' aggregated volume. In most cases, community banks see savings of up to 20 percent compared to Federal Reserve Bank fees. Similarly, working with a bankers bank provides lower fees to receive image files from other banks. And bankers banks can offer value-added services such as item-level duplicate detection, which reduces errors and helps identify potential fraud. Other services include long-term payment archiving, expedited research and adjustments, and payment trend analysis.
In turn, bankers banks can strengthen their customer relationships, attract new bank customers, and increase the percentage of items cleared through their network. Bankers banks that have implemented this service have increased the rate of membership in the geographic region they serve, which results in a bigger network and more value to all participants.
Bankers banks also gain operational improvements by implementing an image exchange system that is not based on the old way of paper-check processing, but designed from the ground up to process today’s growing variety of payment types. In one case, a bankers bank reduced the time necessary to complete its check image processing from eight hours to less than 45 minutes using the new standard in image exchange processing. And, unlike traditional check systems, advanced image clearing solutions allow for configuration changes -- such as adding or disabling a clearing endpoint -- without a significant lead time or custom code.
Key Buying Criteria
When evaluating clearing solutions, there are four key criteria bankers banks should consider:
1. Scalability -- Image clearing requires the processing of large volumes in an extremely short processing window, as well as the effective management of a large number of image files.
2. Exceptions handling -- To minimize costly errors, an image clearing solution must have capabilities for duplicate detection.
3. Enhanced clearing capabilities -- In order to reduce fees, a clearing solution should have capabilities for in-network and consolidated decisioning, as well as bi-directional clearing.
4. Expandability -- Because of the fast-changing nature of the financial services industry, bankers banks should look for solutions that are designed to support future services.
Other evaluation criteria include startup and ongoing costs, time-to-market, the vendor's track record in high-volume operations, any value-added functionality (such as data analytics), and the level of control the bankers bank will have over product pricing, processing deadlines and service levels.
The Bottom Line
With fee income on the line, and community banks desperate for cost-effective clearing alternatives, more bankers banks will establish internal image clearing networks to harness the cost savings of in-network clearing and direct sends to major financial institutions, Returned items and research and adjustments are also simplified with the network approach. With these networks, bankers banks can provide the highest quality of correspondent services to community banks, as well as help their colleague bankers bank serve their customers. To provide even greater benefit to their customers, some of these bankers banks will create expanded same-day exchanges and exchanges with national and regional banks, and bundle their image clearing services with cash management products such as remote deposit capture (RDC) and automated clearing house (ACH) processing.
All of this will strengthen the role of bankers banks in the emerging financial services environment.
What do you think?
Image clearing networks provide an opportunity for bankers banks to grow their revenues and attract new customers. US Dataworks President and COO Mario Villarreal (mvillarreal@usdataworks.com) explains:
At a time when paper cash letter volumes are rapidly declining, and the banking industry approaches the "last mile" in its migration toward electronic clearing, forward-thinking banks are leveraging Check 21 and their existing IT infrastructure to offer new image clearing services to community banks. If there is one thing that bankers have learned from the credit crisis, it is that focusing on their core services can provide a huge payoff.
Bankers banks provide valuable services to community banks, allowing them to compete with their larger counterparts. Bankers banks that have invested in the best technology to clear image exchange items also can offer this as a value-priced service to other bankers banks, extending their ability to service additional community banks, reduce costs, and expand their clearing network for improved funds availability and returns processing.
The Business Case
Prior to Check 21, check clearing was an extremely labor and capital-intensive process. For this reason, most bankers banks provided only settlement services: most community banks deposited paper cash letters at their nearby Federal Reserve Bank, while community banks that weren't members of the Federal Reserve settled their items through a bankers bank.
With the adoption of image clearing reaching more financial institutions, and advances in technology eliminating the need for bankers banks to print substitute checks in order to clear all of their items, more bankers banks are discovering that they can offer check clearing services to their customers with a much smaller investment in staff and equipment than in the past.
The goal for these bankers banks is to provide a lower-cost clearing option for their community bank customers or members, while generating non-interest income through clearing fees. By establishing a regional clearinghouse for in-network financial institutions, bankers banks can help their customers achieve lower costs through direct exchanges, as well as additional discounts through the bankers banks' aggregated volume. In most cases, community banks see savings of up to 20 percent compared to Federal Reserve Bank fees. Similarly, working with a bankers bank provides lower fees to receive image files from other banks. And bankers banks can offer value-added services such as item-level duplicate detection, which reduces errors and helps identify potential fraud. Other services include long-term payment archiving, expedited research and adjustments, and payment trend analysis.
In turn, bankers banks can strengthen their customer relationships, attract new bank customers, and increase the percentage of items cleared through their network. Bankers banks that have implemented this service have increased the rate of membership in the geographic region they serve, which results in a bigger network and more value to all participants.
Bankers banks also gain operational improvements by implementing an image exchange system that is not based on the old way of paper-check processing, but designed from the ground up to process today’s growing variety of payment types. In one case, a bankers bank reduced the time necessary to complete its check image processing from eight hours to less than 45 minutes using the new standard in image exchange processing. And, unlike traditional check systems, advanced image clearing solutions allow for configuration changes -- such as adding or disabling a clearing endpoint -- without a significant lead time or custom code.
Key Buying Criteria
When evaluating clearing solutions, there are four key criteria bankers banks should consider:
1. Scalability -- Image clearing requires the processing of large volumes in an extremely short processing window, as well as the effective management of a large number of image files.
2. Exceptions handling -- To minimize costly errors, an image clearing solution must have capabilities for duplicate detection.
3. Enhanced clearing capabilities -- In order to reduce fees, a clearing solution should have capabilities for in-network and consolidated decisioning, as well as bi-directional clearing.
4. Expandability -- Because of the fast-changing nature of the financial services industry, bankers banks should look for solutions that are designed to support future services.
Other evaluation criteria include startup and ongoing costs, time-to-market, the vendor's track record in high-volume operations, any value-added functionality (such as data analytics), and the level of control the bankers bank will have over product pricing, processing deadlines and service levels.
The Bottom Line
With fee income on the line, and community banks desperate for cost-effective clearing alternatives, more bankers banks will establish internal image clearing networks to harness the cost savings of in-network clearing and direct sends to major financial institutions, Returned items and research and adjustments are also simplified with the network approach. With these networks, bankers banks can provide the highest quality of correspondent services to community banks, as well as help their colleague bankers bank serve their customers. To provide even greater benefit to their customers, some of these bankers banks will create expanded same-day exchanges and exchanges with national and regional banks, and bundle their image clearing services with cash management products such as remote deposit capture (RDC) and automated clearing house (ACH) processing.
All of this will strengthen the role of bankers banks in the emerging financial services environment.
What do you think?
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